A guest post by Michelle Kretzschmar of DIYCollegeRankings.com.

If you’re looking for scholarships to pay for college, it’s time to stop playing with duck tape and start looking at colleges. Why? Because students are likely to receive their largest scholarship from the colleges they actually attend. After the federal government, institutions are the largest provider of financial aid to students.

In fact, colleges provide the largest amount of scholarships to individual students. This includes both need-based and merit-based awards. According the National Center for Education Statistics,  public doctorate-granting institutions provide an average of $4,500 to 25.3% of students while private schools provide an average of $14,100 to 57.9% of students. That’s more than the $500 from the local Kiwanis club.

Not that $500 isn’t useful when  having to buy books for the semester. But when you’re looking at paying $40,000 to $50,000 a year for a private school, you’ll need a lot of $500 scholarships to make a dent in the tuition bill.

Ultimately, colleges use scholarships to convince students to attend their institution. They may decide to award the money in the form of need-based grants to allow more economically disadvantaged students to attend college.  Or they may choose to use their resources in the form of merit aid to attract students with specific qualifications to improve their stature and rankings. In either case, this can mean significant scholarships for the right students.

The key is to identify schools where you would be considered the right student. And guess what, it’s not going to be schools in the top of the US News College Rankings. After all, they really don’t have to worry about attracting students, do they?

But there are plenty of quality colleges out there that provide generous institutional aid to good students. And I do mean “good” and not “great.”  It doesn’t take straight A’s or perfect test scores to qualify for merit aid. Furthermore, scholarships from colleges are almost always for four years assuming you maintain a minimum GPA.

According to the Integrated Post-secondary Education Data System (IPEDS), there are 248 schools where 50% or more of freshman receive an average of $15,000 or more in institutional grants. At 178 of these schools, 80% or more of freshman receive an average $15,000 or greater in institutional grants. Of these schools, 170 admit 40% or more of their students and 132 have graduation rates of 49% or better.

I suspect most students could find at least one or two tolerable schools on such a list.

This is isn’t to suggest you ignore private scholarships. If you think you have a pretty good chance of winning, go for it. However, if going to college depends on getting a large scholarship, you’re better off spending your time looking for the right school rather than trying to find the right color combination of duck tape.

Biography 

Michelle Kretzschmar is the creator of the DIY College Rankings Spreadsheet which contains information on over 1,500 colleges that families can use to identify schools best for them. She is also very interested in college graduation rates and has created a 50-50 list of colleges that accept at least 50% of their applicants and have at least a 50% graduation rate. She will be offering an online class on “How to Get the Best Deal on a College Education” this January. Michelle received her Bachelor’s Degree in Plan II and History and Masters in Public Affairs from the University of Texas at Austin with research focusing on high school dropouts.

The objective for wise parents is to educate their children while keeping their retirement savings and lifestyle intact.  Every year the cost of college attendance increases 4 to 5 percent.  Therefore, every year after the first is more expensive and the last year is the most expensive.

Find out for yourself what the graduation statistics are for any given college.  Go to http://www.collegeresults.org. Consider more favorably those schools with at least 50% or higher graduation percentage to finish in four years. 

Choosing wisely can save you thousands of dollars.    

Interest rates on Federal Stafford loans and Federal PLUS loans are fixed rates that change each July 1 based on the last 10-year Treasury rate auction in May. The current rates for the 2013-2014 award year are 3.86% for undergraduate Federal Stafford loans, 5.41% for graduate Federal Stafford loans and 6.41% for Federal Grad PLUS loans and Federal Parent PLUS loans. These interest rates are scheduled to increase on July 1, 2014 by 0.80%. The new rates for the 2014-2015 award year will be 4.66%, 6.21% and 7.21%, respectively.

This corresponds to an increase in the monthly loan payments on a 10-year term of about $4 for every $10,000 borrowed, or about $46 to $49 a year.

Total costs will increase by $460 to $492 over the 10-year repayment term of the loans.

Unfortunately, there's no way to borrow loans now for the fall based on the current low interest rates. Interest rates are set based on the date the loan is disbursed. Federal education loans cannot be disbursed more than 14 days before the start of the academic year. Also, some colleges are  required to delay the disbursement by 30 days for first-time, first-year borrowers. So, unless the academic year starts before July 1 or soon afterward, students are unlikely to be able to borrow early enough to lock in current rates for the fall.

If a current college student has remaining federal loan eligibility for the award year that ends June 30, 2014, he or she could borrow to the limit under the current rates before July 1 and save the money to pay for next year's college costs. But, most students will have already exhausted their eligibility for Federal Stafford loans for this award year.

The interest rates on federal education loans are likely to continue increasing each year over the next several years by 0.75% to 1.50% per year.

After reviewing your financial aid package, you may find that you come up short. In that case, here are some tips to help you compare your options.

· Look at the Annual Percentage Rate (APR). APR includes associated fees and is a better comparison point than interest rate alone.

· Know your fees and limits. Compare origination and application fees, along with any borrowing limits.

· Learn about fixed and variable rates. Federal student loans currently have fixed rates but most private loans now come with the option.

· Find a cosigner with great credit. More than 90% of approved private loan borrowers applied with a cosigner.

· Compare repayment benefits such as payment plans, deferment options, and auto-debit or relationship discounts.




Reprinted Courtesy of Financial Aid News June 2014