Private Scholarships - The Billion Dollar Rip-off
No, congratulations are not in order. In fact, pity the poor student who dedicated several years of blood, sweat and tears to the Red Cross, YMCA, Kiwanis, Rotary, or other such non-profit organization, only to see all of their well deserved scholarship money evaporate into thin air and wind up in the "scholarship fund" of their college of choice instead of their own financial aid packages.
Most schools send out their financial aid offers between January and April, with a May 1st decision date. As most colleges consider private scholarship awards a resource to help pay for a student's education, they reduce their share of the student's financial aid package dollar for dollar, and this is where the problem lies.
What a kick in the teeth it is for a family to read a revised award letter showing that the school's portion of the financial aid was reduced by the amount of the private scholarship the student earned! The bad news is usually listed on the award letter as private scholarship, outside aid, or very often as other. Here's a typical before and after scenario:
Before Receiving a Private Scholarship
$45,000 - Cost of Attendance (COA = tuition, fees, room & board, books, etc.)
$10,000 - Expected Family Contribution (EFC)*
$35,000 - Financial Need (FN = the maximum amount of aid a family will qualify for)
* EFC = the minimum the federal gov't determines a family will pay at any college
We'll assume the student qualifies for the following aid:
$ 3,500 - Stafford Loan
$ 4,000 - Perkins Loan
$ 2,500 - Federal work-study award
$ 3,000 - State grant
$22,000 - College scholarships, grants, tuition waivers, etc.
$35,000 - Total
The student will qualify for a maximum of $22,000/yr in financial aid from the college.
After Receiving a Private Scholarship:
$45,000 - Cost of Attendance (COA)
$10,000 - Expected Family Contribution (EFC)
$35,000 - Financial Need
The student qualifies for the following aid:
$ 3,500 - Stafford Loan
$ 4,000 - Perkins Loan
$ 2,500 - Federal work-study award
$ 3,000 - State grants, etc.
$10,000 - Private Scholarship
$12,000 - College scholarships, grants, tuition waivers, etc.
$35,000 - Total
While the student still qualifies for a maximum of $22,000/yr in financial aid from the college, the private scholarship has now become a bonus for the school, not the student. All of the student's hard work actually saves the college money, and the benefit to the student is reduced to nothing!
It should be no great surprise to anyone that our greedy institutions of higher learning laid the groundwork for this clever thievery months in advance. Students who apply to any of the 225 elite private and state colleges that require the CSS Financial Aid Profile (FAP) are asked to indicate whether they expect to be scholarship recipients. Section SR, Question SR-150 asks for the dollar amount anticipated from student resources for school year 2007-2008, such as "grants, scholarships and fellowships," and they must be listed individually in Section ES.
The majority of schools that only require the FAFSA (Free Application for Federal Student Aid), simply send out a questionnaire asking about private scholarships. They are less devious, but just as deft.
Who could imagine in their wildest dreams that colleges would stoop so low and play so dirty? Truth be told - and have no doubt about it - it's all about the money. Every year there are billions of dollars awarded in private scholarships, and the beneficiaries of all the hard work that earned them is none other than our poor, starving institutions of higher learning, enriching their billion dollar endowment funds at the expense of their hard working, deserving students.
The best way for a family to avoid the injustice is to personally discuss this sordid state of affairs with the scholarship committee either at the time of application or well in advance of their award announcements. In that way, the check can be made payable to the parents instead of the student! If that fails, parents should ask them to postpone sending the check until after the student has enrolled.
As a last resort, have the parents call the college financial aid administrator, explain the situation, and kindly ask (grovel if you must), that because of all their hard work, the student is really entitled to the money and the college should not penalize them by reducing their aid by the amount of the scholarship. If they take a hard line, try to negotiate some of the money back into the student's pocket, because half a loaf is better than none. Never lose sight of the fact that financial aid is a commodity, and like all commodities, it is negotiable!
Related Tags: scholarship, parents, college, financial aid, rewards, rip-off
Reecy Aresty has been a financial advisor since 1977, and is founder and president of College Assistance, Inc., located in Boca Raton, Florida. He is the author of "How To Pay For College Without Going Broke," an invaluable, critically acclaimed, parent/student manual, (updated from its previous edition, "Getting Into College And Paying for It!"). Arguably the most revealing book ever written on college admissions and financial aid, it is also the only book of its kind available in Spanish. For the past 28 years, Reecy has helped thousands of families send their kids to the college of their choice for less than they ever dreamed possible. For more information on admissions & financial aid, and to checkout the best college book on the market today, please visit Paylessforcollege.com
Your Article Search Directory : Find in ArticlesRecent articles in this category:
- Home Equity Lines Of Credit For Starting Your Own Business
Home equity lines of credit can provide you with all the financing and flexibility your new business - Dealing with Financial Aid in Graduate School
Financial aid in graduate school doesn't work quite the same way as financial aid for undergraduate - Using the Private Student Loan
There is a variance between federal student loans and private loans in the sense that federal loans - Full Scholarships For The Students of University of Wyoming
The University of Wyoming has introduced the Trustees Pride Scholarship Program which offers eligibl - Scholars Should Start Investigating Where They Can Apply for Scholarships and Grants
Scholars should start investigating where they can apply for scholarships and grants. It is best to - Tips on Getting A Scholarship
Not all of us is aware of the process you have to follow in order to get a scholarship and in their - College Education Financing - Finding Scholarships, Grants and Loans
There are several sources of financial aid available for college students. Grants and scholarships a - Small Business Owners Can Save Thousands On College Costs
College and college-bound families should be looking into a unique opportunity to save tens of thous - 529 Savings Plans, Trick or Treat?
College financial aid officers across the county must be in a state of euphoria now that Congress ha - College Goal Sunday - Touchdown or Penalty?
Regarding those countless locations in over 40 states where college financial aid officers and state
Most viewed articles in this category:
- The Basics Of Student Loan Consolidation
Records have shown that there are about 20% of college students who are using student loans to pay f - Don't Pay Your Student Loans, Have them Forgiven
Okay so you went to college, had a good time, went to a few parties, studied hard (hopefully) and gr - Saving Good Money On Your Student Loans
Here are a few important tips on how you can save money on your student loan. Read this article care - College Student Loans - Financing Your Education!
A college student loan has given many people all over the United States a chance to further their ed - Education Loans: Elucidate Your Life With The Education You Dream Of
The growth and development of a nation depends significantly on the quality of the human resource of - Free College Scholarships Ease Financial Burden of College Education
It's no secret that college tuitions have skyrocketed over the last decade. College scholarships hav - Distance Learning Education Loans
What Lenders Require For Distance Learning Education Loans:Lenders require that you supply a number - Using the Private Student Loan
There is a variance between federal student loans and private loans in the sense that federal loans - What To Do When You Need Extra Money for College
Paying for college is one of the biggest headaches that both parents and students are faced with onc - Consolidate Student Loans - 3 Helpful Tips
Earning a college degree is one of the most significant accomplishments in life. However, going to c