Hunting for outside aid is often a total waste of time
Like a lot of seniors in high school, Maggie Beam was worried about getting into college. And her mom, Siobhan, was worried about paying for it. Siobhan was thrilled last January, when Maggie got into her top choice, Winthrop University, not far from their home in Charlotte, North Carolina. But that thrill turned to panic in April, when Maggie’s financial-aid package arrived.
Even after $26,000 in federal grants, loans, and institutional aid from Winthrop, the bill would still be about $15,000. That was $13,000 more than Siobhan — a single mother and public school teacher raising two teenagers on her $75,000 salary — had saved.
Siobhan knew all along that paying for college was going to be a stretch. So she and Maggie had focused their hopes on getting a private scholarship. Every year, hundreds of foundations, companies, churches, and community groups offer grants to deserving students. Some are based on need; others are awarded to kids who meet specific criteria. A few big national scholarships, from the likes of Coca-Cola and Regeneron, make large payouts, while scores of local churches and Rotary clubs award a few hundred dollars here and there.
But where to apply? Maggie, like many students, started with websites like Niche and Fastweb, which claim to help kids find scholarships. When she came up empty, Siobhan got involved. She considered paying $700 for an online class, heavily promoted on Facebook, that promised to show parents how to find college scholarships. The free introductory video for the course recommended using a combination of search terms, like “scholarship AND North Carolina AND community service.” Siobhan felt like she had cracked the code. “Oh my God,” she told Maggie. “This is it.” The scholarships were out there; they just needed to look for them in the right way.
Armed with this new knowledge, Siobhan and Maggie attacked the scholarship problem with renewed vigor. They applied for close to 100 scholarships. But in the end, nothing happened. “I didn’t get any of them,” Maggie told me. “I mean as far as I know, since I didn’t hear anything from them. It was a complete waste of time.”
Every year, hundreds of thousands of students like Maggie devote countless hours to the hunt for private scholarships to pay for college. And like her, most end up with nothing to show for their efforts. Mark Kantrowitz, an expert on student financial aid, analyzed federal data and concluded that in the 2019 school year, only 15% of college students received a private grant or scholarship. And the lucky few who hit the private-aid jackpot didn’t come away with much in the way of winnings. The average scholarship, Kantrowitz found, was under $5,000. And 97% of recipients received $2,500 or less.
The high cost of college, coupled with the relatively low levels of aid available to students, has not only created a crisis of affordability — it’s also given birth to an entire industry that dangles money in front of desperate families. Private scholarships have been around for decades, but in olden times students had to go to a public library or the school counseling office to look through a giant book of grants. The modern search industry was created in the 1990s, when the internet made it infinitely easier for students everywhere to grab information from anywhere. Fastweb, for example, began as a relatively small company in 1995, but in 2001 it was bought by the job-search site monster.com‘s parent company for $60 million.
To see what students are dealing with, I took a look at Fastweb, which bills itself as “the leading scholarship database” designed to simplify the scholarship search. “No more digging to find scholarships you qualify for,” the company’s website promises. “Students create a profile and get personalized scholarship recommendations.”
But before I could see what Fastweb had to offer, I was required to create an account with my birthdate, gender, and contact information. That, experts say, is how scholarship sites make money from the supposedly “free” services they provide. “The primary reason these sites exist is to gather data from students and sell names to other companies,” Jeff Levy, an independent education consultant, told me. Sure enough, before I was allowed to begin my search, Fastweb invited me to sign up for several newsletters, download its app, fill out a more complete personal profile, and agree to share my info with colleges so they could reach out to me.
After declining all the offers, I finally got to see my “personalized” list. Great news! There were 57 scholarships worth a grand total of $10.3 million waiting for me to apply!
When I looked at the list, though, things got a lot less exciting. Almost all of that ridiculous total came from an invitation to enter the $10 million Publisher’s Clearing House sweepstakes. No word on whether you’d get your scholarship in the form of a giant check delivered by the ghost of Ed McMahon. The next largest scholarship offered me $100,000 to skip college. The two-year “fellowship” was from the Thiel Foundation, named after the Silicon Valley billionaire Peter Thiel, for students “who want to build new things instead of sitting in a classroom.” No word on whether you’d get your scholarship in the form of a giant check delivered by an AI bot.
Several of the scholarships appeared to employ lottery drawings rather than merit-based competitions. One of the largest offered a $25,000 “No Essay” scholarship, awarded each year by Niche, an educational-ranking website. It was hard not to interpret that offer as a way to lure students off Fastweb’s site and onto another. After those jumbo prizes, the jackpots got much smaller. The majority were for $2,500 or less. One was worth $25.
“The irony is kind of thick, and a bit sad,” said Ron Lieber, a personal finance expert who teaches an online course on how to get merit scholarships. The sites often aren’t of much help to students, he told me, yet they profit by selling the student data they collect to colleges. “Kids think they’re going to get money, while schools that already cannot meet their full financial need pay money for access to those kids, to peddle educations that might not be affordable.”
