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The 3 Biggest Sources of Free Money for College


It’s an easy mistake.

You’re bouncing around the internet, wildly searching for assurance that college is NOT going to be as expensive as you think it might be.

You’ve heard (time and again) about the awesome scholarships your neighbor, niece, cousin’s kid or  ____fill in the blank___ got for college.

And maybe your first few Google searches have turned up listings for scholarships from companies, service groups, and charities.

So, you’re thinking that your first move should be to get your child filling out forms and writing essays to try to snag scholarships from one of these organizations.

Here’s the thing…

Like so many parents, you believe the biggest source of free money (money that does NOT need to be paid back)  is from these outside scholarships (given from sources outside of the government or the college itself).

Problem is, it just ain’t so.

And that false belief leads students to spend a ton of time and energy seeking, and applying for, puny scholarships.

The truth is…


The time & energy sunk into chasing outside scholarships usually isn’t the best use of a student’s time.

Why?  Because a lot more free money for college goes to students from other sources... and usually in much larger amounts. 


There are many names for free money.

Let me explain….

  • A GRANT is money that does not have to be paid back (aka, it’s free money).

Depending on what they choose to call it, a grant from a college  (either public or private) might also be called:

- gift-aid

- merit aid

- an institutional scholarship

- a tuition discount, or

- just plain scholarship.

When the state or federal government gives grants for college they tend to just call them ‘grants’.

You can see why things can get confusing.

Whatever they are called, grants for college can come from federal and state governments AND from individual colleges (stay with me, this is important).

Some grants are dependent on demonstrating financial need (for instance, almost all grants from the government)...

...and some grants are based on merit (most commonly, academic merit) and have nothing to do with financial need.

Even the child of super-wealthy parents could receive a merit scholarship. 

And then there are...


Like grants, outside scholarships are also free money.  They are given by a source other than the government or a college -- outside of them. These are the grants that come from companies, service groups, charities.

With those definitions behind us, let’s take a look at who gives the largest amount of scholarship money.



Here’s are the 3 main sources of free money given to  help students get through college (nationwide):

1. Federal & state governments (combined) provide approx. 55%  

2. Colleges themselves (both public & private) provide approx. 35%

3. Outside scholarships provide approx. 10%

What I want you to see are the percents up there…

...outside scholarships  are the LEAST significant source of free money for college.

In fact, in 2017, the average amount of an outside scholarship was…

  • just under $4,000 per student, and…
  • only about 12% of college students won a private scholarship.

That’s not a lot of money going to not a lot of students.



So what is the biggest source of free money for college students?

Federal and state governments give the most money overall.  This money is given to those who have shown they need financial help to attend college.

The vast majority of this federal money is awarded through the Pell Grant program. The maximum Pell Grant award for the 2018-2019 school year is $6,095.

According to federal statistics, 92% of Pell Grant recipients have household adjusted gross incomes of under $50,000. To get the full Pell Grant (the entire $6,095) the family’s annual  income is usually closer to $30,000.

States give grants as well. Almost every state education agency has at least one grant or scholarship program available to state residents and the average awards vary dramatically.

You can see from the above numbers that while federal and state governments give the most money overall (making the government the largest provider of free money for college)  -- the per student dollar amounts are quite small.

That is, the government gives the most money out overall, but in small amounts, spread across lots of people.

Now this is where things get a little more interesting.

What a lot of families don’t know is...

Private colleges usually give larger amounts of free money to students than do public ones. 

Private colleges don't give as many students money – but when they do, the dollar amount per student is often quite high.  Of course, their sticker prices are higher, too.


The thing is... is often very possible to get enough grant monies to make a private school price tag close to (and sometimes even less) than a public school. 

And, you don’t have to be financially needy to earn grants (remember, grants are free money) from colleges.

These grants come from the college’s own monies and they are free to give them to whoever they want. They can…

  • give free money to families with financial need…
  • give free money to families without financial need, and  they can…
  • give free money in whatever amounts they want.

Remember that the average size of an outside scholarship was just under $4,000 (and went to only 12% of students)?

In contrast...

...In 2018 the average grant amount from a private college was:

  • $18,798 per student, PER YEAR,* and…
  • 88.7 percent of freshmen (at private colleges) received a scholarship.*

And not only that…

These grants were awarded for 4 years,  making the average grant from a private college approx. $75,000.

And it gets even better . . .

Grants given by colleges are usually awarded, and renewed, automatically.

This means that no separate applications and no extra essays are required to get these grants.  


Average outside scholarship =  approx. $4,000 and is usually given for just one year of college


Average grant from a private college   = approx. $18,800 given for 4 years = $75,000


Why do private colleges give large scholarships?

In a word: competition.

Competition for students with strong academic profiles (relative to each  individual college).

Competition for students with high test scores and GPAs.

Competition for students over-all (to help fill seats and meet enrollment numbers).

Unfortunately, competition is often driven by rankings (such as the highly controversial US News and World Reports rankings).

Competition means that most colleges discount their school’s sticker price with their own grants. But...

…you need to know what TYPE of grant you might be eligible for.


Most colleges give 2  types of grants:

  • Need-Based Grants - which are based on your family’s level of demonstrated financial need and the colleges level of generosity.
  • Non-Need-Based Grants -  (these are the grants that go by many different names: merit aid/institutional scholarship/tuition discount/or just plain ‘scholarship’)

Non-need based grants are largely influenced by two main factors: your GPA and your SAT/ACT test scores (relative to that  schools typical incoming freshman class).

It's important to know that colleges have different policies on the type of grants they give and that their levels of generosity in giving it vary considerably.  

But know this -  you do not need to be a straight A student with perfect scores to get aid at most schools.


Where to put your time and energy for the biggest return on investment

Since the largest scholarships come from colleges themselves, it’s crucial to focus your college search on schools that are most likely to give YOUR student a grant. 

For starters, you'll need to determine whether you're most likely to get the most money from need based or non-need based aid. 

The place to start is knowing your Expected Family Contribution (EFC).

Your EFC is the dollar amount that your family will be expected to pay for one year of college, at a minimum. 

Knowing your family’s EFC is the starting point to deciding on which colleges to apply to (at least for families who hope to cut the cost of college).

Your EFC will tell you whether you should look for colleges that will give you need-based or non-need based grants (or both).

You can download a free worksheet to learn how to figure out your EFC here.


Bottom line…

The colleges you choose to apply to can make the biggest difference in the price you pay. 

If cost is a factor in your college decisions, as it is for most of us, you don’t want to create a list of colleges to apply to before you know your EFC.

This doesn't mean you shouldn’t apply for outside scholarships, they can be a part of your strategy. But you’re not likely to net  as much as you would from a well-researched list of colleges.


Takeaway - The biggest scholarship you may earn is likely to come from the college itself.

To score big you need to know:

1. What type of aid you should focus your attention on  (need vs non-need) and…

2. The type AND the average grant amount given by the colleges you’re looking.

Knowing the first and researching the second are key factors in strategizing for affordability.  

In more ways than one, doing your homework pays off!

Click here and I'll walk you through exactly how to find out what type of aid makes most sense for you to target.

 Always in your corner,




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