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This is the second in a series of articles examining the impact the high cost of college and the student loan crisis are having on families. RSC Your College Prep Expert is dedicated to making college affordable to all families. See how we do it here.
Jeremy’s family was counting on scholarships and some good grant money to meet their son’s $55,000-a-year tuition at one of New York’s top private colleges. First, the good news: That private school offered him a remarkable $12,000 scholarship (the good kind; see below)*. Now, the bad news: even with his grant money, he was still $19,000 short on tuition.
Many families pin their hopes on scholarships, particularly full-ride scholarships that pay for everything. Maybe they have a good student like Jeremy, but counting on scholarships makes for poor financial planning.
Facts on Scholarships
· Only 6% of college students receive any kind of scholarship.
· Only 0.003% of scholarships are “full ride.” That’s 3 in every 1,000 scholarships.
· Given those statistics, out of the more than 14,000,000 college students in the United States, only 860,000 receive scholarships and only 2,500 receive full scholarships.
Those aren’t good odds. Fortunately, Jeremy is among the 6%, but his chances of a scholarship paying any more of his education are slim.
*It’s even more unlikely that a scholarship actually benefits you. Jeremy got a scholarship directly from the university, which counts toward his tuition. However, many students receive outside scholarships, which most colleges don’t put toward your tuition. They simply subtract that same amount from money they were already planning to give you, freeing up additional money for another student.
Let’s say the college was planning on giving you $5,000 in financial aid because that’s what officials think you deserve. You then get a $1,000 scholarship. Rather than giving you $6,000, the college still gives you $5,000 – because that’s what they think you deserve. Your scholarship gets applied, but officials remove $1,000 in grant money and award it to a student who needs additional help.
Facts on Student Loans
The university that accepted him suggested an additional $7,500 in loans (both subsidized and unsubsidized Stafford loans, as well as others), which over four years is $30,000 he’ll have to pay back. That prospect is daunting, too.
· Student loans are routinely suggested in financial aid packages (unlike scholarships)
· 35% of undergraduates take out Stafford Loans. 70% of them take out both subsidized and unsubsidized loans.
· In 1999, students borrowed $15.7 billion; in 2009, they borrowed $44.2 billion.
· 44% of need-based aid – provided to lower- and middle-income families -- is student loans.
Jeremy and his parents could take some comfort that his student loan total is actually $8,000 less than what the typical high-school senior today can expect to pay when he or she graduates, but it didn’t make up for the fact that they were hoping to get more money in gift aid.
The impact student loans can have on college graduates can be devastating. It affects their credit scores, ability to leave home, buy a house, buy a car – even meet life’s everyday expenses.
· 320,000 grads default every year.
· Between 2006-2011, only 37% of student loan borrowers made payments without interruption.
· College dropouts are four times more likely to default on loans than graduates.
· 30% of students who take out loans drop out of college.
Jeremy’s parents aren’t worried that he’ll drop out of college because of his studies. He’s gotten good grades in tough classes and can handle the college workload, but if it gets too expensive, they worry he’ll take a year or two off, or quit altogether. Will the debt he has to carry simply make college unaffordable?
Student loan worries drive tends of thousands of students out of college every year. Jeremy’s parents don’t want to see that derail their son’s plans.
The good news is that Jeremy has been working with a private college prep expert who knew several ways to get Jeremy more financial aid – without searching for scholarships.
Private Guidance Counselors and Financial Aid
Jeremy’s family signed him up for the RSC program, which let him develop a college resumé years in advance. He was able to pick the right high-school classes, boost his SAT scores and map out his extracurricular activities. The program also pointed out which colleges were likely to give him the best financial aid. Jeremy’s resume, hard work and college prep plans led the university to give him that scholarship money.
Then, Jeremy’s family let a college prep expert – someone versed in financial aid paperwork – fill out all his need-based forms, including the FAFSA and New York State TAP. Updating his Student Aid Report proved essential in helping him get more aid.
Finally, RSC’s financial aid experts walked Jeremy and his family through the appeals process. That pricey private college that was first on his list offered him more grant money, enough to keep his unmet need well below the national average.
Jeremy’s diligence and RSC’s experience helped him become one of the 6% who receive college scholarships, but 94% of students don’t. The system seems to encourage people to bet against the odds in paying for college – and that’s part of the reason college students and graduates are so deep in debt.
RSC’s program helped Jeremy get both merit-based and need-based aid with fewer student loans than many of his classmates. His approach proved to be a lot better than to rely on a scholarship – particularly a full-ride scholarship.
This fall, Jeremy will be a freshman at Syracuse University. We wish him the best!
Build a college prep and financial aid plan with an experienced college prep expert. RSC helps you succeed!
Enroll today, or call 800-898-4636 to find out more about how RSC’s program to help you navigate through the financial aid system!
Next Monday: The Impact of Student Loans & High Tuition on Today’s College Graduates
Click to read Part One of this series: What Families Face: The Staggering Cost of College.
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