Scholarship

The FAFSA Just Opened: Why You Should Apply Now

Posted on by Cecilia Clark

An influx of college financial aid applications this year means that money could run out for students who don’t file early.

Due to financial strain caused by COVID-19, nearly 40% of families that didn’t previously plan to apply for federal financial aid now expect to do so, according to a recently released survey from Discover Student Loans.

The federal government, states, colleges and other organizations use the Free Application for Federal Student Aid, or FAFSA, to award financial aid. You must complete the FAFSA to be considered for financial aid.

You have 21 months to submit the FAFSA for any given academic year. For the 2021-22 school year, the FAFSA opens Oct. 1, 2020, and closes June 30, 2022. But that doesn’t mean you should wait.

“There is no downside to applying early, but a lot of risk in applying late,” says Manny Chagas, vice president and head of marketing and product at Discover Student Loans.

Here’s why you should file the FAFSA now.

Better shot at more free money

The sooner you submit the FAFSA, the greater your chances are of getting free aid you don’t have to repay, such as grants or scholarships.

Federal Pell Grant money likely won’t run out, but other need-based aid, including that awarded through your school and state, is limited and awarded on a first-come, first-served basis. Jack Murphy, financial aid counselor at the University of Northern Iowa, named the Federal Supplemental Educational Opportunity Grant and his school’s tuition assistance grant as examples.

The Federal Work-Study Program also has limited funds, so you’ll want to file the FAFSA early to take advantage of it.

More time to appeal a financial aid decision

Students and parents who are dissatisfied with their aid amounts or have a change in economic circumstances can appeal the financial aid award from their school. To do this, you need to petition your school with a financial aid appeal letter and provide evidence to support your need for more aid. If you wait too long, the aid money could run out.

Those who file the FAFSA early are more likely to receive their school-based financial aid awards with their college acceptance letters. While your federal aid will be the same no matter where you attend college, you can send your FAFSA information to several schools to see which will give you the best school-based aid package. Doing so early will allow you to compare offers and appeal if necessary.

If you apply for the FAFSA late, you not only risk a smaller award to begin with, but you also have less opportunity to “shop around” and submit a successful appeal letter.

A quarter of parents surveyed by Discover Student Loans say they’ll appeal their financial aid decision because of previous award amounts and pandemic-induced changes in family finances. In speaking about the survey, Chagas emphasizes that there tends to be more money available early in the process, so students should make the FAFSA a priority.

Murphy agrees. “Filing early makes sure you’re in the running to receive as many awards as possible,” he says. “We see students that get [aid] one year, but not the next.”

They don’t lose out on aid because they no longer qualify, Murphy explains. They just waited too long.

Cecilia Clark is a writer at NerdWallet. Email: cclark@nerdwallet.com.

The article The FAFSA Just Opened: Why You Should Apply Now originally appeared on NerdWallet.

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Be First in Line for College Aid by Filing the FAFSA Now

Posted on by Anna Helhoski

The fall semester has only just started, but if you rely on financial aid to pay for college, you should get started on next year right now.

Why the time crunch? Submitting the Free Application for Federal Student Aid as close to opening day as possible will increase your chances of getting first-come, first-served federal aid. That includes Pell Grants and work-study, as well as grants and scholarships from your school and state.

That opening day is Oct. 1.

While 97% of families with college-bound students said they planned to submit the FAFSA, only one quarter knew the form becomes available in October, according to a 2019 survey by Discover, which provides private student loans.

You should submit the FAFSA, even if you think your parents make too much money for you to qualify for need-based aid. Submitting the application is also the key to accessing certain scholarships along with federal student loans.

If you’re not sure how to complete the form or need a refresher, here’s what you need to know so you can submit ASAP.

Know where to go

You can complete the FAFSA electronically on the fafsa.gov website or with the MyStudentAid app. But first you’ll need to create a Federal Student Aid ID — a username and password — that you can use to log in and sign both the FAFSA and, later, promissory notes. You can make one on the FAFSA website. If you’re submitting with a parent, they’ll need their own FSA ID, too.

If you don’t want to submit online, you can download a PDF through the FAFSA website or request a paper copy.

Get your documents ready

Completing the FAFSA will go quicker if you already have the documents you need, such as a Social Security card, driver’s license (if you have one), current bank statements and tax information. Use this checklist to prepare.

You don’t need to wait to file taxes before you submit: Parents and students can use “prior-prior year” tax information. That means you should use 2018 tax information for the 2020-21 form. Use the IRS data retrieval tool available with the online FAFSA to import your information from the IRS automatically. You cannot update the application with 2019 tax information after filing, but contact your school if your 2018 tax information no longer reflects your family’s financial situation.

Include colleges you want to apply to

Don’t wait to apply to college before submitting the FAFSA. All you need are the FAFSA codes for up to 10 schools where you plan to apply, which will be available on the online application or on the federal student aid website. If you want to add or change schools after you submit, you can update your application at fafsa.gov.

