Maybe you've been carefully saving for the day your child begins college, or perhaps you've worked on the assumption that Bruiser is going to be the starting nose tackle for a Division I school's football team and will receive a full athletic scholarship. No matter which category you fall into, as you move closer to that fateful day, you may find that your planning hasn't produced the desired results. Maybe the stock market didn't perform as well as you'd expected, or Bruiser is actually more comfortable ripping the guts out of a computer than a live opponent. As you look at that first tuition bill, you may realize that you don't have enough saved, and you can't possibly make up the full amount of the difference from your current earnings.
Now, you could panic — after all, you've told your child all along that you expect him to attend college and you'll somehow find a way to pay for it. A better option, however, is to take that same energy and begin researching what available free, and not-so-free, money is out there in the form of outright grants, scholarships, fellowships, and guaranteed payments for service, just waiting for your child to apply for it.
Fortunately, finding sources of free money isn't nearly as difficult as finding the lost ark or the sales receipt for the toaster that blew up the first time you used it. You just need to know the different places to look for the money.
Before you start your search, though, you should be aware that the words scholarship, fellowship, and grant are often used interchangeably by various organizations, but they essentially refer to the same thing: money that the organization provides to your student for higher education expenses without any expectation on the organization's part that they will be repaid. These terms do have some subtle differences, however. Generally speaking, a scholarship is paid to undergraduate students, a fellowship goes to graduate or postgraduate students (often with a research or teaching requirement attached), and grants are usually associated with need (but scholarships and fellowships may also be need-based). The basic theory is the same, however.
You may think that your child isn't smart enough, talented enough, or poor enough to warrant someone else picking up even a part of his tab at college, but you're probably wrong. Money is available from a wide variety of sources, and it runs the gamut from small stipends to full tuition grants. Many of these aren't based on either ability or need; they merely require that you apply for the funds. Do your research and check all available sources — you may be quite surprised to find out just how much money is out there.
When conducting your search, keep track of all the different ways that your child may be able to access scholarship money. Scholarships are awarded not only on merit and need, but also on the basis of residency, ethnic or religious background, college choice, career path, and whether he is left-handed. Some scholarships are awarded only to incoming freshmen; others don't begin until a student's senior year. Don't assume that your child won't qualify; instead, work on the assumption that, if you dig hard enough, something out there has his name written on it. And, if you fail this year to snag some funding, don't give up — as any good Red Sox fan knows, just wait until next year.
Beware of scholarship scams, where for a small (or large) entry fee, your student is guaranteed a scholarship, or given access to scholarship information that is supposedly not available for free. Remember, all scholarship information is free for the asking, and you must apply to the scholarship directly (not through any middleman) for the grant. Anyone who asks for your credit card information or charges you a fee for any scholarship-related service is scamming you. Always keep in mind that scholarships are a classic case of receiving money on the basis of hard work, good looks, talent, or a combination of the three, and nothing else; there should be no need for you to pull out your wallet at any point in the application process.
Help! We Won Too Much Money!
What if you've managed to save the necessary amount of money in either a Section 529 plan or a Coverdell Education Savings Account (ESA), and all of a sudden, a full scholarship lands in your student's lap? Well, first thank your lucky stars that you're one of the few who get to have this problem, and then consider your options for what to do with the unneeded savings account. You may choose any one of the following courses of action:
- If your student has dreams of graduate school dancing in her head, keep it safely stashed for that day. Remember, Section 529 or Coverdell plan funds can be used to pay for all postsecondary qualified educational expenses, not just undergraduate school expenses.
- Distribute the money to your student or to yourself after graduation. Remember, though, if money is left over in either your Section 529 plan or your student's Coverdell ESA after he's completed his education, distributions to either you or him will result in income tax owed on the earnings plus a 10 percent penalty.
- Make distributions to your student in the years in which he receives his scholarship. By making distributions in these years, he'll pay only the income tax, but no penalty.
- Roll the account over to a new beneficiary. By changing the designated beneficiary and then using the money to pay qualified educational expenses for that student, you and your new beneficiary may escape paying any income tax at all on the distributions.
Looking To Your Child's Prospective College
Begin your scholarship search at your child's college, both in the admissions and the financial aid offices. Every college has a list of scholarships that are available if a student applies for them. Some of them are well known and very prestigious; others, though, are buried in obscurity, and you just have to be proactive enough to look for them and apply. Although the size and seeming abundance of the athletic scholarships have become the stuff of legend, your child may also qualify for academic scholarships.
Both athletic and academic scholarships are generally awarded before your student even begins his college career, and they need to be renewed for each subsequent year. Substandard performance may lead to a reduction in, or even total loss of, the scholarship.
Don't forget, though, that there are often smaller scholarships awarded to students who have already proven themselves at the college level. The annual history award may not carry much cachet outside the history department, but that's real money they're handing out with it.
Working With Your Employer
Two of the most worthwhile benefits an employer can offer are scholarship programs for the children of employees and tuition assistance programs for employees. These programs provide the company with valuable tax deductions and give huge boosts to the educational plans of their employees and their children.
Even if your employer doesn't directly offer either a scholarship program or some form of tuition assistance for employees, if you're a member of a union, the union may provide some aid. Assumptions that your union doesn't have anything like this in place will only hurt you — check with your union representative and find out.
Employer-sponsored Scholarship Programs
Company-sponsored scholarship programs generally aren't need based at all but are rather merit based. What company, after all, wants to admit that it doesn't pay its employees enough to enable them to easily send their children to college? The fact that these scholarships are merit based doesn't mean that your student needs to be a genius (she is, after all, competing only against other children of people employed by the same company). It does mean, however, that she must maintain reasonable grades in high school; she also may have to complete an application, take a test, or both.