But hey, every little bit helps, right? Maybe not, thanks to a phenomenon known as scholarship displacement. When a student wins an outside scholarship, many colleges respond by reducing the financial aid they provide the student. If a student receives a $2,000 scholarship from their local Rotary club, say, the college simply slashes its institutional aid to the student by that amount. In effect, they pocket the scholarship the student worked so hard to find.
It’s difficult to know how many colleges displace private scholarships, or how many students are affected by it. In 2013, a small study conducted by the Silicon Valley Community Foundation found that one in five colleges engaged in the practice. Since then, advocates believe, the number has likely gone down, thanks to bans on scholarship displacement in California and other states.
But even when students are allowed to keep the money, they still get little help from private scholarships. To see how much outside grants contribute to financial aid, I analyzed 1,400 schools that report the dollar value of all grants. On average, I found, private scholarships account for only 5% of the aid going to students. At half the schools, it was 3% or less. Even if you’re lucky enough to win an outside scholarship, the payoff won’t make much of a dent in your college bill.
“Basically, it’s a black hole that can waste a bunch of time,” said Dawn Brady, a mother in San Diego whose son tried to find money on one of the scholarship sites to help pay for his freshman year at Lehigh University. “Getting a job and saving money would be a better way to spend your time.”
Despite the small aid and low chances of success, none of the experts I spoke to tell students not to bother looking for private scholarships. “It’s a hard argument to tell students not to apply for scholarships,” said Chris Reeves, a college admissions consultant. “But most of the money is going to come from colleges.” Aisosa Ede-Osifo, a public school counselor in Dallas, gives students a similar message. Given the small sums at stake, she tells them, the scholarship hunt “may not be the most efficient use of your time.”
So what are cash-strapped families to do? For starters, consultants say, spend less time searching for private scholarships and more on the single biggest thing they can do to reduce the cost of college: applying to schools that will be affordable in the first place. What matters most is the total cost of attendance, and how much the school provides in institutional aid. “Yes, you can get some outside scholarships,” Levy tells students. “But you are stepping over dollars to pick up a nickel.” He encourages families to focus their time and energy on building a list of colleges that are more likely to award tens of thousands of dollars in aid to attract students who fit their institution’s profile and priorities. Building this kind of list is not easy, Levy acknowledges, which is why he publishes an annual chart of the merit aid provided by some 500 colleges. To find a good financial fit, students can also consult the Department of Education’s College Scorecard, which lists the actual price families pay by income bracket.
Focusing on institutional aid is what ultimately helped Maggie Beam. Once she got her financial aid offer from Winthrop, she told me, she gave up on outside scholarships and focused her considerable determination on getting more aid from the college. She called the school and submitted an appeal for more aid, which led to another $1,000. And after she and her mother went to campus and shared her final grades with the school’s financial aid officers, she was awarded another $2,000.
In the end, Maggie also benefited from taking a more strategic approach to her scholarship hunt. Rather than relying on websites, experts say, students should reach out to their high school counselor and others in their community. “Start where you have the least competition,” Charlain Bailey, a former guidance counselor who advises private clients, tells families. “Start within your circle.” The people who know you well are much more likely to connect you to an appropriate scholarship than a random search engine. And fewer students are vying for the local grants, which are often offered by churches and civic groups in the area.
That’s what happened to Maggie. In her senior year, she got involved with a local organization called Right Moves for Youth, which provides free mentoring and other support to public school students. In the spring, after Maggie had given up on the scholarship hunt, a mentor at Right Moves told her she should apply for a scholarship from the Schug Foundation, which awards grants of up to $5,000 each year to 100 students from three counties in North Carolina. Maggie filled out the application and interviewed with the foundation’s directors, who were impressed with her commitment to public service. In July, she found out she’d be getting an annual scholarship of $4,000 — renewable for four years. Without the suggestion from the mentor, she told me, she wouldn’t have known about the foundation. She got lucky inside her circle.
Aid advocates are trying to help other, less fortunate students get equally lucky. In an ongoing pilot program at the Common Application, which is used by more than a thousand colleges and a million students, applicants were invited to apply for one of 200 scholarships offered by the Equitable Foundation for low-income students of color who would be the first in their family to attend to college. The first year of the pilot was disappointing. Common App emailed 35,000 students, but only 316 applied for the scholarship and just two received an award. The following year, after getting Equitable to place greater emphasis on students with financial need, the number of award winners increased to 40. And last year, after Common App began contacting eligible students within the portal itself and increased the number of grant providers, the total value of private scholarships students received soared from $350,000 in 2022 to $4.8 million.
With the combination of institutional aid and private scholarship she received, Maggie managed to cut her original college bill from $15,000 to $8,000. “It was meant to happen,” her mother told me — an assessment that downplays the perseverance and luck it required. But a few weeks ago, the family’s fortunes took a turn for the worse: Siobhan was diagnosed with cancer. The illness is treatable, but it’s likely to cost the family $5,000 out of pocket — effectively wiping out the financial value of the private scholarship Maggie received. Even after their relatively rare success in scholarship hunting, Siobhan had no choice but to pay Maggie’s first-semester bill with a credit card. For far too many families, the hunt for affordability never ends.
James S. Murphy is a higher education policy analyst at Education Reform Now. Follow him on Twitter at @James_S_Murphy.
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