Remember the deadlines

You only have to apply once, but keep in mind three deadlines: federal, state and school. The deadline to apply for federal aid for the 2020-21 school year is June 30, 2021. Your school and state may have much earlier deadlines. Find out your state’s FAFSA deadline on the student aid website.

What happens after you apply

You’ll receive a Student Aid Report three to five days after submitting electronically with an FSA ID or up to 10 days using paper forms. The report will detail information about your financial aid eligibility. It includes your Expected Family Contribution, which is the estimated amount of money your family can contribute toward your college education.

In the spring, you’ll get your financial aid offer for the upcoming school year. If you’re an incoming freshman, you’ll get offers from the schools that accept you. Accept all free aid before choosing loans. If you’re not sure how much debt you can handle, use an affordability calculator to find out.

The article Be First in Line for College Aid by Filing the FAFSA Now originally appeared on NerdWallet.

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Will a Summer Job Burn Your Financial Aid for College?

Posted on by Ryan Lane

Roughly one-third of teenagers have summer jobs, according to the Pew Research Center. Some of these jobs may make you very familiar with the letters “SPF.” But every working student should know a different abbreviation to avoid getting burned: EFC.

While you may be working to help pay for college, the money you earn could affect the financial aid you receive. Here’s how.

Income and financial aid

Every student who wants federal financial aid must complete the Free Application for Federal Student Aid, or FAFSA. Colleges use this information to calculate how much a student and their family can pay for school. This is known as the expected family contribution, or EFC.

The EFC considers the income and assets of parents and students. In general, those with more money pay more money — and may not qualify for more desirable aid as a result.

“Typically, students with higher EFCs won’t be eligible for need-based money,” says Lauren Brantley, an eAdvisor for the College Advising Corps, a nonprofit organization based in Chapel Hill, North Carolina, that works with low-income, first-generation students.

Need-based aid includes Pell Grants, which you don’t repay, and subsidized federal loans, whose interest the government pays while you’re in school. Schools may also use the FAFSA to determine institutional aid, awarding some scholarships and grants based on financial need.

Student income protection

Penalizing working students may sound unfair, but annual earnings are excluded from the financial aid formula — to a point.

For dependent students, “The FAFSA wipes out any income earned at $6,660 or below,” says MorraLee Keller, director of technical assistance for the National College Access Network, a nonprofit organization in Washington, D.C. If you exceed the maximum, the formula counts half the excess earnings.

For example, say you worked at an ice cream shop earning $10.45 an hour, the median for food service workers according to the Bureau of Labor Statistics. You’d have to work more than 630 hours to hit the income maximum.

That’s not likely over the summer, but you could earn more than $10,600 by working 20 hours a week at that salary for the entire year. In that instance, the FAFSA would ignore $6,600, and $2,000 of the remaining $4,000 would affect your EFC.

It’s tough to say how much need-based aid that $2,000 could cost you — it would depend on your entire financial picture — but Pell Grant amounts and EFC are directly correlated.

Currently, if you attend college full time and have an EFC of $3,000, you’d qualify for a Pell Grant of $3,245, provided the school’s cost of attendance exceeds $6,195. If your EFC increased to $5,000, your grant would decrease to $1,245.

You can estimate this potential effect on your situation with the U.S. Education Department’s FAFSA4Caster.

Details to know

If you make a lot of money, you’ll want to understand the school year those earnings affect because the FAFSA uses income information from two years ago.

“For a student who’s an incoming freshman, calendar year 2017 is what is being taken into account on their FAFSA,” Keller says.

This wrinkle means college students close to graduating who land high-paying jobs or internships would likely finish school before that money counts toward their EFC.

Work-study jobs also don’t count toward the amount of income students can earn. You could make $3,000 from a work-study job and $4,000 from a summer job, but only the latter would go into the EFC calculation — keeping you below $6,660.

These details mean the benefits of working likely outweigh the risks.

“I think that students need to work when they’re in college,” says Jodi Okun, founder of College Financial Aid Advisors, which helps families understand the financial aid process. “It’s going to help them get employed faster.”

Independent students can earn more

Independent students, who don’t provide parent information on the FAFSA, can earn more before affecting their financial aid — $10,360 for single students and up to $16,620 for married students.

However, independent students might easily surpass those limits. They are typically older and may be working their way through school.

Okun advises these students to “do what you need to do, and try to stay away from worrying about income protection.” She says colleges will analyze these students’ situations differently when calculating financial aid.

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The article Will a Summer Job Burn Your Financial Aid for College? originally appeared on NerdWallet.

How Much You’ll Really Pay for That Student Loan

Posted on by Ryan Lane

Those who graduate college with student loans owe close to $30,000 on average, according to the most recent data from the Institute for College Access & Success.

But they’ll likely repay thousands more than that because of interest. One key to limiting interest cost is choosing the right repayment plan. The bottom line? Opting for lower payments will cost you more overall.

Using a tool like the Education Department’s Repayment Estimator can help you better understand potential costs. Here’s how much $30,000 in unsubsidized federal student loans would cost under different plans at the 2019-2020 undergraduate rate of 4.53%.

