Wednesday’s Parent: Yikes! Scholarships can be lost

Yikes! Scholarships can be lost. Photo by Wendy David-Gaines

Yikes! Scholarships can be lost. Photo by Wendy David-Gaines

Scholarships can be won but did you know they can be lost? There’s no such thing as a free lunch and this applies to scholarship and grant awards, too. So-called college free money comes with strings attached. When broken, the money either isn’t sent or must be paid back. It’s essential for families to prepare themselves to avoid a nasty financial surprise. Here are four ways to prevent losing scholarships and grants:

Know the strings. Students should carefully read the eligibility requirements for directions when they win. Some awards have strings requiring the winning applicant to do something next like promoting the scholarship or writing a thank you note by a particular deadline before a check is sent. Thanking the sponsor is a good idea even when not required.

Keep the strings intact. Students should know what they must do to keep the grant or scholarship after it’s awarded. The free money may be tied to maintaining a minimum GPA (grade point average), keeping a major, playing an instrument in the band, or being on a sports team. Students must commit to the strings and be sure they have the time and passion to maintain them.

Use the money correctly. The free money may be designated for certain educational expenses only like tuition. Be careful not to spend it on specified non-qualifying costs like food and travel. This may be turn that portion into taxable income according to an article in Huff Post Financial Education.

Buy some time. Things can go south that cut the scholarship and grant strings like injuries and changing interests. The grant or scholarship may have an appeal process or offer a brief extension to give the student a chance to regain compliance.

Don’t bank on free money without knowing and being prepared to follow the strings attached. It’s also a good idea to keep searching and applying. Read the posts under College Costs on my blog for Scholarship Mom Alerts filled with scholarships and important info.

Read Suzanne’s post: Scholarships with Strings Attached

Read more:

Wednesday’s Parent: 4 strings attached to FREE financial aid 

Scholarships, grants, crowdfunding and other college finance self-help 

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Wednesday’s child may be full of woe but Wednesday’s Parent can substitute action for anxiety. Each Wednesday Suzanne Shaffer and I will provide parent tips to get and keep your student on the college track. It’s never too late or too early to start!

The bonus is on the fourth Wednesday of each month when Suzanne and I will host Twitter chat #CampusChat at 9pm ET/6pm PT. We will feature an expert on a topic of interest for parents of the college-bound. 

Wednesday’s Parent will give twice the info and double the blog posts on critical parenting issues by clicking on the link at the end of the article from www.pocsmom.com to http://www.parentscountdowntocollegecoach.com/ and vice versa.

Wednesday’s Parent: 4 strings attached to FREE financial aid

Strings attached to FREE financial aid. Photo by Wendy David-Gaines

Strings attached to FREE financial aid. Photo by Wendy David-Gaines

College-bound families looking for help in paying for college are on the hunt for financial aid but even free money grants and scholarships can have strings attached like loans that must be paid back. Grants and scholarships can come from federal or state governments, colleges, and private outside scholarship sources. Students must be prepared to check out the terms of any awards as carefully as if they are student loans.

FAFSA is the Free Application for Federal Student Aid released every January 1 for the following school year. If your student is attending college for the 2015-2016 school year, now is the time to file FAFSA. Although income and other tax information is required, estimate now and go back to update after submitting tax returns. You may be able to use the IRS Data Retrieval Tool that automatically fills in the numbers from the returns.

When the FAFSA is processed, the federal government applies certain complicated formulas to determine the student and his family’s need for financial aid and the programs they qualify for. The student and the colleges the student selects receive a numerical result called the Expected Family Contribution or EFC. Colleges use this figure and any other financial aid forms they require to calculate awards to admitted students from their own institutional funds. States and private outside scholarship sponsors have their own method of award calculations.

No matter the donor, there can be strings attached to financial aid gifts. Before accepting, students should discover if their awards have conditions and the penalties for failure to meet them. The punitive action may be minor or harsh like forfeiture of future aid or having to pay back financial aid money given.

Here are four string examples:

  1. Make the grade. Students must make Satisfactory Academic Progress (SAP) In order to continue receiving financial aid from many sources including federal and state programs. In other words, students have to make good enough grades. Each school has their own SAP policy so check the college’s website or call the financial aid office to find the minimum GPA (grade point average) that has to be maintained and how often the school will evaluate the student’s progress.
  2. Get enough credit. There is a big difference between college costs for part-time and full-time students and financial aid reflects this. When credits are lost from not completing a class or withdrawal, it could change the student’s attendance status and the eligibility for aid previously awarded.
  3. Keep moving forward. Repeating a class, changing a major, or transferring and losing credits can mess up the momentum toward successfully completing a degree or certificate in the time period that’s acceptable at the college. Financial aid doesn’t last forever. Time limits make college financial aid expire.
  4. Stay put. Some scholarships and grants are awarded based on a student’s interest in an activity or course of study. Dropping out could mean losing the award for no longer playing the tuba in the band, being the quarterback, majoring in physics, being an A-earning student, etc.

Financial aid goes to eligible students only so if student qualifications change, they may no longer be eligible to receive financial aid. Parents can discuss with their student the importance of understanding the strings attached, committing to following them, and dealing with the consequences if they break the strings.

Read Suzanne’s post: “We Won’t Qualify for Financial Aid” 

Read more about financial aid tools and how to make affordable college choices:
Wednesday’s Parent: Formula and tools to calculate college costs
5 financial resolutions the college-bound should make
Money influences college choices from the start

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Wednesday’s child may be full of woe but Wednesday’s Parent can substitute action for anxiety. Each Wednesday Suzanne Shaffer and I will provide parent tips to get and keep your student on the college track. It’s never too late or too early to start!

This month Suzanne and I will host Twitter chat #CampusChat at 9pm ET/6pm PT on Wednesday, January 21. Our guest will be financial aid expert Jodi Okun. She is the founder of College Financial Aid Advisors, an About.com Money Expert, host as @JodiOkun of #CollegeCash twitter chat, and the @Discover Student Loans Brand Ambassador. Jodi has helped thousand of families navigate the financial aid process so you don’t want to miss a chance to get her tips and ask questions.

Read Wednesday’s Parent Night on #CampusChat! for some simple instructions to join a Twitter chat.

Wednesday’s Parent will give twice the info and double the blog posts on critical parenting issues by clicking on the link at the end of the article from www.pocsmom.com to http://www.parentscountdowntocollegecoach.com/ and vice versa.