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Final thoughts on finding college funds

Posted: December 23, 2011 1:30 a.m.
Updated: December 23, 2011 1:30 a.m.

Here we are again, meeting with Heather and her parents. Since last time, several developments have taken place that affect Heather’s financial aid and quest for “free money” to help her pay for college.

Recall that Heather was invited to attend an awards banquet for scholarship finalists. At that event, she received a scholarship for $5,000. Not the top award, but very significant money. Hard work found a payday.

Her parents, however, had different news this week. They have become part of another, too-common scenario for families that we work with.

That is one, or even both, parents find themselves laid off, downsized or underemployed.

Their income has been cut in half. For parents and students in this situation there are federal and state programs that may help them.

According to the National Center for Educational Statistics Federal Pell Grants (need-based grants to low-income families, maximum amount $5,500) are awarded to 27 percent of all undergrads, and the average award is $2,600.

This is money that does not have to be paid back. California has a program called the Cal Grant Program, which grants up to $10,302, depending on the school you attend and other eligibility factors.

Cal Grants are an entitlement program, meaning if you meet the criteria you will receive the grant.

Predictably, California’s fiscal problems are having an impact on this program, resulting in more restrictions on the eligibility of students and institutions to participate.

Financial eligibility for these grants phases out above $50,000 of income.

Federal Supplemental Educational Opportunity Grants are for undergraduates with the greatest financial need. Pell Grant recipients with the lowest EFCs will be the first to get Federal Supplemental Educational Opportunity Grants. Just like Pell

Grants, the federal grants are “free money” and don’t have to be paid back.

Additionally, there are grants such as the TEACH grant and the SMART grants that will provide funds and forgive repayment if you meet certain conditions. More information can be found at

Last, but not least, on our list of sources to find money is the federal government student loan program.

These are not “free money,” as we have been looking at, but they do include subsidized loans for students who qualify based on need.

A subsidized loan is one that does not accrue interest on the money borrowed while you are in school. During your first year, the maximum amount of subsidized loan is $3,500, $4,500 in the second year and $5,500 in third year and beyond, to a maximum of $23,000 in subsidized loans.

Once you have graduated and begin to pay back the loans, the interest will begin to accrue.

Let’s fast forward now to see how Heather’s quest for “free money” has turned out. There’s been great news, not so good news, and good news again.

Great news: She has been offered a full ride to play ball at a Division I school. As we mentioned in the first segment, athletes with great grades are the more recruited because coaches can use other sources of funds to provide a scholarship besides those in their departments.

This also enables them to make commitments beyond the one year to which the NCAA limits athletic scholarships. The not-so-good news: Heather has to return the $5,000 award she received earlier due to NCAA rules.

However, her bad news is someone else’s good news: the runner-up to Heather’s award just found $5,000 of “free money.”

Chris Towles is a consultant to College Bound Strategies LLC and can be reached at (888) 791-9616.


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