Standard repayment

  • Total repaid: $37,311
  • Monthly payment: $311
  • Repayment term: 120 months

The standard plan splits loans into 120 equal payments over 10 years. Federal borrowers automatically start repayment under this plan, unless they choose a different option.

Standard repayment adds more than $7,000 to the loan’s balance in this example, but that’s less than most other options.

Barry Coleman, vice president of counseling and education programs for the National Foundation for Credit Counseling, says to stick with the standard plan if payments aren’t more than 10% to 15% of your monthly income.

“The monthly payment would be higher, but in the long run [you] would save more in interest charges,” Coleman says.

Graduated repayment

  • Total repaid: $39,161
  • Monthly payment: $175 to $525
  • Repayment term: 120 months

Graduated plans start with low payments that increase every two years to complete repayment in 10 years. Despite having the same repayment term as the standard plan, graduated repayment costs $1,850 more overall due to additional interest costs.

Cathy Mueller, executive director of Mapping Your Future, a nonprofit located in Sugar Land, Texas, that helps college students manage debt, says graduated repayment may be a good option for those who expect their earnings to increase in the future.

However, those doing well careerwise should try to make the standard plan work because of its lower interest costs.

“It’s not going to be a huge difference, but every penny counts,” she says.

Extended repayment

  • Total repaid: $50,027
  • Monthly payment: $167
  • Repayment term: 300 months

The extended plan stretches repayment to 25 years, with payments either fixed or graduated. Fixed payments add more than $20,000 to the example $30,000 balance; graduated payments would inflate your balance even more.

“[Extended repayment] is not going to be best for a lot of people,” Mueller says. “But it is an option.”

You must owe more than $30,000 in federal student loans to use extended repayment.

Income-driven repayment

  • Total repaid: $37,356
  • Monthly payment: $261 to $454
  • Repayment term: 110 months

The government offers four income-driven repayment plans that base payments on your income and family size.

This example uses the Revised Pay As You Earn plan, a family size of zero and an income of $50,004, based on starting salary estimates from the National Association of Colleges and Employers. It also assumes annual income growth of 5%.

Income-driven repayment costs about the same as standard repayment under these circumstances. But these plans are typically a safeguard for borrowers who can’t afford their loans, as payments can be as small as $0 and balances are forgiven after 20 or 25 years of payments.

Lindsay Ahlman, senior policy analyst for the Institute of College Access & Success, says to think long-term before choosing an income-driven plan, and know you can always switch to income-driven repayment if you hit a rough patch.

“A lot of things are going to happen over the course of repayment — your earnings trajectory, your life decisions like marriage and children — that affect your income-driven payment,” Ahlman says. And while an income-driven plan can reduce monthly payments, you may pay more overall because the repayment period is longer than the standard plan, she says.

Ways to save

Even the least expensive repayment plan could add $7,000 to your loans. If you just graduated and want to shave down that amount, you have options.

Coleman suggests making payments during the six-month grace period and paying off interest before it’s added to your balance when loans enter repayment, if possible.

Other ways to cut costs include letting your servicer automatically deduct payments from your bank account, which can reduce your interest rate, and paying loans twice a month instead of once. You can always prepay student loans without penalty.

This article was written by NerdWallet and was originally published by The Associated Press.

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The article How Much You’ll Really Pay for That Student Loan originally appeared on NerdWallet.

Why Your Financial Aid May Plummet After Freshman Year

Posted on by Ryan Lane

Grants and scholarships are the best ways to pay for college because you don’t have to repay them. But if you chose a college because it offered you the most free money, your final bill may end up bigger than you thought.

More than 72% of college students ages 18 and younger received scholarships, grants or other free money in 2015-16, according to the latest data from the National Center for Education Statistics. For students ages 19 to 23, that percentage is less than 65%.

Here are some reasons your free money may disappear after freshman year and how you can prepare.

Some scholarships aren’t renewable

All of the scholarships listed on your financial aid award letter may not be available to you next year.

For example, some schools award incoming freshmen a one-time scholarship for visiting the college’s campus or interviewing with the school, says Tori Berube, vice president of college planning and community engagement at The NHHEAF Network Organizations, a nonprofit agency based in Concord, New Hampshire.

Other scholarships are renewable if you meet specific requirements. These may include maintaining a particular grade point average, choosing a certain major or following the school’s code of conduct.

Review your scholarships to see which are renewable, and make sure you meet their terms — even if that means doing “handstands in the quad on Tuesdays,” says Berube. You should be able to find this information in your award letter, on the school’s website or by calling the financial aid office.

Financial situations change

Typically, schools aspire to maintain overall awards from year to year, says Stacey MacPhetres, senior director of college finance for College Coach, an educational adviser located in Watertown, Massachusetts. But the types of financial aid within that award may change.

For example, students have higher federal student loan limits after their first year in school. To account for this, a college could replace a grant with a loan of an equal amount for your sophomore year.

