The Free Money
Free money consists of much more than just grants and
scholarships, and knowing all the options may give you an edge in
your ultimate goal: getting someone else to pay for your education.
10 Kinds of Free Money
- 1. Federal grants
- 2. State grants
- 3. Private scholarships
- 4. Institutional scholarships
- 5. Federal scholarships
- 6. Service rewards
- 7. Fellowships
- 8. Tuition waivers
- 9. Housing allowances
- 10. Forgivable loans
The Meaning of “Free”
The financial aid counselors you meet probably won’t use
the term free money—it’s hard to convince a financial aid counselor
that anything is truly free. If you eavesdrop on a financial aid
meeting, you’ll probably hear them talk about gift aid and self-help
aid. Gift aid is money given to you that you don’t have to repay,
such as a grant or scholarship. Self-help aid is money you either
have to repay or earn beforehand, such as loans or college work-study.
Each financial aid office has the right to set a ratio
of gift aid to self-help aid that meets its overall funding and
enrollment goals. After the financial aid officers determine your
need, they will use this ratio to decide how much of your need will
be met by scholarships and how much will be met by less favorable
aid, such as loans.
You should request this ratio from the colleges you’re
applying to. Different schools handle the ratio different ways,
and their methods can make a difference in your aid package. For
example, some schools actually reward students for bringing in private
scholarships by including these as self-help aid. You did earn that scholarship
through hard work, right? Other schools will simply award you more
loans, rather than institutional scholarships, to meet your remaining
The Pell Grant
The Pell Grant, by the Department of Education’s account,
is the foundation upon which the neediest students can build their
dreams of a higher education. In terms of a dollar amount, the main
source of free money available for college is the U.S. government,
and the largest of the free federal programs is the Pell Grant.
In order to receive a Pell Grant, you must be a U.S. citizen
or eligible noncitizen who has not yet earned a bachelor’s or graduate
degree. You are eligible to receive only one Pell Grant per year
and cannot receive Pell Grant funds from more than one school at
How to Apply
The FAFSA serves as the application for the Pell Grant.
You will also need to complete any financial aid applications for
your specific school, though they will not affect the amount of
your grant. The Department of Education creates a list of tables
each year that specifies the Pell Grant amount a student can receive
based on numerous factors, including the student’s EFC, COA, and
enrollment status (full-time, half-time, or less than half-time).
Note: In 2004, the Pell Grant program had
a budget of $12.7 billion. In 2003, over 4 million students applied
for and received Pell Grant assistance, with individual awards averaging
Besides the Pell Grant, the other major federal grant
program is the Supplemental Educational Opportunity Grant (SEOG).
The maximum amount of this grant is similar to the Pell Grant, weighing
in at $4,000.
Unlike the Pell Grant, the SEOG is not an entitlement.
The SEOG is known as a campus-based program, which means that just
because you qualify for a SEOG doesn’t mean you’ll get one. Campus-based
programs are limited, and the criteria for receiving them depend
on each campus’ own guidelines. Some students who are not eligible
to receive a Pell Grant might still receive a full SEOG. However,
when awarding SEOGs, most college financial aid offices give the
greatest priority to students who have the lowest EFCs.
Apply as soon as you possibly can. Most colleges run out
of SEOG money when they process their first batch of applications,
so if you wait until March or April to complete the FAFSA, you’ve
likely already missed the boat.
Keep in mind: Turning in your FAFSA early maximizes your
chances of getting a SEOG, but it doesn’t guarantee you’ll get one.
Since each financial aid office sets its own guidelines for awarding
SEOGs, you should contact the schools where you are applying to
find out how these grants are awarded and what the qualifications
Uncle Sam isn’t the only one concerned about your education.
Each state plus the District of Columbia has a higher education
agency that oversees financial aid programs specific to state residents.
Most of these states offer some pretty enticing reasons for staying
close to home and attending either a public or private college in
your state of residency. In fact, some states offer grants that
can exceed $10,000 per year!
States don’t always do a good job of promoting how much
financial aid they can offer to local students. Texas alone offers
up to $3 billion per year in total financial aid. California and
New Jersey each budget nearly $1 billion for grants, loans, and
While the federal grant programs are based on need, many
state awards are based on a combination of need and merit. Students
who are ineligible for Pell Grants are sometimes very surprised
to discover they’ve won a big pot of cash closer to home. You should
actually be thankful the states don’t know how to advertise their
financial aid—the fewer people who know about this money, the better
your chances of getting it!
