Many college students are used to jumping a huge financial gap: tuition is rising, and student loans are skimpy. Applying for a private scholarship – from a corporation or non-profit – used to be the bridge.
Now, students are finding, those scholarships are harder to come by as companies stop growing their scholarship funds. The pullback in scholarship money will affect a wide swath of college students and could spell trouble in the form of higher debt loads.
Privately funded scholarships, including employer tuition programs, currently make up 13% of all grants available to college students. Prior to the recession, that number was 15% in 1999 and 17% in 2008. More important was the trend: a steady rise every year. Since 2008, however, the amount of private scholarship money has stayed the same or increased at half the speed as before.
Americans have looked to potential sources of funding closest to them and have found them wanting. Very few are satisfied with the assistance available, Gallup found last year. According to a survey of 1,000 Americans, majority agree that employers (68%), community-based scholarship organizations (62%) as well as federal (55%) and state (59%) governments should offer more assistance.
In “making do”, various organizations had to cut their administrative costs, cut the amount of awards issued and turn away increasing amount of students seeking assistance. While various organizations providing US students with private financial assistance have not been forced to close their doors, the past five-plus years have proved rocky and low on funds.
This is bad news for students.
“Scholarships are more and more important in the college funding puzzle,” says Amy Weinstein, the executive director of the National Scholarship Providers Association.
In 2013, about 30% of US families reported receiving some kind of the non-profit and community scholarships, according to a Sallie Mae report ‘How America pays for College 2013‘. “The post-recession reality appears to be that grants and scholarships have replaced parent income and savings as the major contributor to paying for college,” found the report.
Due to the recession, the flow of private funds into scholarships slowed down. A couple of scholarship funds shut down after 2008. One that particularly stands out in Weinstein’s mind is the Zuckerman Forum Scholarship Program, which was terminated when its benefactor’s finances were affected by the Bernie Madoff scandal.
That means the narrative has flipped. The view of private scholarships in the past few years shouldn’t be one of failure, but one of perseverance, says Weinstein. “The story is more about the programs that keep going.”
Even before the recession, the funding did not always keep up with the demand. From about 2006 to 2009, the Fulfillment Fund, a non-profit organization that provides scholarships to Los Angeles public high schools, had to cut the number of its scholarships in half and tightened its requirements, according to the New York Times.
Since the peak of the recession in 2009, however, the fund has been able to maintain the number of scholarships it distributes, says Maria Espinosa, chief programs officer at the fund. During the 2012-13 academic year, the fund gave out about $371,250 in scholarships and stipends.
The nature of scholarship business is changing. As funding became scarce, the scholarship programs looked to transform themselves. After all, it can no longer be just about money.
“Organizations that are giving scholarships are not giving just money, they offer other support as well,” explains Weinstein. “They are strategically investing their finite resources. They are careful – not in a miserly way, but in wanting to be more effective.”
The Fulfillment Fund focuses on helping student get the money from schools themselves. In the form of financial aid counseling, the fund helps negotiate financial aid packages and institutional aid for the students it works with. According to Espinosa, such services reached about 2,500 students in 2012-2013 school year. That same year, the fund was able to negotiate $1.5m in aid for its students in Los Angeles.
The competition for scholarships is high, with some well-known national scholarship programs receiving as many as 40,000 applications, says Weinstein. As a result, she adds, “we tell students to look more regionally, within their state, community foundations.”
The story of perseverance, as Weinstein has put it, is not yet finished. As the sources of funding for private grants slowly recover from the 2008 recession, they have far to go to catch up to the ever-increasing tuition prices and the demand – or more accurately – the need those prices have created.