“I think a lot of families see that as a pretty significant bait and switch,” says MacPhetres. She believes that is not necessarily the case because the student still receives the same total amount of aid. Still, scholarships and grants are always more desirable than financial aid you have to pay back, like student loans.

Other changes to your financial circumstances could lead to you losing aid altogether. For example, say your older sibling graduates or moves out of your parents’ house while you are enrolled. The financial aid calculation now sees your family as having more available income, which increases the amount you’re expected to pay out of pocket.

When you submit the Free Application for Federal Student Aid, or FAFSA, be aware of changes to your income. If these are one-time events — like your parent taking a stock or a retirement distribution — MacPhetres says you should ask the financial aid office to treat this money as an asset, instead of income. Assets have a smaller impact on your ability to receive financial aid.

Tuition and fees increase

Even if you receive the same amount of aid year after year, it may feel like less because your college’s costs increased. On average, tuition and fees have risen roughly 3% annually over the past 10 years, based on data from the College Board.

Mark Salisbury, the founder of TuitionFit, a website aimed at increasing transparency around college pricing, offers this example: A school with a cost of attendance of $40,000 might offer you a $20,000 scholarship. The cost of attendance then rises each year, while the scholarship doesn’t.

“By the time the student graduates, tuition is $48,000 and they end up having to pay substantially more,” says Salisbury.

Planning ahead is the best way to prevent these additional costs from catching you by surprise. To help predict future tuition and fee increases at your own school, look it up on the College Navigator website.

College is a multiyear investment. If you can’t make the numbers work long term, be honest with yourself. Transferring to a less-expensive college may feel drastic, but it won’t necessarily hurt your education.

“What you do in college matters far more than where you go,” says Salisbury. “Go to a place that is less expensive, and then go in and make the most of it.”

This article was written by NerdWallet and was originally published by The Associated Press.

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The article Why Your Financial Aid May Plummet After Freshman Year originally appeared on NerdWallet.

4 Places to Find Last-Minute Scholarships

Posted on by Anna Helhoski

Only a few weeks — or maybe even days — remain until college campuses reopen, but there may still be time to get a scholarship and reduce the amount of student loans you have to borrow.

Here are four resources to find a scholarship to help pay for college before classes begin.

1. Your college’s financial aid department

last-minute-scholarships-1

Your school’s financial aid office may know about remaining opportunities.

Contact your school’s financial aid department to find out if any institutional scholarships are left. There may be money left behind from a student who decided not to attend. Or a financial aid department may have inside information on available award opportunities.

At the University of San Francisco, Christopher Simpson, associate director of the school’s financial aid and veteran student services, recently heard from an administrator at the East Bay College Fund. The nonprofit couldn’t find a recipient that fit its scholarship’s profile: a student from Southern California attending a school in Northern California and not living on campus.

“By chance, I had a student who I could pass along the resource to,” says Simpson.

2. Your employer or your parents’ employer

last-minute-scholarships-2

Your parents’ employers may sponsor scholarships.

Ask your parents if their employers have scholarships available. One in 10 companies has employer-sponsored scholarship programs for members of their employees’ families, according to the 2018 Survey of Benefits by the Society for Human Resource Management, a trade association.

If you’re working yourself, even part-time, find out if there is a scholarship program for employees.

3. Scholarship search engines and contests

last-minute-scholarships-3

Scholarship search engines and social channels may show late-deadline options.

Find late-deadline scholarships using search engines like the U.S. Department of Labor’s CareerOneStop scholarship finder, College Board Big Future scholarship search tool, Scholarships.com, FastWeb, FinAid and Peterson’s.You can filter by due date or find ones that accept applications year-round. You may also search for scholarships on social channels, using hashtags.

Monthly scholarship contests may pop up on search engines, too. They’re simple to enter and often don’t require an essay. Typically, awards are around $1,000.

Never enter a contest or apply for a scholarship online if you’re required to submit money or private information, like your Social Security number; that may signal a scam.

4. Local organizations

last-minute-scholarships-4

Try local organizations connected to a charity or career that interests you.

Find organizations in your hometown that award scholarships. These tend to be less competitive than national awards because recipients usually must be local. Start by inquiring with your high school’s guidance office or college career center to find community-based scholarships that have gone unclaimed.

“Local organizations often won’t have a recipient, so they’ll extend their deadline and they don’t always advertise that,” says Jennifer Horner, director of financial aid at Eastern Connecticut State University in Windham, Connecticut.

Reach out to community organizations, foundations and charities in your hometown or state to find out if they have scholarships still available. On scholarship search engines, you can usually filter awards by geographic location to find nearby awards.

You can also look for career- or major-related scholarships through professional associations and national student organizations. These may be tougher to get at the eleventh hour, but are still worth a shot.

Get your ducks in a row

To make the late-scholarship-application process easier, polish your resume and have a basic essay template on hand. The template should include information about yourself, why you’re attending school and why you need the money.

