One of the biggest myths in the world of college admissions is the myth of the scholarship. Now, just to be clear, I am not talking about scholarships that come from the colleges themselves. I am talking about scholarships that come from outside businesses.
You know, those billions and billions of dollars that everyone says is available in scholarships. Is that money available? Yes it is. So what’s the problem?
The problem is in understanding how scholarship money like this works. So let’s explore this a little bit.
Let’s say your favorite college gives you $10,000 in scholarships. Now you get a $1,000 scholarship from your local dollars for scholars program. Good deal, right? You now have $11,000 to pay for college. But wait, things aren’t that simple.
That $1,000 you got from dollars from scholars because you are a great kid? That money will be subtracted by the college from what you are going to receive in scholarship money from them so that the money you have for college is still $10,000.
Did you see what just happened? That money you got to help you pay for college is going to the college, not you.
Now at some colleges you will benefit because they will subtract that $1,000 scholarship you got from the loans they gave you. So instead of having $5,000 in loans to pay back, you will have $4,000 in loans. That will be of benefit to you 4 years from now when you start to repay the loans but what you have to pay out of pocket right now, will be the same as before the scholarship.
You know who really benefits from these scholarships, other than the colleges? Rich kids. Yes, you read that right. If a student doesn’t get any financial aid from the college, they have nothing to offset your scholarship against and you can use that money to reduce the cost of the college.
All of this is explained in more detail on my webpage, Financial Aid Basics.
The problem here is that this is not simple stuff to explain. But it’s real easy to say to someone, apply for this scholarship so you can help pay for college. I get that, even if it isn’t true.
And that is why it is so important to take a few minutes to really understand how college financial aid works. This little bit of knowledge truly can save you thousands of dollars in paying for college.