Finding Private Scholarships: Is It Worth It?
By Joe Messinger, CFP®
June 11, 2021
When parents think of paying for college, they think of scholarships. They often hear stories about students winning full rides, or applying for a range of unusual private scholarships that accumulate to cover a notable chunk of tuition. However, parents and students need to understand the reality and develop a plan of action if they want to make this scenario their reality. We are taking a moment this week to revisit this important topic.
Often, when high school students receive their financial aid award letters, they’re shocked to see a gap in the total sticker price of their university and the financial aid they’re granted. Taking out loans isn’t a preferred course of action, so they look to private scholarships to bridge the amount they need.
Just to clarify, we refer to “outside” or “private” scholarships as those coming from third parties — not from the colleges themselves. Private scholarships come from places like the Rotary Club, Coca-Cola, etc.
Parents are always surprised to find out that private scholarships are unlikely to fill the entire gap.
We all hear about the billions of dollars in unclaimed free college money each year, and that “fact” is not exactly true. Those stories about unclaimed college money are mainly talking about federal Pell grants for those in need, and employer tuition assistance programs that go unused.
Most private scholarships (especially those with higher dollar awards) have multiple applicants and stiff competition. The private scholarships that go unclaimed are the really unusual ones like “the Zolp scholarship…available only for students at Loyola University of Chicago born with the last name of Zolp.”
Parents are also surprised to learn that private scholarships are not the largest source of scholarships.
The majority (over 80%!) of scholarships students receive will come from the colleges themselves. Colleges reward merit and want to attract students by giving them scholarship money. A student doesn’t have to have perfect test scores either to receive scholarships from colleges. They just need to find the right fit.
In a recent post, we discussed how winning an outside scholarship can actually cause you to lose need-based financial aid! Affectionately called scholarship displacement. You can learn more here.
One of the keystones of our college conversations with families is looking at how they can find those colleges that will give them the freest money. Ideally, families need to be thinking about where they can find merit money from colleges before they even start the college search. (We call these “unicorn colleges”.)
High school seniors are going to drag their feet.
Oftentimes, the hardest part of private scholarship searches is motivating a teenager with Senioritis. Seniors will be “hesitant” to write one more essay. We use the word “hesitant” as a kindness. They may be dead set against it! Writing one more essay to apply for a private scholarship is not something a student is excited to do in the spring semester of their senior year.
What can you do if they refuse? There may be nothing a parent can do. However, sharing with them a budget of what their post-graduation life will look like with a large student loan payment can be very powerful. (Click here for our blog with a helpful budget worksheet.)
So, given all that, why should a family even bother?
We use this phrase all the time. If you could earn $50 an hour doing a job, wouldn’t you? Share that with your student and see what they think.
The truth is, if you find the right private scholarships to fit your student and can spend a few hours applying for them you may be surprised by the benefit. (Of course, nothing is guaranteed, so the struggle with your high school senior continues.)
Don’t ignore the small-dollar awards.
The private scholarships worth $500 are not going to have as much competition as the $20,000 national Coca-Cola scholarship. Every little bit counts and spending an hour to apply and winning $500 is a pretty good paycheck for an hour’s work.
Also, apply for more than just one. Shoot for at least 6-8 scholarships to give yourself the best chance of winning one.
Where are the best places to find private scholarships (in our preferred order)?
- Start in your high school. Talk to the guidance counselor. They are often the best resources and are very knowledgeable about scholarship sources that would fit you.
- Think personally. Employers, clubs, churches…what groups and organizations does the student and family belong to. Ask family members if they know of scholarships from their organizations/employers.
- Look locally with foundations in your geographic area. Here in Central Ohio, we have the Columbus Foundation and the Delaware County Foundation, among others.
- The internet is your friend. Lots of great sites out there: Fastweb.com, scholarships.com, Scholarship America, bigfuture.collegeboard.org, Cappex.com. Beware of scams, though. If you have to pay money to get money, it’s probably a scam.
- Google your interest. If a student is thinking about being a financial advisor (yay!), Google “scholarships for financial advisors,” and you’ll see several that apply. (Our local FPA Central Ohio is among them.) You could Google “college scholarships in meteorology.” Many professions have associations and frequently offer some kind of scholarship at the local level, national level, or both. You get the idea.
Our advice: always look to the college first. They have the deepest pockets, and we know that the majority of scholarship money will come from them.
Then, when thinking about private scholarships, don’t wait until the last minute. Scholarship applications can take some time—essays may need to be written. Watch out for those deadlines, and be sure to keep looking each year during college. Many majors have scholarships specifically for upperclassmen.
Make a game plan and tackle the search and application process to find some free money. The awards may not fill all the gaps as you hoped, but the effort should be well worth the time.
Original Post: 2/2018
Updated Post: 6/2021