“If you can have those things on hand, in your mind or written down somewhere, then in most cases you’ve got most of your essay done and you’re just tying it back to the objective of that particular organization,” says Simpson.

What to do when you get a scholarship

last-minute-scholarships-6Once you get a scholarship, alert your financial aid office, and ask about returning loan money you no longer need to borrow.

Once you receive a scholarship award, contact your school’s financial aid office. Scholarship money is factored into your entire aid package. If you receive more gift aid than your determined financial need, it can impact need-based aid you receive and may even reduce institutional scholarships you’ve already been awarded.

If you have student loans, a scholarship can help you lower how much you need to borrow. Ask your financial aid office about returning loan money that could now be covered by your scholarship.

Make a scholarship plan for next year

Plan ahead to apply for scholarships to pay for the spring semester or the next academic year. Apply for renewable and large-dollar scholarships to reap the biggest benefits. Track upcoming deadlines so you won’t have to scramble for last-minute awards next year.

This article was written by NerdWallet and was originally published by The Associated Press. 

The article 4 Places to Find Last-Minute Scholarships originally appeared on NerdWallet.

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How Acing the PSAT Can Lead to Scholarship Money

Posted on by Rebecca Safier

If you’re like most high schoolers, you probably think of the PSAT as a practice run for the SAT. But this test actually has some pretty high stakes of its own.

In fact, its full name is the PSAT/NMSQT, or National Merit Scholarship Qualifying Test. If you get a top score on the test, you could qualify for a National Merit Scholarship in the amount of $2,500.

Plus, you could be in the running for college-sponsored, corporate-sponsored, or “special” scholarships.

For now, let’s focus on the National Merit Scholarship of $2,500. Here’s what you need to know about winning this scholarship opportunity.

1. Take the PSAT in 11th grade

Before winning a National Merit Scholarship, you’ll need to take the PSAT. Fortunately, you probably don’t have to worry about signing up for the test. Most schools across the country administer the PSAT to students in the fall of their junior year.

That being said, you might ask your school counselor if you can take the PSAT 8/9 or PSAT 10 as a freshman or sophomore. That way, you’ll get a sense of what the test is like and you’ll learn how to perform under testing conditions.

Just keep in mind that only your 11th-grade PSAT scores count toward the National Merit Scholarship. Beyond taking the test as a junior, you also have to meet a few other eligibility requirements set by the National Merit Scholarship Corporation (NMSC).

These include being a U.S. citizen or permanent resident and progressing normally toward graduation. And of course, you have to be one of the top PSAT scorers in the country.

2. Score in the top 1 percent

To stay in the running for a National Merit Scholarship, you have to do extremely well on the PSAT. In fact, you need to score in the top 1 percent of scorers across the country.

So, what is a good PSAT score for the National Merit Scholarship? That all depends on the state you live in, since NMSC compares scores on a state-by-state basis. Plus, it uses its own scoring system called the Selection Index.

To learn your state’s cutoff from previous years, call NMSC at (847) 866-5100. Keep in mind, though, that state cutoffs can change from year to year. A good PSAT score for the National Merit Scholarship in one year might not qualify the next.

Plus, scoring in the top 1 percent doesn’t guarantee you a scholarship. What it does mean is that you could be named a National Merit Semifinalist, a prestigious distinction in its own right. But you’ll have to wait to move from semifinalist to scholarship winner.

3. Wait for a notification letter

If you’ve got your sights set on a National Merit Scholarship, you’ll have to be patient. That’s because you don’t actually find out if you’re a semifinalist until almost a year after you take the PSAT.

Although you’ll take the PSAT in October of your junior year, you won’t hear from NMSC until September of your senior year.

Of the 1.6 million juniors who take the PSAT, 16,000 get a letter saying they became semifinalists. Of this group, 15,000 are invited to apply for the National Merit Scholarship. If you’re one of the invitees, your next step will be to put together a scholarship application.

4. Craft an outstanding application

Your National Merit Scholarship application is similar to a college application. In addition to your PSAT scores, the scholarship committee will look at your:

  • Academic transcript
  • Extracurricular involvement
  • SAT scores
  • A letter of recommendation from a school official
  • Your response to the National Merit essay prompt

Unlike a college application, your recommendation should come from your high school principal. Spend some time getting to know your principal so you can get a thorough and personal letter of recommendation.

Along similar lines, put effort into your National Merit application essay. According to NMSC, both your recommendation and essay can go a long way toward helping you win the scholarship.

After submitting your materials, you’ll find out in the spring of your senior year whether you won the scholarship. Of the 15,000 students who apply, 2,500 win the $2,500 National Merit Scholarship. Plus, an additional 6,200 students win other types of scholarships.

