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Grants and scholarships are the best form of financial aid, because they do not have to be paid back. (The terminology can get a little confusing. The term "grants" usually, but not always, refers to need-based awards. The term "scholarships" usually refers to awards that are not tied strictly to financial need.) Most of this gift money comes from the federal government through the Pell Grant program. The states, as well as schools themselves, also provide significant amounts of both grants and scholarships.
Private scholarships are another source of education funding. A study by the Institute for Higher Education Policy estimates that scholarships from foundations, corporations, research centers, individuals, and other private sources totaled between $3.1 billion and $3.4 billion in 2003-2004, accounting for about 7 percent of grant-based aid and 2-3 percent of all student aid.* Approximately 7 percent of undergraduate students received private scholarships with an average value of $1,982.** The average amount for professional and graduate students was even higher.
While small in comparison to other grant sources, private scholarships are a critical piece of the college financing puzzle for many families. You may find it well worth the effort to seek out and apply for private scholarships. Your local library will have books offering information about private scholarships, and a number of scholarship "search" services can be found on the Internet. A couple of the best free search websites are:
The Federal Trade Commission advises that you beware of scholarship scams. Services that "guarantee" money for college in exchange for an upfront fee can be rip-offs. Read the FTC's consumer alert HERE before paying for such a service.
**National Center for Education Statistics, National Postsecondary Student Aid Study 2003-2004