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The Reality of Private-Sector Financial Aid

FOR IMMEDIATE RELEASE
August 15, 1996
CONTACT: Mark Kantrowitz
Financial Aid Information Page
1-724-538-4500

Pittsburgh, PA -- Figures reported for the total amount of private-sector aid vary considerably, even among reputable sources that do not have a vested interest in exaggerating the results. Nevertheless, there seems to be some consensus that a total of about $1.25 billion is awarded to 750,000 undergraduate and graduate students from about 3,100 private-sector sources each year, when employee tuition benefits and college-controlled aid are excluded. This represents about 4.0% of the student population.

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Roger Koester, Director of Financial Aid at the Colorado School of Mines, notes that "At the Colorado School of Mines, less than 5% of all financial assistance for undergraduates comes from the private sector. Students receive these scholarships by using their ingenuity, e.g. contacting local organizations such as the Kiwanis or Elks Clubs, pursuing religious or parents' job related affiliations, and working with their high school counselors and reference librarians. In my opinion, it is a mistake for students and families to believe the '$6.6 billion in unclaimed scholarships' myth and pay any organization to do a scholarship search, when they can obtain the same information for free."

Even though private-sector financial aid represents less than 5% of all financial aid, it remains a vital source of funding for many students. Federal student financial aid programs, especially government grant programs, have not kept pace with the increases in college costs. Even university financial aid budgets are severely strained by college costs that grow at twice the inflation rate. It is likely that private-sector funding will play an increasingly important role in helping make higher education possible for many students.

Private-sector scholarships are limited and very competitive, according to Mark Kantrowitz, author of the Financial Aid Information Page on the World-Wide Web. Although Mr. Kantrowitz himself received more than $250,000 in non-need-based aid for his undergraduate and graduate education, he says he is the exception, not the rule. "Most students do not receive scholarships from the private-sector, and will have to rely on funding from federal, state, and university sources." Nevertheless, he encourages students to apply for scholarships because every penny helps. "There are no guarantees that you will win a scholarship, but if you don't apply, you certainly won't receive any money. Look for local scholarships, since these are often the least competitive."

Students should be wary of scholarship search services that claim that money is available regardless of need or ability. Selection criteria are designed to identify the most qualified students, not the least-qualified. Only the best students -- those that demonstrate artistic, athletic, or academic talent -- will win merit scholarships. Moreover, the information provided by fee-based scholarship search services can often be obtained for free, from public libraries, high school guidance counselors, university financial aid offices, and even the World-Wide Web.

RELIABLE DATA FROM UNBIASED SOURCES

According to the 1992-93 National Postsecondary Student Aid Study (NPSAS) conducted by the National Center for Education Statistics at the US Department of Education, only 4.0% of all students received non-employee, non-college-controlled private sector student financial aid during the 1992-93 academic year. The NPSAS surveyed a nationally representative sample of 66,000 undergraduate, graduate, and professional students enrolled at 1,100 public, private, and proprietary institutions of higher education. The study found that a total of $1.217 billion was awarded to 735,487 students, with an average award of $1,655.72. Of this total, $920 million was awarded to 638,974 undergraduate students, with an average award of $1,440.52, and $297 million was awarded to 96,513 graduate and professional students, with an average award of $3,080.46. These figures represent private sector grants from religious, community, civic, fraternal, professional, and philanthropic organizations, and exclude employee tuition benefits and private aid that is awarded by the schools.

The 1992-93 NPSAS also reported that 4.3% of undergraduate students received college-controlled non-need-based grants, with an average grant of $2,530. These grants include athletic scholarships, merit grants, and non-need tuition waivers.

Most student financial aid does not come from the private sector. According to NPSAS data, private sector grants represent only 5.8% of undergraduate grant funds and 2.9% of all undergraduate aid. Private sector grants represent 12.5% of graduate grant funds (6.8% when assistantships and tuition waivers are included) and 3.3% of all graduate aid. In contrast, the federal government provides 65.1% of all undergraduate aid funds (44.1% of grants), state governments provide 8.3% (12.8% of grants), the schools provide 20.0% (35.6% of grants), and private employers 3.5% (1.7% of grants).

The 1995-96 College Board Annual Survey of Colleges surveyed 3,300 public, private, and proprietary institutions of higher education. 1,400 schools responded to a question about private-sector aid, reporting that their students received a total of $973,850,000 from independent sources, including private-sector scholarships and employer tuition assistance programs. This figure is for "pass-through" money, where an independent source picks the student, but writes the check directly to the institution.

The Foundation Center reports in the 15th edition of Foundation Giving (page 74) that private foundations awarded a total of $324,658,000 in student aid funds in 1993. This money was awarded through colleges, and excludes grants paid directly to individuals. Of this total, $157,178,000 was for fellowships, $131,851,000 for scholarships, $25,967,000 for grants, and $9,662,000 for internships.

