I want to switch gears for a second to issue a very serious warning about bogus financial aid services.  When it gets ‘down-to-the-wire’ for paying the college bill,  many students and their families will fall prey to ‘private’ scholarship scams.  It happens every year – In fact, the Federal Trade Commission estimates that parents lose more than $100 million to these swindlers per year (that’s $250.00 a day).  And that’s just what gets reported.

If you have a teen at home, you will eventually receive unsolicited offers from companies claiming to have access to  ‘hundreds of millions of dollars in unclaimed college scholarships’ or ‘confirming your eligiibiity for an award, or offering ‘guaranteed’ scholarships,  When you do, RUN!  These offers will look very official — and will seem very tempting, but buried in the fine print is a request for your student’s social security number and a small processing fee to provide you with the information. You should NEVER  reveal personal identity information over the phone and you should NEVER have to pay for this type of  information.  If you want to learn more about what to watch out for or to report abuse, you can go to  http://www.ftc.gov/scholarshipscams

At this time of year especially, I get asked about private money like this every day.  Here’s what I tell people.  First, anyone going down the private scholarship route should realize that they’ll be facing some pretty long odds: in any given year, a scant 6.9%, or about 14.5-to-1 of the undergraduates who apply for private scholarships actually receive anything at all.  In fact, private scholarship money  represents less than  2% of the total that’s available for merit and financial aid (through the government and the colleges themselves).  Common sense dictates you spend your effort and time on getting your share of the other 98%. 

Which leads to my second point… which is… if you begin your college planning process early — when your child is in 10th and 11th grade — you won’t be scrambling for ‘private’ money to pay the bill.  If you plan ahead, you can integrate your student’s admissions plans with your financial needs.  In doing so, you can make sure that your child applies to schools that meet her academic, social and emotional needs and have money to give.  You can make sure he is  positioned at the top 25% of some of those schools and you can re-allocate your non-exempt assets so that your child qualifies for the maximum  merit awards from the college and the most  scholarships and grants offered by the Federal Financial Aid system.  Believe me – this works.  In fact, 82% of students who plan ahead will pay less than the sticker price of the college they attend.

But in case you didn’t start early enough (like 97% of Americans), it won’t hurt to try and find additional sources of money for college, so long as you follow these safe guidelines.

1. Start with a FREE, reputable online scholarship search like www.fastweb.com or www.meritaid.com.  Buy or borrow a scholarship book that is less than one year old.

2.  Check with your, your spouses and even your parents’ employers.  Many have scholarships that nobody knows about because they’ve never asked and never been aggressively marketed.

3. If you are at least 1/16th Native American, check with the Bureau of Indian Affairs.  They often have substantial scholarships available for those who qualify.

4.  Since you don’t have unlimited time, increase your odds and apply wisely.  Look for criteria that match up well with your student.  DO NOT apply for scholarships that ‘everyone’ can apply for or that aren’t worth much money to begin with. 

5. DO NOT apply for any scholarships that your student can’t qualify for – in this case, close does not cut it.  If the minimum GPA is a 4.65, don’t apply with a 4.6 and hope for the best.

I don’t want to sound like a broken record (now I’ve dated myself), but the best defense against scams and needing private money at all, is  begin college funding planning when your student is in 10th and 11th grade, the same time that they are beginning their admissions preparation.  I cover this as well as many late-stage safe funding strategies to reduce your out-of-pocket college expenses in my College Funding Classes.  To learn more or to register, visit www.LearnCollegeFunding.com.

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