Furthermore, each state’s higher education agency may
be found online at www.ed.gov/erod by clicking the “state/territory”
link. These agencies are supported by your tax dollars, so don’t
be afraid to drop them a line and let them know what you need.
In addition, these higher education agencies often sponsor
free financial aid workshops that can give you the inside scoop
on state financial aid programs. Check their Web sites for details
on when and where.
Don’t make the mistake of relying on your high school
guid-ance counselor to know about all the state financial programs.
Even the sharpest guidance counselors sometimes miss the best of
what’s out there simply because state programs can change from year
Just like federal aid, state financial aid requires that
you complete the FAFSA. The priority deadline for completing the
FAFSA varies considerably from state to state, so be forewarned.
For example, Michigan and Rhode Island require that completed FAFSAs
arrive at the financial aid office by March 1. Since processing a
paper FAFSA for the first time can take up to six weeks, this means
that in order to be absolutely sure you’ll meet your state’s financial
aid deadlines, you should complete your paperwork in January.
You can win scholarships for any number of accomplishments,
including athletics, academics, and music. Scholarships are available
for students of certain ethnic backgrounds and for outstanding essays.
In other words, there’s probably a scholarship that will be a perfect
fit for you. In case you forgot . . . scholarships are free money.
You need to know how to find (and get) a scholarship to help pay
for college. You also need to know how scholarships affect your
overall aid package.
Private scholarships, or outside scholarships, can come
from anyone and anywhere for any number of reasons. These are generally
scholarships you pursue on your own, independently of the colleges
you apply to.
Scholarships are always good, right? Not so fast. Most
colleges count private scholarships as gift aid when calculating
your financial aid award. This means that if you receive a scholarship,
you may end up with more loans to cover your remaining need and
fewer institutional scholarships, grants, or work-study. If your
COA is $20,000 and you win a scholarship for $15,000, that means
you can now receive only an additional $5,000 worth of financial
How the financial aid office treats that remaining $5,000
of need may make all the difference in the world, and this is a
very good example of why you should apply to more than one college.
By comparing different award letters, you’ll be able to see which
colleges will use that private scholarship in a way that leaves
you with the least amount of graduation debt.
Institutional scholarships typically come from the college’s
endowment or foundation, and financial aid offices will almost certainly
consider them as gift aid. Though you should still apply for all
the institutional scholarships you can, you might want to ask the
financial aid office how these scholarships will affect your other
financial aid. Each year, countless students are dismayed to find
out that their financial aid award letters are adjusted with higher
loan amounts after they win institutional scholarships. The financial
aid officer will probably give you that look that says, “Stop complaining—you
got a scholarship, after all.” But if you’ve received a similar
award offer from another college with a higher gift aid to self-help
ratio, you can return that look with a choice one of your own.
In addition to private and institutional scholarships,
there are also several federally funded scholarship programs out
there. The Byrd Scholarship (www.ed.gov/programs/iduesbyrd), with
average awards of $1,500, is offered in all 50 states, usually based
on academic or extracurricular merit. Application information is
available through each state’s higher education board or through
your high school guidance counselor. Truman Scholarships (www.truman.gov)
provide $26,000 to 70–80 undergraduate students each year based
on leadership and public-service skills. Truman Scholars are nominated
by the college, so it’s a good excuse to practice those networking
skills as soon as you’ve gotten your bearings on campus.
Note: For some reason, these and other federal
scholarships seem to be the least publicized and least well known
financial aid awards in existence—even some financial aid officers
are unaware of them. An easy place to start your search for federal
scholarships is the Department of Education Web site at www.ed.gov. Simply
type “scholarship” into the search box. They are usually treated
as gift aid, like Pell Grants, but they are much better options
than student loans.
Free Scholarship Search Engines
Is there anything more American than a contest? Even if
you’ve been lax in your studies or lazy on your SATs, a contest
offers you the chance to roll the dice and make the world right
again in one fell swoop. Unfortunately, as your instincts are almost
assuredly telling you, many contests are likely to be set-ups, with
the only real winners being those smart enough not to play. You
should be skeptical of any scholarship contest application you receive,
particularly if there are any fees involved.
Legitimate and Free, Scholarship Contests
- Think you have a great idea for making the world a kinder
place? Try entering the National Peace Essay Contest (www.usip.org).
- Or maybe you don’t see what’s so great about peace, love,
and understanding. In that case, maybe the Principles of War Essay
Contest (www.usni.org) is the way to go.