A tabulation of educational grants to individuals listed in the 1993 edition of the Foundation Center's Foundation Grants to Individuals shows that 1,130 private foundations offered 61,777 awards that are not restricted to use at a particular college or university, for a grand total of $156,892,149. The average number of awards per source was 54.67 and the average award was $2,539.79. These figures are for grants from private foundations and do not include all private-sector sources. These totals also do not include loans and internships.

In March of 1996, the Financial Aid Information Page conducted an informal survey of six prestigious universities. The six schools reported that their undergraduate students had received a total of $193,752,042 in financial aid from all sources during the 1994-95 academic year, including financial aid from federal and state governments and the universities themselves. Of this total, $7,699,342 or roughly 4% came from the private sector. This figure includes financial aid provided by employers.

Data provided by scholarship search databases shows widespread agreement on the number of sources of private scholarships, fellowships, and grants that are not college-controlled. Peterson's database lists 3,170 sources, the FastWeb database lists 3,066 sources, and ARCO's database lists 2,980 sources. There are much greater differences on figures for the average number of awards per source and the average dollar amount per award. Peterson's reports that these sources award a total of 801,143 scholarships, grants, loans, and internships, for an average of 252.73 awards per source. The other databases report somewhat lower figures for the total number of awards, with estimates of the average number of awards per source ranging from a low of 20.52 to a high of 169.13. Peterson's reported an average award amount of $3,183, but this figure counts only the high award amount per source. In contrast, the "Top 40" scholarship sources published in Peterson's Paying Less for College 1996 have an average award amount of $1,860. A random sample of 250 sources in the FastWeb database yielded an average scholarship amount of $2,878. ARCO's database had an average award amount of $1,637.

ALTERNATIVES TO FEE-BASED SEARCH SERVICES

The Financial Aid Information Page lets you search several scholarship and fellowship databases online for free, including FastWeb, a database of more than 180,000 private sector scholarships, fellowships, grants, and loans. David Levy, Director of Financial Aid at the California Institute of Technology, says that the fact that FastWeb is easily accessible through the Financial Aid Information Page makes it very attractive to his students. "Several CalTech students have found FastWeb to be the most comprehensive, accurate, and easy-to-use search currently available. Our students who have used FastWeb have been able to find and attain scholarship funds in a much more expeditious and economical approach."

The information provided by scholarship search services may also be available at no cost in your local public library and the financial aid offices of many schools. Many schools and libraries provide free search services, and maintain large collections of scholarship books. Before using a scholarship book, check the copyright date; books that are more than three years old are likely to be too old to be useful.

Students who insist on using a fee-based scholarship search service should ask the service what database they use. There are thousands of search services, but all of them use one of a handful of national databases. You will get the same results from a service that charges $10 as from a service that charges $179 or more. Anything over $50 for a search is excessive. Most students who use a scholarship search service do not ever win a scholarship.

ABOUT THE FINANCIAL AID INFORMATION PAGE

The Financial Aid Information Page, also known as the FinAid® Page, provides free and unbiased advice about paying for a postsecondary education and serves as an objective guide to student financial aid information on the World-Wide Web. The page is located at the address http://www.finaid.org/ and can be viewed using Web browsers like Netscape, Mosaic, or Lynx.

The FinAid® Page is the central resource for student financial aid information on the Internet, with more than 15,000 people accessing the page every week. According to Lycos, the FinAid® Page is the most popular financial aid page on the World-Wide Web, with more sites linking to it than to any other financial aid page.

The Financial Aid Information page received a four-star rating from Magellan and Yahoo Internet Life, was named one of the top 100 web sites by PC Magazine, won in two categories on the I-Way 500, and was rated among the top 5% of all web pages on the Internet by Point Survey. The page is also listed in GNN's Personal Finance Center. Kiplinger's Personal Finance Magazine called the site "one of the best finds" on the Internet for personal finance resources. Money Magazine said it "provides an excellent general introduction to the aid chase plus a number of electronic extras..." NetGuide Magazine said the Financial Aid Information Page "is probably the best of what the Web offers, with its links to in-depth and helpful information." Internet World said that "this site is exceptional". USA Today called it "one of the most comprehensive sites".

Mark Kantrowitz was named one of six 1995 Pittsburgh Outstanding Citizens by the Pittsburgh Post-Gazette and KDKA-TV for his "exceptional volunteer work" in creating the Financial Aid Information Page. He was awarded the Jefferson Medal from the American Institute for Public Service and a Meritorious Achievement Award from the National Association of Student Financial Aid Administrators.


For media interviews, contact

  • Mark Kantrowitz, FinAid® Page, Inc., 1-724-538-4500,

  • David Levy, Director of Financial Aid, California Institute of Technology, 1-818-395-6280, david_levy@starbase1.caltech.edu

  • Roger Koester, Director of Financial Aid, Colorado School of Mines, 1-303-273-3207 or 1-800-446-9488 x3207, rkoester@mines.edu
 

 
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