YesLetter: Scholarships and Financial Aid: Articles

Hiding Your Money (Legally, of Course)

By Louis

Scholarships are the ultimate insult to high school seniors. First, you spend the first half of your school year waist deep in applications, activities and school work. Then, after you’ve accomplished the impossible and gotten into your school, you have to assemble another wave of applications, activity lists, and essays for scholarships. Unfortunately, many people don’t realize that scholarships are often a waste of time and money – and that’s where I come in.

Take “Kingsley College,” as an imaginary example. Initially, Kingsley gives you $5,000 in grants and loans. Later, you get $1,000 in scholarships, you report it, and Kingsley applies its “formula.” So, if you’re getting $5,000 in grants and loans and you get $1,000 in scholarships ($5,000 + $1,000 = $6,000, for those who are mathematically disinclined), you get a totally of $5,000 in financial aid. Wait – where’d the $1,000 go? Kingsley takes off your scholarships from its grant; they figure that their initial calculation took into account all the money you might need, and so if you get money from other sources, they should be able to take their money back. After all, you can handle the rest, or else they would have made their initial loan/grant larger. Riiiiight. The moral of the financial aid story is that most colleges display exceptionally minimal generosity whenever possible.

It’s fully possible that the schools you’re looking at don’t adopt this diabolical doctrine, or that your schools don’t give grants. (If the school only gives loans, a scholarship does indeed help – you end up paying back less money after you graduate.) Make it a point to find out, or even better, make your parents do the research. After all, in most cases, they’re the ones who are going to take the ultimate financial hit. Make sure to know each school’s financial aid policy inside and out – look specifically for loopholes that might let you keep scholarships, and question financial aid officers closely during any information sessions. If you find that your school is more generous than “Kingsley” is, skip to the paragraph that begins, “Your Mom! (and Dad) should know certain things about financial aid as well.” Otherwise, read on.

What I am about to say will make you feel like you just had a full body Swedish massage (I think): Forget about applying for a plethora of scholarships. Go for the ones you know you can get – meaning, do not apply for 20 national or international scholarships, unless you are a legitimate academic and/or extracurricular deity, which does not describe most of us. Instead, apply for the French Club scholarship if you were French Club President, or apply for the scholar-athlete scholarship if you captained three teams your senior year. It’s also beneficial to go for scholarships with big names – for instance, Robert C. Byrd, William Bloustein, National Merit, or National Honors Society scholarships. While these generally go right to the school, they look great on resumes, so they’re worth the effort.

Before applying, find out if the check is going to be made out to you or the University; if it’s the latter, consider abstaining from applying. Despite the fact that you might have deserved the scholarship, if the check is made out to your university and said university just subtracts the amount from your financial aid package, you’ve prevented one of your peers from actually getting to use the scholarship (assuming that not all colleges are financial aid as- I mean, assuming they’re not all asinine). Furthermore, keep in mind that there is nothing immoral about “pocketing” scholarship checks. It’s all eventually going to go into the tuition coffers anyway, or at least into the purchase of books or travel expenses or gum that you’ll chew in class.

Technically, it doesn’t hurt you to apply for and win all the scholarships you can. If you don’t mind that your college will take your money and save its own, then go right ahead with the extra work. That said, I fought my parents tooth and nail over the number of scholarships for which I should I apply, and I’m glad I didn’t go overboard, especially since my father was a stickler and made me report everything – even checks made out in my name – to the university. Speaking of parents . . .

Your Mom! (and Dad) should know certain things about financial aid as well. (I swear, that sentence was not just an excuse to say “Your Mom!”) One of the best moves my parents made during my application process was to call on the services of a Financial Aid Counselor (FAC). This is basically a person who gets paid to tell you how to hide your money, all legally, of course. Here’s how it works: each college, when determining your financial aid package, applies various familial economic indicators to a formula. In plain English, they look at your tax returns and bank accounts and decide on the maximum amount of money they can squeeze out of you. If NYU sees that you have exactly $42,000 in the bank, then you will most definitely get no financial aid your first year there. Enter the FAC – he’ll take your $42,000, hide some of it in retirement accounts, give some of it to “charity” (grandparents count as charity cases, right?), and otherwise perform death defying magic tricks to make it appear that you have much less money than you actually do. The end result is breath taking – suddenly, someone who is borderline-financial aid-worthy gets $10,000 for the first year. In my opinion, these FACs have succeeded in putting a price – albeit an extremely affordable price – on some priceless advice.

It all balances out – the $500 or so that you shell out for an FAC brings you returns in the thousands. Now, your parents can afford to send you to college, and your sister can get that annoyingness-removing surgery, and you get a new car to boot. How sweet is that? But seriously, the FAC strategy is worth trying out. And like most other things, the earlier you apply it, the better. My parents lamented not calling our FAC sooner, because with the limited amount of time we gave him (around 8 months) he wasn’t able to pull out all the stops. If we had contacted him freshman year rather than junior year, he could have saved us another $10,000. Alas, the bittersweet wisdom of hindsight . . .

Consider the alternative. Without an FAC, after your college applies its formula, you could be stricken with (gasp!) an on-campus job, or be forced to (double gasp!) contribute excessive summer earnings. Of course, if you’re incredibly loaded, even an FAC probably won’t do you any good, but then again, if you’re incredibly loaded, what good do you need done? Go read an article about getting in . . . geez. For everyone else, you can find ads for FACs in the “Financial” section of your local yellow pages. As with everything, you can also find FACs online – just search for “Financial Aid Counselors.”

So kids, you know what to do. Take all that pressure your parents are putting on you and sock it right back to them – give them deadlines for hiring an FAC, filling out all his paperwork, and most importantly, getting the final paperwork in to your school. And remember: the more money they save before you get in, the less pressure there will be for you to apply for scholarships that you may not be able to use. Read my lips (text, in this case): no new scholarships. Hide your money instead!! (Always legally, of course).