You could also win college or corporate scholarships

The official National Merit Scholarship isn’t the only prize you could win for your high PSAT scores. There are three other types of scholarship prizes for students who rock the PSAT:

  • Corporate-sponsored scholarships: About 230 businesses, including Macy’s, Pfizer, and UPS, partner with NMSC to give out 1,000 scholarships. Each business sets its own criteria and NMSC helps locate students. NMSC might look for children of employees, community residents, or finalists with career plans the company supports.
  • College-sponsored scholarships: Your college could give you a scholarship if you designated it as your first choice on your NMSC application. About 4,000 students win college-sponsored scholarships.
  • Special scholarships: About 1,200 special scholarships go to students who got high scores on the PSAT but didn’t become finalists. NMSC will notify you about applying to a special scholarship, and you might need to submit a separate entry form to be considered.

For full details on how to apply for each type of scholarship, check out the official NMSC website. Whichever award you’ve got your eye on, you’ll need to ensure you earn a top score on the PSAT.

Don’t put too much pressure on winning the National Merit Scholarship

As you can see, the National Merit Scholarship is extremely selective. Plus, applying for it is a long process that spans a year and a half.

Since there’s no guarantee of winning, make sure you’re applying to other scholarships in the meantime. There are tons of scholarship opportunities across the country that could help you pay for college.

You might get a scholarship for your academic achievements or community service work. Or you could find random prizes that reward you for being left-handed or having an unusual hobby.

Make the most of scholarship search engines, and apply for opportunities far and wide. Instead of placing all your eggs in the National Merit Scholarship basket, seek out alternate sources of funding.

That way, you’ll reduce the amount you have to pay for college and, hopefully, avoid taking on too much student debt.

The article How Acing the PSAT Can Lead to Scholarship Money originally appeared on studentloanhero.com.

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Your 5-Step Guide to Writing an Awesome Scholarship Essay

Posted on by Christy Rakoczy

Students in the 2016-17 school year received $125.4 billion in grants to help pay for higher education, according to College Board. If you want to get your hands on some free college funding, you might need to learn how to write a scholarship essay.

To narrow down applicant pools, many scholarships require candidates to write an essay. These essays often carry a lot of weight when deciding who receives a scholarship — you’ll need to write a good one to maximize your chances.

But how can you do that? “Show why you deserve the scholarship through a story that is unique to you,” Andrea Friedlander, a college essay consultant at The Write Angle, advised. “Stories that reveal the person behind the application are powerful and memorable.”

Of course, showing who you are through an essay is easier said than done. To help you out, follow these five tips for writing the best scholarship essay you can.

1. Follow directions regarding the scholarship essay format

One of the quickest ways to lose out on a scholarship is to fail to follow the directions, according to Carol Drummer, an admissions consultant with Accepted. “An example would be ignoring the word count or page limits.”

To make sure you don’t make this easy-to-avoid blunder, read the instructions for the scholarship application and follow them exactly.

Adhering to the guidelines about scholarship essay formatting is important. Eliminating those who don’t comply with the rules is an easy way to narrow down the pool of eligible candidates.

2. Make it memorable

Readers of your essay play a significant part in deciding whether you land the scholarship or not. When they’re considering applicants, you want your name to be first on their minds — which means you want your essay to stick with them.

As the Philadelphia Tribune wrote: “A generic and bland submission, especially one riddled with spelling and grammar errors, is not even worth your time to compose.”

“Make it memorable is my top tip for answering college scholarship essay questions,” Drummer advised. “Open the essay with a story, anecdote, or memory that immediately engages the audience and shines a spotlight on your unique strengths.”

Friedlander echoed Drummer, adding, “You want the reader to relate to you, like you, and remember you.”

Friedlander also suggested telling a story that shows how you think, how you feel, and how you deal with obstacles or problems. “Write about a single incident and use specific details to paint a full and memorable picture,” she said.

3. Skip the platitudes

Your essay is your chance to speak directly to the reader about why you’re the best candidate. You want the essay to be in your voice.

“Don’t write in generalities and platitudes,” advised Friedlander. If your essay sounds like a stock essay that could have been written by anyone, it will quickly be forgotten. “Vague generalities are not memorable; vivid details make an impression.”

But, while you want to paint a picture for the reader, you’ll want to avoid prose that is too fussy. “Use clear, concise and simple phrases or language,” Drummer said. “Stay away from the thesaurus.”

4. Avoid rehashing your application

Essays are just one part of your application — you’ll likely need to provide your resume and academic transcripts, too. Your essay should offer something additional on top of the other credentials you provide.

“Do not use the essay space to repeat information already contained elsewhere in the application,” Friedlander warned. “The essay should be used to enhance the application and provide information about who you are that is not available elsewhere.”

She explained that your essay is a chance to show “how you think, how you deal with problems and obstacles, and what is truly important to you.”

You should also shy away from including long lists of your accomplishments, Reann Ritland, a consultant at Iowa State’s Writing and Media Center, told Iowa State Daily. She indicated this was one of the biggest mistakes she sees applicants make.

5. Proofread and take the time to do it right

Taking the time to write the best essay possible increases your chances of actually getting free money for school.

“Carefully allocate enough time to brainstorm multiple ideas before beginning to write,” Drummer advised. After you’ve narrowed down your ideas to a great topic, she also recommended beginning with an all-inclusive outline before moving on to the draft phase.

