An Unconventional Guide to Paying for College

College Students Face Stiff Competition for Financial Aid

USA TODAY recently ran an article about the shrinking pool of financial aid, and how there is more stiff competition than ever for the financial aid that does exist.

Here is the down and dirty according to USA TODAY: 

Several states have reduced scholarships or toughened eligibility criteria for financial aid. Eligibility for the maximum Pell Grant, the largest source of federal financial aid, has also been tightened. Meanwhile, the number of families applying for financial aid has soared. More than 21 million families filled out the Free Application for Federal Student Aid (FAFSA) for the 2010-11 academic year, last fall, up 49% from two years earlier.

This sounds like depressing news, but I would give a much rosier view of the situation. Yes, the Federal Pell Grant applicant pool has grown tremendously. However, the Pell Grant is a guaranteed award. Meaning if you qualify, you earn it. Our government has set aside enough funds to cover every student that applies. This may not say good things about our government’s fiscal policy, but it should give you some comfort in applying for the Pell Grant. Also, Pell Grant funding has been secured through 2015 according to new legislation.

The article also notes that states have tightened the reins on qualifying for state supported scholarships. This is a sad trend but not one without hope. The positive trend that I have seen in recent years is that colleges have stopped relying as heavily on state supported scholarships, and they have begun relying more on school supported scholarships. Athletic departments are pumping money back into schools to be earmarked for Academic scholarships. Private donors are increasing their contributions which are earmarked for scholarships. Cost cutting measures have freed up University funds to be put back into the scholarship program. Colleges and universities have begun to realize that students are their greatest asset. Just like great employees make a company profitable, great students make a school excel. Scholarship money is one of the main lures to attract top tier students.

The USA TODAY article does go on to give three tips to deal with what they believe is a worsening financial aid situation: 

1. Pay attention to deadlines.

2. Be on the lookout for private scholarships.

3. Use net price calculators as a screening tool, but exercise caution.

I actually strongly agree with all 3 of these points. We have talked numerous times here about how important financial aid deadlines are. Missing a crucial financial aid deadline could mean the difference in thousands of dollars in aid.

Private scholarships, and especially local scholarships, are in my opinion the absolute best source of financial aid. You compete against a limited applicant pool, and you can gain the support of your local community. It’s a win – win!

Finally, the article mentions the debacle that is a net price calculator. The intent was good, the end result was a confusing mess. The net price calculator was a mandate from the Department of Education for all schools to be able to give prospective students an estimate of what they could expect to pay. The net price calculator gives all students an estimate of their tuition and fees, and then subtracts an estimate of their financial aid. The problem is that these estimates are almost always way off. The calculator often does not include private scholarships, and never includes student loans. These differences are not explained to students, which gives them a very skewed view of the financial aid that they can actually expect to receive from one school versus another.

With that said, I firmly agree with this author’s suggestion to take the net price calculator with a grain of salt. It can be a good tool, but should not be your deciding factor.

Have you noticed any drop in financial aid in recent years?

 

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8 Comments

  1. I’ve been nagging my sister to completely her application. I’ll have to show her this.

    • @Michelle — Sound great! Sometimes it takes a little prodding to get the result you need! Hope it goes well.

  2. It’s been a long time, but one of the regrets I had was not going after more private scholarships. This was before the Internet so I think it was a little harder to easily search, but I probably could have been more diligent.
    Money Beagle recently posted..I Should Have Known We Would Get Less SnowMy Profile

  3. So many of the local kids are going to college on borrowed or ‘granted’ money because there are no jobs available. Hopefully, there will be jobs available when they leave school.
    Dr. Dean recently posted..You wanna be work-happy? or work sad?My Profile

    • @Dr. Dean — That is a really good point. If grants and scholarships ar intended to educate the next generation with the assumption that they will in turn be productive and working members of society, then they will need jobs. If the past few years have been any indication, decent paying jobs right out of college are hard to come by.

  4. My husband just finished his Ph.D, and my son will be starting college in 10 years, so we have a rather limited window to save for him. Of course, I would like him to get a full scholarship (what parent wouldn’t), but I am hoping he will want to go to the university where his father teaches so he can get a steep discount and get through without student loans.
    Melissa@FiscalPhoenix recently posted..The Case for Gazelle Intensity When Paying Off Your DebtsMy Profile

    • @Melissa – That is awesome that your husband receives a discount on tuition. Unfortunately, the public university does not offer any tuition benefit to dependents. I am able to receive free tuition as an employee, but it cannot be passed along to my family members. Yours sounds like a great plan though!

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