Truly Easy Money
When it comes to college funding, loans and scholarships get all the attention. Both certainly ease the problem of coming up with cash for college, but both have their drawbacks. Loans, as we’ve discovered, only put off the inevitable and cost you more in the long run. Scholarships provide free money* to the student, but are definitely harder to qualify for and often competitive enough to discourage many students. Into this void between easy but painful loans and joyous but hard scholarships step grants, available to broad swaths of students, completely without charge to those who meet the criteria.
So what is a grant? Perhaps we will find them easier to define and understand if we compare them to the much more commonly understood scholarship. Like the scholarship, a grant is free money* awarded to students for the purpose of making college more affordable. The main difference lies in the qualifications. Whereas scholarships generally award cash to students on the basis of what a student has done, i.e. academically or athletically, grants provide payments to students on the basis of who they are. You compete for scholarships but qualify for grants. People fund scholarships to reward past student effort; funders of grants tend to want to entice students toward a specific future.
Who Are You?
Grant applications tend to be quite simple affairs in that you either qualify or you don’t. Thus, while it might make sense to apply for any number of scholarships hoping someone will pick you out of the pile, you can much more effectively narrow down the grants worth applying for by weeding out the ones which state up front they won’t consider you. The bad news: You may not qualify for many, if any. The good news: If you do qualify to apply for a grant, you simply need to prove your claims.
Generally speaking, most grants award money on the basis of one of three main considerations: Financial status, personal background, or area of future study. Check all the right boxes and you could be in the money in short order.
The granddaddy of them all, the Federal Pell Grant, provides more funds to students each year than any other grant program. It and numerous other grants provided by state governments and private sources do so primarily on the basis of a student’s financial status. While definitions vary of what “financial need,” “economic disadvantage,” and “low-income” means, the fact remains that if the grant provider thinks you and your family don’t have enough money, they stand by to rectify the situation. Even when other grants provide awards primarily on the basis of other criteria, they usually include financial status as a secondary consideration.
In order to qualify for financial status grants, the student typically must fill out a form and attach pertinent documents such as tax returns, proof of other economic assistance and account statements. In the case of the Pell grant the ubiquitous FAFSA serves this function. If upon receipt the grantor organization determines through its metrics you qualify you can all but expect to receive some money so long as you applied in a timely manner (more on this later).
Are you female? Are you a member of a racial or ethnic minority? Do you have a medical condition or disease? Are you a “non-traditional” student? Are you disabled? Do you or a member of your immediate family serve in the military?
If you can answer yes to such questions you may qualify for a grant with minimal other qualifications such as GPA and income level. Thus it makes sense for anyone seeking college income to look for grants crafted for people such as themselves, externally speaking. Even if you don’t fit any of core profiles mentioned above, there exist outliers and exceptions on the fringes. Don’t give up on grants until you completely rule out the entire list of personal background grants.
Area of Future Study
Grants exist for almost every area of study, but particularly for those fields experiencing severe shortages of qualified graduates available for hire. In particular, students seeking to major in any of the so-called STEM studies (science, technology, engineering and mathematics) will find several grants available to them. Students who seek to serve “under-served” populations in various professional roles may also find lots of free money* available to help achieve this goal.
Often this form of grant comes with one big caveat: If the grantee does not then work in a related career field they may owe the money back to the grantor organization. Often organizations offer these grants in the form of a contract, and students who do not then fulfill the terms therein may find themselves repaying the funds back with interest. In essence, such grants often work much like a loan forgiveness program. Thus, students considering this avenue of funding may want to think of their grant as “free if” money and take their initial educational and career pursuit decisions much more seriously than other grant recipients. Such grants might seem like more of a gotcha than a gift in the midst of a change of majors.
Grabbing the Dough
While grant money is some of the easiest to obtain, it does take some effort on your part. Here are some tips for you as you pursue an income boost in this way.
