Student Loans Under the CARES Act: Your Questions AnsweredGuest Contributor
By Matt Grezetich
The headline is enough to make parents of college-bound kids sit up and take notice: “How This Savvy Student Won More Than $700,000 In Scholarships!”
Read on in the article in the Feb. 9, 2018 edition of Forbes and you’ll find that it took applying to more than 140 scholarships to win six awards — and the student couldn't accept more than half of the $700,000 total because it included scholarships from schools he chose not to attend.
Even so, the remaining awards amounted to a hefty sum. If this student could do it, why can’t everyone?
It comes down to more than whether someone is a good student with a glowing list of extracurricular and volunteer activities, and stellar recommendations. Before encouraging an already time-strapped student to pursue outside scholarships, it makes sense to look at the factors that can impact awards, and whether all the work is worth it.
It can easily take a student 100 hours of concentrated effort over a six-month period to earn $5,000 in scholarships. While $50 an hour is certainly a good return on investment, between homework, part-time jobs, extracurricular activities and volunteer work, few students have that kind of time to dedicate to hunt for and apply for scholarships. Be realistic about whether your student has the time to invest in a scholarship hunt or whether their time could be better spent elsewhere.
Start searching for scholarships and you’ll soon come across headlines proclaiming that there are millions of dollars of scholarship money just waiting for your child to claim it. Unfortunately, many of those headlines come from companies that want you to pay them to find those opportunities.
Do not pay when you can find the same scholarships for free. An online search will turn up lots of free websites for finding private scholarships. Sites like fastweb.com and scholarships.com often turn up on “best of” lists. A new mobile-friendly site, myscholly.com, is especially popular with students.
Advise your student to go after a lot of $250 to $500 scholarships rather than a few $2,500 to $5,000 ones. Students will have a much easier time earning $10,000 in scholarship money if they don’t have to compete with thousands of other applicants. A high school guidance counselor can direct students to small scholarships available in your area.
What could be the downside to earning free money for college? At some colleges and universities, the more outside scholarship money students have the less money they’ll receive from their college. It’s called “scholarship displacement,” and it often comes as a shock to families who are counting on that scholarship money to send their student to their dream school.
Maryland has outlawed scholarship displacement. In other states, practices at colleges and universities vary. Most schools will let students use private scholarships to reduce or eliminate the need for a Federal Stafford Loan before reducing a student’s grant, and about 80 percent will let students use private scholarships to pay for their unmet need. Anything more, however, is considered an over-award and may not be used.
To get around this, parents may ask a university if they would be willing to allow them to bank the excess scholarship money for a future year, or parents might go to the scholarship provider to see if their student can bank the scholarship for graduate school or to pay off loans after graduation.
The upside of all of this is that with proper planning, outside scholarships can cut the cost of college. The application process can also teach students great time management skills. Students will need to carve out a few hours every week to search for scholarships and complete applications. They may want to use a spreadsheet to track pertinent information, including application deadlines.
For some students with packed schedules, time in high school may be better spent focusing on school work and activities rather than searching for scholarships they may never receive. In that case, make sure your student applies to at least some schools where they qualify for merit aid based on their GPA and test scores.
Remember the scholarship search doesn’t need to end in high school. There are plenty of scholarships available to students currently attending college — including ones offered by their own universities. The student who missed out on scholarships in high school may still find plenty of opportunities for “free money” in college.