Institutional Aid – Show me the Money

Where does all the undergraduate financial aid go?  The largest amount of money given for college tuition is in the form of loans.  Loans are not the aid you want to go after.  Too many students are ending up with huge debts that will take years to repay.  Loans for college only make sense in small amounts and you want to make sure you have a plan on how to pay them off. 

Federal grants and most state grants truly are need-based, but the vast majority of students don’t qualify for them.  If you do, then great, but most do not. (hyperlink to need-based vs merit-based scholarships)

When it comes to planning for the cost of college, many students devote a lot of time chasing private scholarships.  These are the $500 Exchange Club scholarships, the $250 PTA Scholarship, the $750 Boeing Scholarships. But notice, these aren’t even on the chart below!  In total private scholarships account for less than 1% of the money out there to pay for college.  A student would need to secure 40, yes forty, $500 private scholarships to cover the national average cost of ONE year of tuition at a public school! Way too much effort and attention is put into this insignificant piece of the pie.

So, if we avoid loans, don’t qualify for federal need-based grants, and can’t come up with $20,000 in private scholarships, where can we find the money?  The answer is in Institutional Grants.  These Grants account for $26 BILLION/year!  This is free money (not a loan).  An Institutional Grant is the school taking the sticker price of college and slashing it to some lower number, calling it a “Presidential” or “Regent” Scholarship and using the tuition discount to convince the student to choose their college over the competition.  Which schools are most likely to give out institutional aid?  Private Colleges.

Crystal Anderson is the president of Crystal Clear College Planning, which helps Seattle-area families plan financially and academically for college. Learn more about our free local workshops on planning for college.