After you’ve completed your final draft, you’ll need to proofread carefully. Errors in grammar and spelling are common mistakes that could lead to an application rejection.

To make sure your essay is perfect, check for typos, misused words, or failure to follow the scholarship essay format. Asking someone else to read your essay and provide feedback is also helpful. Friends, parents, and teachers can catch any mistakes you might have missed, as can online tools such as Grammarly or Scribens.

Follow these tips when writing a scholarship essay

Knowing how to write a scholarship essay isn’t that hard if you think about the process as a chance to tell a story about who you are. You can follow this simple checklist to make sure you’ve got the process down.

scholarship essay format

Ideally, the readers will come away feeling like they know you, like you, and want to give you money to help pay to further your education.

The article Your 5-Step Guide to Writing an Awesome Scholarship Essay originally appeared on studentloanhero.com 

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Do You Owe Taxes on Your College Scholarship?

Posted on by Shannon Insler

There’s nothing like your first-ever paycheck to teach you about the reality of taxes. And as we get older, the many ways our money goes to the government become even more apparent.

But what about college scholarships? Surely the money you received to pay for your education can’t be taxed, right? The truth is, it could be.

To find out if this could happen to you, check out the information below and see which rules apply to your college awards and whether your scholarships are taxable income.

Are scholarships taxable? It depends

So, are scholarships taxable income? The answer lies in what type of scholarship you have. Below are the tax implications for college scholarships, as explained by the IRS.

Scholarships covering tuition at an eligible educational institution: not taxable

According to the IRS, an “eligible educational institution” is defined as follows:

  • The main purpose is formal instruction.
  • It regularly maintains a faculty and curriculum.
  • It normally has an enrolled student base where it performs instruction.

Additionally, you must be a candidate for a degree at such an institution. That means your school has to offer the credits necessary to get that degree. That said, schools offering a training program for a “recognized occupation” can also qualify for tax-free scholarships, so it’s best to check with the school in question if you think you fall into this category.

If your school fits this description, then your tuition scholarship isn’t taxable. But the funds need to meet a few other criteria.

If you use your scholarship for expenses other than tuition, such as room and board, it might be taxable. Likewise for payment for services you agree to do for the scholarship, such as teaching or conducting research.

Scholarships covering non-eligible educational institutions: taxable

If you’re thinking of using scholarship money to take classes for fun, you might want to reconsider if you don’t want to pay taxes on your college scholarship.

According to the IRS, “a scholarship or fellowship grant is tax-free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution.”

If not, you’ll have to include your scholarship money on your taxes as income.

Scholarship funds that exceed qualified education expenses: taxable

Room and board can be a pricey part of the college experience, so it might come as a surprise that scholarship or grant funds used for that purpose could be taxable. The same goes for any funds that exceed the cost of your tuition.

Scholarships and grants can have parts that aren’t taxable and parts that are. That’s why you need to know about “qualified education expenses.”

Qualified education expenses include the following:

  • Tuition
  • Fees
  • Course-related required expenses, such as books and supplies

Expenses that aren’t qualified seem to be whatever happens outside the classroom, including room and board and travel. Scholarship funds used for those expenses would be taxable.

Scholarships covering payment for your services: taxable

There are times when a scholarship or grant comes with a stipulation requiring you to work for it — by teaching or conducting research, for example.

In those cases, you’ll most likely have to treat payment for those services as taxable income.

But there are exceptions to this rule.

If your services are being paid for by the National Health Services Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program, then you’re not required to treat that payment as taxable income. The same goes for services paid for in work-learning-service programs, as defined in Section 448(e) of the Higher Education Act of 1965.

Veterans benefits: not taxable

If you’re a veteran, the IRS doesn’t consider funds you get for education or training to be taxable income. That said, the IRS does caution you to be aware of the tax implications of any other grants or scholarships you receive.

You can find out more about education benefits for military members, including student loan forgiveness and repayment programs, via the U.S. Department of Veterans Affairs.

Other scholarships and grants: it depends

What about the other ways you might receive funds for your education? Consider the following:

  • Athletic scholarships
  • Fulbright scholarships
  • Need-based education grants

According to the IRS, all of the above “are tax-free to the extent used for qualified education expenses during the period for which a grant is awarded.”

Are your college scholarships taxable? Here’s what to do

If any or all of your scholarships are taxable, the first thing to do is find out how much of the amount is taxable. You can do so with the help of this worksheet from the IRS.

You can find instructions on how to report the taxable amount on your taxes here. The process differs depending on which tax form you use.

Even if your college scholarships are taxable, avoiding debt is key

If you just found out that your college scholarship could be taxable, you might be feeling a bit frustrated right now. After all, that money is supposed to help you with school, not cost you more money.