Most of these programs don't provide full tuition assistance; instead, they usually give a more nominal amount. Still, any money that you receive will supplement what you've saved, and it may just bridge the gap between your savings and your student's potential costs.
The existence of a scholarship program may be buried deep inside your employee manual. Check with your human resources department to find if your company has such a program in place, what the requirements are, and what you and your child must do to apply.
If you're fortunate enough to work for a college, the most valuable benefit your employment contract contains may be that you, your spouse, and your children can attend that institution tuition-free and tax-free, or at least at a discounted rate. Unlike corporate and union scholarships, these tuition reductions aren't based on merit, but rather on your employment.
Employer-sponsored Tuition Assistance/Reimbursement Programs
Tuition assistance programs are one of the more highly touted benefits a company may offer, but they're often the most misunderstood. If you're contemplating returning to school to either hone your existing skills or to branch off in an entirely different direction, check with your supervisor and with your personnel or human resources office to see how much, if any, your company's program may cover. You may be pleasantly shocked to find that, even though you're taking a course that seems to be completely unrelated to your job, your company may feel that your new skills add value to the company, so it will cover at least a portion of your expenses.
Be prepared to pay the full cost of any course you take upfront, whether you pay cash or use a credit card. Most companies will reimburse you for your tuition expenses only after you successfully complete the course, not before. Also keep in mind that they usually expect a grade of a C or higher for reimbursement.
Scouting Local Civic Groups
What do the Elks, the Moose, the Knights of Columbus, the Daughters of the American Revolution, and the Chamber of Commerce all have in common? They all provide prizes and awards to deserving high school seniors, who are nominated for the award either by their teachers or by members of the organization who are familiar with the students and their work.
Scholarships may be given for academic excellence, athletic prowess, or community service, depending on the organization. Some of these awards are in the form of books, but others are cash. The checks are generally made out directly to the student, not to the university that the student will be attending the following fall. These small scholarships may provide your student with necessary money to buy incidentals that often aren't covered by a university scholarship program but are necessary purchases nonetheless.
Competing For Corporate-sponsored Awards
You may be familiar with the Miss America and Miss U.S.A. pageants and know that these young women receive scholarships from these organizations to further their educations. What you may not realize is that other types of corporate competitions (that don't require parading around in a swimsuit in front of a national television audience), open to both genders, offer similar benefits to the winners. These competitions don't require that you work for a particular company or business in order for your child to compete; in fact, if you're an employee, your child may not be eligible (check the entry rules).
Corporate scholarships, such as those offered by Best Buy, Burger King, Coca-Cola, Calgon, and the Discover Card, among others, can be very lucrative if you manage to nab one. The first-place award often is more than enough to cover all the expenses for a single year, but even runner-up prizes can be worth thousands. Awards are usually made for only one year at a time. Some are renewable annually, provided your student kept up his grades. Others are good only for a single year; if students want further funding from that source, they'll have to apply for it each year they're eligible.
Corporate competitions are competitive — don't let foolish errors trip up your student's application. Read the entry requirements carefully, and follow them closely. If the application must be postmarked by October 31, don't mail it on November 1 and hope that officials won't notice — they will.
You may access lists of what corporations sponsor competitions, what the general requirements are for each, and how much money is at stake through a variety of Web sites. Plug scholarship into any search engine to access a list. Good places to start are at www.scholarships.com and www.fastweb.com, although new Web sites sprout almost daily in this very popular area. Libraries may also have books that give you this information, although the information in the books may not be as current as the Internet info.
Tracking Down Charitable Foundations
The United States has thousands upon thousands of charitable foundations, and most of them are completely obscure. In fact, many of them, according to the terms of their establishing documents, can't give scholarship money directly to students. Instead, they must set up scholarships through another organization, such as a college or university. Check with your student's financial aid office to obtain a list of these charities.
Some charitable organizations, however, do provide scholarship and fellowship money directly to students to help defray the cost of education. Unfortunately, finding these organizations may be difficult (because many keep a very low profile). Still, you can locate them. Here are some suggestions:
- Check with your state's attorney general. The AG's office in each state usually keeps a list of all organized charities operating within the state. They're obligated to provide annual reports, and this information is available to the public.
- Check with regional associations of grant makers. Their lists may not be as complete as the one you get from the attorney general because charitable foundations don't have to register with them, but this may be the easiest way to access information from charitable foundations around the nation. Remember, if you can find a local foundation that's giving away money for schooling, your chances of snagging a scholarship from them may be greater than from a national charity because you're competing against a smaller pool of applicants.
- Search the Internet. Not every charitable foundation has a Web site; in fact, most don't. But you can often find the major charitable foundations that do provide scholarship assistance on the big scholarship search Web sites, such as www.scholarships.com and www.fastweb.com.
Snagging State And Municipal Scholarships
You may or may not want your tax money spent on scholarships, but most states and some cities and towns provide some scholarship aid to some of their neediest students. Even if you're not sure that your child will qualify, there's no harm in accessing the information and making sure.
If you're not sure how to begin searching for these taxpayer-funded scholarships, the Internet is always a good place to begin. You can plug in your state's (or town's) name and scholarship into any search engine and come up with a fairly extensive list of what's available to you from local sources. You should also check with your student's guidance counselor for any smaller grants that may not have Web sites. And, last but not least, check with your state and local departments of education to see if they have any pertinent information for you.
Generally, when you do receive assistance from the state, some strings are attached — for one, your student must attend a public institution in that state, whether it's a community college or a four-year college.
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