How do Scholarships Work?

What is a scholarship?

Scholarships as well as grants, are ways to pay for college that you do not have to pay back. There are two common types of scholarships. Merit scholarships are awarded based on academic achievement or extracurricular activities. The second are need-based scholarships and grants, which are awarded based on financial need. Need is determined by the school’s cost of attendance and the amount the family is expected to pay for education expenses using family income and assets. By taking the time to understand scholarships better, you are well on your way to bridging the gap between the cost of college and the money you have available to pay for college.

Why are scholarships important?

The more money awarded through scholarships means less out of your pocket. If a student is awarded a $1,000 book scholarship, that’s a $1,000 burden removed simply by filling out an application.

Scholarships are a way to reduce student loan debt. If you do not have enough grants, scholarships, and savings to cover the cost of college, you may need to borrow money. Student loans have terms of repayment and charge interest on the money owed which really adds up over time. Avoid borrowing money by finding scholarships…free money that you do not have to pay back.

How to find scholarships?

Many scholarships require specific qualifications and are offered by many different organizations - schools, businesses, individuals, nonprofits, communities, and social organizations. Here are some ways to find college scholarships:

• Use the U.S. Department of Labor’s Scholarships Search Tool
• Check with the high school’s guidance office
• Look for industry organizations related to a specific field of study
• Make connections locally at community organizations, businesses, religious organizations or civic groups.
• Ask about scholarships sponsored by a family member’s employer
• Search for scholarships at the college or university. Talk to the school’s financial aid office to get information about scholarships and grants.
• Finding scholarships is a move in the right direction. Once you find them, the next step is completing applications.

How to apply for scholarships?

Scholarships are oftentimes awarded after an application process. Over two million students have missed out on this free money simply by not applying.

To be eligible for most federal, state or institutional scholarships, you must complete the FAFSA (Free Application for Federal Student Aid). The FAFSA is used to determine the eligibility for need-based scholarships and grants for each attendee as it is through the FAFSA that the amount the family is expected to pay for education expenses is determined. Many colleges require completion of the FAFSA to be eligible for scholarships. So, no matter what, complete the FAFSA.

Some colleges require the completion of a common scholarship application form. This application may be used to determine which scholarships a student qualifies for whether that’s need-based or merit. 

Whether you find the application form on the college website or someplace else, you may be asked for an essay, references, recommendation letters, and transcripts. Don’t wait until the last minute, because it can take a little while to pull together all of the documents you need.

If a scholarship application asks for an essay, set humility aside–it’s time to be confident. While boasting about your best accomplishments may feel uncomfortable, those reviewing the scholarship applications will only know what’s on the essay submission. Don’t undersell your achievements.

Once the application documents are ready, which require some time proofreading and editing everything, submit all application materials by the deadline. Some scholarships have deadlines more than a year in advance. With this in mind, make a list of potential scholarships as early as 18 months BEFORE the planned start date of college. Look into how to apply, the documents required for the application, and the deadline. Applying early is a sure way to meet deadlines. 

Think of applying for scholarships as the best-paying part-time job. If you set aside 10 hours to work on scholarship applications and you receive one $1,000 scholarship, you just made $100/hour.

Now that you have a better understanding about how scholarships work, it’s time to get to work! Cast a wide net to find scholarships and apply before the deadlines. In 2022, a high school senior made the news for receiving $1.3 million in scholarship offers. There are a million good reasons to make time to apply for free money!