Starting a college education is a life-changing experience that involves both intellectual and personal development. However, many students are concerned about their financial situation. Fortunately, college scholarships provide an important source of financial support, making higher education more affordable.
In this article, we’ll go over the essentials of what a college scholarship comprises, from knowing the many categories to learning about the application procedure. Join us as we explore the subject matter of college funding and provide you with the knowledge you need to pursue your academic goals without feeling overwhelmed by financial constraints.
What Is A Scholarship For College?
A scholarship is financial support awarded to a student based on academic achievement or other criteria that may include financial need for schooling. There are various types of scholarships, the two most common being merit-based and need-based. The donor or department funding the scholarship sets the criteria for recipient selection, and the grantor specifically defines how the money is to be applied. The funds are used to defray the costs of tuition, books, room, board, and other expenses directly tied to a student’s educational costs through the university.
Scholarships are typically awarded using a variety of factors, including, but not limited to, academic achievement, departmental and community involvement, employment experience, areas of study, and financial need.
What are the sources of scholarships?
Scholarships are awarded by a variety of organizations, groups, charities, foundations, enterprises, colleges and universities, the government, and individuals. These scholarships can be merit-based, need-based, or a combination of the two, allowing you to continue your education without incurring large financial obligations.
- Merit-based scholarships are awarded based on your academic or extracurricular accomplishments, such as good grades, test scores, athletic or creative achievements, or community service. These scholarships recognize and encourage academic achievement and typically require candidates to complete specified qualifying requirements to be considered.
- Need-based scholarships, on the other hand, are provided based on your financial situation. As a result, your family income, assets, and other conditions that may affect your capacity to pay for college are taken into account in the eligibility decision.
- Specific criteria scholarships: Some scholarships target students with specific characteristics or backgrounds, such as those pursuing a particular field of study, belonging to a certain ethnic group, or having specific career goals.
- Athletic scholarships: These are awarded to students who excel in sports and plan to participate in college athletics. Athletic scholarships are common in the United States, particularly in NCAA (National Collegiate Athletic Association) schools.
- Corporate and private scholarships: Many businesses, foundations, and individuals offer scholarships to support education. These scholarships may be tied to certain industries, professions, or community service.
Eligibility for need-based scholarships is usually established after submitting the Free Application for Federal Student Aid (FAFSA) or other financial aid applications, such as the CSS Profile. Tuition, fees, room and board, and other educational expenditures can be covered by need-based scholarships for students who do not have the financial means to pay for college on their own.
Scholarships may include both merit-based and need-based components, depending on your academic achievements and financial circumstances. As a result, it is critical to research the precise eligibility criteria for every scholarship you are interested in.
Where Are the Most Common Scholarship and Grant Sources?
College candidates have access to four key types of free money. We’ll list and explain them below, along with the percentage of total grants and/or scholarships that come from each:
- Federal grants account for 47% of total financial help.
- State grants and scholarships provide for 8% of total financial aid.
- Scholarships and grants from schools account for 35% of total financial aid.
- Private scholarships provide for 10% of total financial aid.
1. Federal Aid (about 47% of total aid)
The federal government is anticipated to give out $120 billion in federal aid each year.However, if you are looking for federal government merit scholarships, you are out of luck. Almost all federal government handouts demand proof of financial need. To be eligible for federal grants, you must complete the Free Application for Federal Student Aid (FAFSA).
Soon, you’ll see the new and improved Better FAFSA, which you can read about by clicking the link.
Types of Federal Student Aid
By far, the Pell Grant is the biggest federal grant. Pell Grants are available to students with demonstrated financial need. For context, during the award year 2020-2021, 78 percent of Pell Grant recipients had a family income of less than $40,000 a year.
The current full grant, which is adjusted annually, is $6,895 for the 2022-2023 award year.
Is FAFSA a Pell Grant?
Answer: No. The FAFSA is the application, and a Pell Grant is one type of financial aid available to students who complete the FAFSA.
Federal Supplemental Educational Opportunity Grant
The FSEOG is available for students who have “exceptional financial needs.” If you don’t qualify for a Pell Grant, you won’t be eligible for this grant that ranges from $1,000 to $4,000 annually. The FSEOG will not be available on all campuses, and the money can run out.
Education Tax Benefits
The federal government provides several education tax benefits, which are claimed on your federal income tax return. Some are based on tuition and textbook costs. These include the American Opportunity Tax Credit (AOTC), Lifetime Learning Tax Credit (LLTC), and Tuition & Fees Deduction.
Of these, the AOTC yields the most significant tax savings per dollar of qualified higher education expenses, but it is limited to four years. As a result, the LLTC is used mainly by graduate and professional students and continuing education students after they exhaust eligibility for the AOTC.
Another popular education tax benefit is the Student Loan Interest Deduction, which provides an above-the-line exclusion from income for up to $2,500 in interest paid on federal and private student loans.
Veterans and Military Student Aid
The federal government provides several types of military student aid to members of the U.S. Armed Forces and veterans. These include ROTC Scholarships, the Montgomery G.I. Bill, the Post-9/11 G.I. Bill, the Yellow Ribbon Program, U.S. Armed Forces Tuition Assistance (TA), and the Student Loan Repayment Program.
You can turn to federal loans if you aren’t eligible for federal grants.
The direct loan is for those who file the FAFSA and attend school at least half the time. During five years, students can borrow a maximum of $31,000.
The PLUS Loan is designed for parents of undergraduate, graduate, and professional students. Parents can borrow the difference between the cost of the school and what their child received in financial aid.
2. State Aid (about 8% of all aid)
Almost every state education agency has at least one grant or scholarship program available to state residents. Some offer several programs.
States in the South are more likely to award money based on grade point averages and possibly test scores. States on the East and West coasts are more likely to provide awards based on financial need.
An easy way to learn more about aid programs in your state is to head to the website of the National Association of Student Financial Aid Administrators (NASFAA).
On the NASFAA website, you can find links to your state aid programs by following these steps:
- Click on the Students, Parents & Counselors link
- Then click on the Financial Aid in Your State link
- Next, choose the State Financial Aid Programs link
- Once you call up the U.S. map, click on your state
Some state programs, such as those in California and New York, have centralized systems, meaning state-level formulas set awards. In other states, the government sets essential criteria, but they allow public universities to exercise some discretion when making the awards. States in this category include Texas and Virginia.
3. University Grants and Scholarships (about 35% of total funding)
The following is a typical award procedure: When a student applies to a school, the admissions office determines whether or not to admit the student. If the institution offers merit scholarships, the decision is normally made during the admissions process, depending on the student’s grades and test scores.
This frequently occurs before the school determines whether a student is eligible for need-based aid. The admissions staff then evaluates if a child still requires assistance after considering merit scholarships when the school reviews the financial aid paperwork.
If the institution is willing to go above and beyond, it will issue a need-based grant in addition to the scholarship. Unfortunately, the most prestigious research universities and liberal arts colleges
4. Private scholarships and employer grants (amounting to around 10% of total aid)
Private scholarships are awarded by outside organizations such as foundations, civic organizations, businesses, religious organizations, professional associations, and charities. Many people believe that private scholarships are the most important source of school funding, yet as you know, they are among the lowest.
Unlike other sources, these scholarships often last for one year, and the majority of these prizes are less than $4,000. As a result, the chances of receiving a scholarship are approximately one in eight. Scholarships with prestigious odds of one in 250 or one in 500 are available.