What You Need To Know About The Scholarship Process

October 16th, 2007

A majority of the scholarship dollars available are for those students graduating from high school and entering an undergraduate program. Many high schools capitalize on the availability of these scholarship dollars and provide assistance to students and their parents in earning these dollars. It is important to know up front that every high school is different in how they assist parents and students in earning scholarship dollars. Furthermore, every high school is different in what scholarships they attempt to help students earn. Some offer assistance to students only for locally available scholarship dollars that have been awarded at the school before. Others high schools will do everything they can to help students earn every dollar available for scholarships.

In the best case, students will only need to fill out one application for the locally available scholarships that the school awards every year. In this process, the student completes one application and then is compared against the requirements for many different scholarships. This program is beneficial as it streamlines the work students need to do. However, if the school makes an effort to balance the amount of scholarships dollars earned by each student then a particularly high achieving student may not receive all the dollars they would receive in a more competitive process that is not centralized.

Parents and students need to follow up regularly on the scholarship process at the high school on a regular basis. This includes learning when deadlines are, what documents the guidance department at the high school will provide, and what other documents/information the student will need to complete the application process. Scholarship application processes can begin very early – as early as the high school sophomore year.

In addition to providing guidance to students on what scholarships are available, the high school should provide some support in gathering the documents necessary to complete scholarships. These documents include:

* high school transcripts which typically provide the student’s grade point average and the student’s class rank
* PSAT, SAT, and/or ACT scores.
* Listing of awards the student has received
* Listing of activities in which the student has participated including documentation of the number of service hours earned and the activities in which these hours were earned
* Scholarship essays
* Letters of reference for the student
* Financial need statements/Financial Aid Applications (typically the FAFSA is used to demonstrate financial need and guidance offices are the key high school office for assistance with this document)

Note that the guidance department can not create or even gather all of these items. However, they may maintain records that will support you in completing scholarship applications – whether private or high school provided. They may also maintain copies of these items which you create or provide and may be willing to submit them on your behalf for scholarship applications which require only demographic information (name, address, phone) and numerical data (test scores, class rank, financial need.).

After scholarships are awarded
Students who are awarded scholarships should remember that the people and organizations which award these scholarships do so because they feel that it is important to invest in the future – and in the education of those who will lead the way in the future. However, it is appropriate to thank those who provide these awards if you receive one. The guidance department at your school should be able to provide you with sample thank you letters if you have never written such letters before and should also provide you with the names and contact information to which these letters should be sent.

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Saving And Investing For College

June 27th, 2007

At a recent college financial aid session on the campus of a small, private liberal arts college, the financial aid director told a room of parents of nearly 200 students that the primary responsibility of paying more than $30,000 per year in tuition for the next six years of the pharmacy program was theirs. Each of these families was going to have to come up with a means to fund a $180,000 education, not to mention the cost of housing, transportation, books and the necessary incidentals that mark college life. The financial aid director asked how many had the money saved and were ready to handle the burden this would place on their families. A wave of nervous laughter, a sound somewhere between hysterics and despair filled the room.
The financial aid director’s point, is that the burden of funding a college education is that of the child’s parent. While there are many sources of funding that may be available to the student and the parents, there is no guarantee that these sources will be available when your child is ready for college. The only way to guarantee that your child can attend college is to fund it yourself.

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So, how do you fund your child’s education on your own? The most important key is to start early. Many parents elect to start saving for their child’s or childrens’ educations from the day they are born, and some even earlier than that. Every penny you save now, will be one less penny you have to try to come up with when your child gets to college. Keep in mind that your child can save for college as well. Setting aside a separate savings account for your child to deposit earnings from allowance, odd jobs, and formal work experiences is a great idea to introduce them to the concept of financial planning and investment. You might even consider allowing your child the opportunity to invest their money in the stock market or mutual funds using one of the investment programs named below. This is a great (and fun!) way to talk to your kids about finances and savings and start them down a life long path of responsible savings and investment.

If you’ve decided that you want to fund all, or at least a major part, of your child’s education on your own and you want to start saving, there are many options available to you. Let’s take a look at some of those options:

*Savings Accounts: The simplest method to save for your child’s education is using a basic savings account. Keep in mind that this offers a very low rate of return on your money so while you may be contributing to the account, you’re not going to realize the benefits of compound interest and other advantages investing in other types of financial products. The typical savings interest rate is somewhere around 2.5%, whereas money markets and CDs are typically around 5%. Bonds can be as low as 6% and as high as 9%.

*Money Market Accounts, Certificates of Deposits(CDs), and Bonds: In contrast to a savings account, money in these types of investments is often tied up for a bit more time (or in the case of a money market account you have to maintain a certain balance at all times) so if an emergency arises and you have to get to this money you won’t be able to do so as easily. Money Markets and Bonds are fairly liquid, but CDs typically require that you maintain your money in the account for a minimum of six months to a year.

*529 Plans: A 529 plan is a special type of investment account specifically designed to allow for the prepayment of higher education expenses. Many different financial institutions offer 529 plans and your employer may also offer a 529 investment plan to you as a part of your benefits program. Keep in mind that you don’t want to overpay a 529 plan because the money must be spent on qualified higher education expenses at an eligible institution, so it’s important to do your homework up front on these types of plans.

*Stocks and Mutual Funds: If you’re willing to take on a bit more risk for the possibility of a far greater return on investment, then stocks and mutual funds may be good investment decisions for you. If you’re new to the world of investing, consider a program like ShareBuilder (http://www.sharebuilder.com) or the Motley Fool Investment Guide (http://www.fool.com) to get hints and tips on investing safely and intelligently. Stock and Mutual Fund investing can provide the highest returns depending on the amount of research and preparation made prior to investing. You can win big and you can lose big. Index mutual funds are advised for those new to investing.

* Life Insurance: A final basic savings option is to invest in life insurance plans and then borrow against these plans to pay for your child’s education. This offers the added benefit of life insurance protection for your family under these policies.

Remember, if you want to guarantee that your child will have a fully funded education when he or she gets to college, the best advice is to start early. It’s also important that you do not make poor funding choices like borrowing against your own retirement plans. You will need that money long after your child graduates. Your retirement account could be significantly depleted if you use it to fund your child’s education.

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