There’s good news, however. If you do your taxes properly, it might not cost you much. Here’s an example scenario:

  • You find out that $15,000 of your annual college scholarship is taxable.
  • You work part time and earn $3,000 per year.
  • Add your taxable scholarship money to your annual income, and you have $18,000 of income to report.
  • If you file as a single person in your tax bracket (not that of your parents), this number puts you at a 10 percent tax rate.
  • You’ll owe $1,800 in taxes this year.

Keep in mind that although you can pay these taxes in your own bracket, your parents still can claim you as a dependent (as long as you don’t claim any tax exemptions).

Although $1,800 might sound like a lot, even if you owe that much every year and graduate in four years, then you have to pay only $7,200 in taxes on your scholarship money. Compare that to the average student loan debt, which was $37,172 for the class of 2016.

What’s more, you can sign up for a payment plan on your taxes if you need to — and the interest rates on an IRS payment plan likely won’t be nearly as high as student loan interest rates can be.

In the end, if you take on as little student loan debt as possible, you’ll get a much fresher start after college.

The article Do You Owe Taxes on Your College Scholarship? originally appeared on studentloanhero.

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Banking on an Athletic Scholarship? You May Want to Think Again

Posted on by College Factual

It’s not hard to get caught up in the glamour and excitement of big-time college athletics. And when top athletes are being recruited as early as junior high, many parents see athletics as a way for their child to get college paid for.

The reality, however, is that the odds of earning a fully-paid athletic scholarship are extremely slim. For one, consider that over a third of all colleges with sports teams aren’t allowed to offer athletic scholarships. Here’s a closer look at that reality of college athletic scholarships, and why your best bet as a high school student is to strive for far-more-prevalent academic scholarships.

Long Odds

While there are over 1 million boys playing high school football, there are only about 19,500 college football scholarships.

Take another example: of the over 535,000 boys playing high school basketball, only 3.3% will play NCAA basketball. For girls, it’s only slightly higher – 3.7%.

See more here.

Athletic Scholarships Aren’t What You Think

Full-ride Division I athletic scholarships are offered in only four sports – football, men’s and women’s basketball, and volleyball. That leaves the average athletic scholarship (for all athletes) at about $10,400. If you exclude men’s and women’s basketball, the average falls by nearly another $2,000.

Scholarships Are Divided Up

College coaches routinely split up the scholarships the NCAA allows them to offer. A Division 1 soccer or wrestling coach may be given 10 scholarships of a certain amount, but they have the freedom to further divide those amounts into as many scholarships as they want.

Apply for hundreds of scholarships by filling out one simple form.

Even Division I baseball, which can be a steppingstone for elite players to make it to the professional level, can only offer partial scholarships equaling 11.7 full scholarships. And those needed to be divided among 27 players.

Apply for hundreds of applicable scholarships with one simple form. START HERE

Scholarships Aren’t Guaranteed

Even if you receive a college athletic scholarship, there’s no guarantee that you’ll have it for four years. That’s because college scholarships must be renewed each year and it’s at the coach’s discretion. That puts extra pressure on students to maintain their scholarship while still trying to earn their college degree.

Athletics Won’t Make Up For Poor Grades

The focus on earning a college athletic scholarship can be all-consuming – and at the expense of high school academics. Many parents, in fact, see the possibility of a college scholarship as a legitimate fall-back when their child’s high school GPA drops.

You will rarely receive an athletic scholarship that will overcome poor grades. Students will generally do much better by earning a competitive financial aid package with merit aid.

You Need to Promote Yourself

Unless you’re a superstar high school athlete, college coaches may not even know that you’re out there. Students need to be proactive by emailing coaches at schools you’d like to attend. Forward all of your relevant contact information (including your coach’s contact info), statistics, and anything else you think is relevant about your high school athletic career. Better yet, put together several minutes of YouTube highlights and send coaches that link.

Athletes Can Often Do Better by Earning Merit Aid

If you’re serious about continuing your athletic career after high school, Division III offers the best opportunities. It’s the largest division of schools and players in the country, but its schools don’t offer anything when it comes to athletic scholarships. They can, however, offer merit aid to academically-accomplished student athletes, which places a far greater emphasis on grades and test scores than athletic prowess.

Tips for Athletes

Some students do receive full-ride athletic scholarships and then go on to play professional sports. This is just not a common trajectory for most student athletes. Make a realistic assessment of your strengths and decide what it is you are ultimately going for.

Enjoy your experience as a high school athlete, but don’t let pressure on achieving an athletic scholarship overwhelm you. Keep up your grades, and be proactive in your search by contacting coaches.

Playing sports has many benefits for students and is often considered favorably when applying for internships and jobs (as long as your grades don’t slip). Learning how to balance your athletic commitmentswith studying and a social life can teach you excellent time management skills.

Make sure you’re getting an education at a school where academics are prioritized as well as athletics. Visit our sports rankings to immediately begin discovering colleges sports programs of all divisions where the athletes succeed in the classroom as well as on the field.

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Looking to learn how to get recruited, play college sports and save money in the process?

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The article Banking on an Athletic Scholarship? You May Want to Think Again originally appeared on College Factual.

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