- Maybe you just want to make the world a greener place.
Voila! The Better Earth Environmental Essay Contest awaits (www.abetterearth.org).
- Did you save all those A+ Civics papers? The National
Endowment for the Humanities is dying to hear your “Idea of America”
- Even better, the Society for Professional Journalists
(www.spj.org ) wants to know, “What does a free media mean to America?”
So send in your essay.
- You can enter the Free Will and Personal Responsibility
Essay Contest (www.intothebest.com), especially since you’ve surely
stayed up countless nights asking yourself, “Would I rather be liked
- Speaking of tough questions: Is your favorite president
Abraham Lincoln? (www.thelincolnforum.org)
- …or John F. Kennedy? (www.jfkcontest.org)
- Are you the one kid in class who really gets Ayn Rand?
There’s a scholarship contest out there for you, too. (www.aynrand.org)
- Maybe, just maybe, the only thing you really understand
is good old-fashioned “duck” tape. It’s good to know that www.ducktapeclub.com
Several states have established memorial scholarships
to assist those affected by national tragedies. Oklahoma has created
a fund to assist those affected by the Oklahoma City bombing. Both
New York and New Jersey offer financial aid specifically for the
victims of the September 11 attacks. New Jersey also offers a scholarship
dedicated to the memory of Dana Christmas, a student who lost her
life helping others in the tragic Seton Hall dorm fire of 2001.
If you are a relative of a police officer, firefighter, or soldier
who died in the line of duty, you may be eligible for similar scholarships
set up by many state higher education boards nationwide.
Many students seeking scholarships fall victim each year
to scholarship fraud. Don’t be one of them! You should be wary of
any solicitations that promise you scholarships or low-interest
loans, even though they might sound like incredible deals. Most
scholarship scams involve asking you to pay up-front fees, “guaranteeing”
that you’ll receive money for college. Legitimate scholarship search
Web sites will never require you to pay a fee for their services,
and, unfortunately, there is never any guarantee that you will win
the scholarship you want.
Five Signs of Potential Fraud
- “Scholarship success guaranteed, or your money back.”
- “You can’t get this information anywhere else.”
- “I just need your credit card number to hold this account.”
- “The scholarship will cost some money.”
- “You’re a finalist (in a contest you never entered) for
the following scholarship. All you need to do is pay the entrant
You can earn free money for school simply by giving a
little of yourself and your time. Service work looks great on a
AmeriCorps offers up to nearly $10,000 in scholarships
for those who perform community service. If you use the AmeriCorps
education award to repay student loans, you don’t have to report
it to the financial aid office, which means it won’t reduce your
other financial aid. Visit www.americorps.org for details.
The Armed Forces
Service in one of the armed forces is a popular choice
for students looking for a lot of free money for college. The amounts
can seem quite high, and advertisements often claim that you’ll
receive up to $50,000 for college. If you explore this option, be
sure to find out exactly how much you’ll actually receive. The amount
will vary considerably based on which type of military service you
choose, how long you sign up for, how long you attend college, and
what kind of degree you decide to pursue.
If you decide that military service is the right choice
for you, find out as soon as possible if the college you want to
attend has a financial aid officer who specializes in Veteran’s
Administration (VA) benefits. This person will be a vital resource,
especially since the impact of VA benefits on your other financial
aid can be extremely complicated.
Students interested in attending a regular college might
also be interested in the Reserve Officers Training Corps (ROTC),
which provides tuition expenses and a $100 monthly stipend. ROTC
requires that participants serve in the armed forces after graduation.
Service academies provide tuition free of charge to students.
These colleges are highly selective and also require five years
of service in the military, but if you’re interested in military
service and gaining a college degree for free, there’s really no
There are four service academies:
- 1. The U.S. Military Academy (West
Point, New York)
- 2. The U.S. Naval Academy (Annapolis, Maryland)
- 3. The U.S. Air Force Academy (Colorado Springs,
- 4. The U.S. Coast Guard Academy (New London, Connecticut)
A fellowship is free money generally in the form of a
stipend that is awarded for a specific project, purpose, or skill,
but it can also be awarded based on need. Though most fellowships
are indeed awarded to graduate students, many fellowships are available
for undergrads as well. In recent years, many community foundations
have changed their former scholarship programs into fellowships.
You are unlikely to find fellowships by searching through
the typical scholarship books or Web sites. More often fellowships
are offered by community-based, nonprofit groups who see the value
of combining their philanthropic giving with educational opportunities.