First of all, make grants first of all. Grants should be your number one priority of time and effort committed to boosting your income—before scholarships, before pursuing work and definitely before loans. If you qualify for any you will find grant money just about the easiest to come across aside from graduation gifts (but even then, to get those you had to sit behind a desk for four years). It truly is the low hanging fruit of the college finance world.
Secondly, apply early and often. Most grant organizations, including Uncle Sam, set aside a pile of money and hand it out as students qualify, first come, first serve until it’s gone. Thus it pays to get your applications in as soon as allowed and long before the deadline looms. Since many of the grant organizations also require proof of financial statements, you and your parents will want to file your taxes right away to smooth the process. Perhaps it goes without saying, but also request as many grants as you even marginally qualify for. For more on this, see the related post “FAFSA, ASAP.”
Lastly, when easy money flows to certain categories of humanity the natural temptation for students of other situations will be to make stuff up, to try and look like something one is not. To this end I have seen a number of crazy schemes, including some recommended by other professionals. I even know of a college funding advisor who recommended my friend’s parents get a divorce but still live as married so on paper he would come across as the son of a needy single mother. Avoid this temptation. You either qualify, as-is, or you don’t. Any other representation is a lie and all the money in the world isn’t worth a tarnished reputation…or worse (Proverbs 22:1, Mark 8:36).
That said, you can employ any number of perfectly legitimate ways to “hide money”. More on this topic can be found in our post “Avoid Penalities on Your Savings.”
The Affordology Considerations
As you qualify for grant monies, they should have some impact on your filters, and therefore your overall college options. Let’s review how in light of each filter.
Do not, under any circumstances, alter your Rank filter because this or that grant might come into play. For instance, let’s say Taylor’s number one priority for higher education involves a pursuit of the arts and the presence of an arts community. As Taylor explores her options, she discovers a nearby college offers significant grants to women students because they desire a more diverse male/female ratio on campus. However, this college offers primarily hard science degrees and has no reputation for artistic opportunities to speak of. While this free money* may make the college affordable according to the latter two R filters, she will almost inevitably feel unfulfilled and begrudge the opportunity cost. Similarly, students not suited for careers in the sciences will somehow find college costly in spite of all the free STEM grant money thrown their way.
When you obtain grant money, this has an obvious direct impact to the bottom line(s) of your Resource filter. You simply must beware justifying higher yearly college costs on the basis of one-time awards. Some grants will automatically renew and provide you with new funds annually so long as you keep up certain GPAs or stick to a field of study; many will not. For those only available as one-time awards, remember to spread your numbers across the years and semesters to not overshoot your payment abilities.
Grants may expand your Resource filter if you so choose. Since grants and scholarships provide free money* I consider it allowable to increase your return number by the amounts awarded. Remember, the initial Return number is mostly a measure of the maximum you should pay out of pocket lest you achieve a negative return on your investment. Since grant money is available only for school purposes, we couldn’t legitimately argue that it would be better spent elsewhere or not spent at all as we could with gift money or personal earnings. So if you have a return filter number of $X and grab $5000 in grants, then your new return filter could be $X+$5000 and you won’t be any worse off for your investment. However, I would encourage those who plan to borrow based on the difference between their Resource and Return filters to instead fill the void with grant money. Generally, consider it a good idea to get out of college with as little money spent overall as possible.
If, after some research, you find you don’t qualify for grants or that the amount offered doesn’t quite get you into the black, don’t despair. In the next chapter we will talk about that other major source of free money*, scholarships, which number in the thousands and for which more students can apply. You’ll just have to work harder and smarter to get them.
* Now about that “free money” thing. Rule #1 in economics is, “There’s no such thing as a free lunch.” When we talk free grant money or free lunch we mean free to you. But of course someone ultimately paid for this free thing. I surely speak for all taxpayers and generous donors when I urge you to be mindful of this fact and not waste what we gave to you toward your pursuit. We expect hard work in return for your free and easy money.