College tuition is on the rise again after a two-year hiatus brought about by the pandemic. Increases have been substantial — usually in the range of 3 to 4%. Families are more concerned than ever about the affordability of college, so they seek options to avoid taking on excessive debt or foregoing college altogether. One such option is private scholarships.

There is huge pool of private scholarships every year. There are so many that it may seem that winning one is easy. A number of free websites are available to help students identify the scholarships that are most suitable for them. One scholarship search website offers to match students with 3.6 million scholarships worth over $14 billion. Another site claims that there is over $1 billion in scholarships that go unawarded every year for lack of qualified applicants. Both exaggerate, but it’s true that there are many scholarships available. Unfortunately, each one has its own time-consuming application process.

The Internet has simplified the process of identifying the most suitable scholarships for an individual student. But searching is only the first step. A student must apply and compete with the many students who used the same websites and applied for the same scholarships.

The Value of Private Scholarships

Here’s the problem — a typical private scholarship award has only a small impact on the cost of attending either a public or private college in 2022. According to

• Private sources award over $7 billion in scholarship money annually.

• 12% of college students are awarded a private scholarship.

• Of the students who are awarded scholarships, 97% receive $2,500 or less.

• Only 0.2% of students receive private scholarships worth $25,000 or more.

Scholarship Displacement

About half of students who are awarded private scholarships experience scholarship displacement. This occurs when a student is awarded a private scholarship but then receives a revision to their financial aid offer from a college that has admitted them. The purpose of the notice is to inform them that the amount of need-based aid that the college originally offered has been reduced because the student is receiving additional financial aid. This means that the scholarship doesn’t increase the amount of money that the student has to spend on college — it merely replaces some of it.

The college’s reasoning is that, if the private scholarship award added to the financial aid package exceeds the college’s Cost of Attendance, then the family’s Expected Financial Contribution under the FAFSA formula is raised by the amount of the excess, which is equal to the award. The result is that the time and effort that the student expended on winning the scholarship was a waste of time unless it replaced a student loan.

Scholarship displacement commonly affects only need-based aid. Merit awards don’t usually affect financial aid packages. However, it’s advisable to check with each college being considered to determine how the aid package may be affected by a scholarship.

Time and Effort

In 2022, the average cost of tuition for an in-state student attending a public 4-year institution is $25,707 per year. The cost for the average private, nonprofit college student is $54,501 per year. It would take multiple private scholarships at a value of $2,500 to substantially reduce a student’s cost of attending college.

An often unexpected characteristic of many private scholarships is that they are for one year only. This means that a scholarship winner must devote more effort in subsequent years to re-competing for the award on an equal basis with others seeking the scholarship.

A student may still wish to compete for private scholarships, but they should carefully assess the ratio of effort against the possible reward. A student must use their time wisely in the last two years of high school as they ramp up their college admissions campaign.

Tips for Private Scholarship Seekers

For those who choose to compete for private scholarships, we offer the following advice:

  1. Don’t use scholarship services that charge a fee. Applying for a legitimate scholarship is always free. Fee-based services, especially if they guarantee a scholarship, are a scam.
  2. The pursuit of scholarships need not end when a student is enrolled in college. They may continue to seek scholarships throughout their college career. There are many single-year awards for which all winners must re-apply and re-compete annually. Even as a sophomore or upperclassman, a student will compete on equal footing with previous winners for these awards.
  3. Students must submit an essay, transcript, letters of recommendation, and other documentation to apply for many scholarships. This takes additional time, so a student should be aware of these requirements before deciding to apply.
  4. Scholarship websites have varying degrees of reliability. One may do a better job of narrowing results to a student’s profile and another may have fewer outdated scholarships. Student are advised to use more than one website to improve their chances of finding active scholarship programs that suit their profile.
  5. Students have better odds of winning local scholarships because there’s less competition. Scholarships are offered by the following types of organizations:
  • Service Organizations: Local Chambers of Commerce often award scholarships that are available only to local students, as do organizations such as the Lions, VFW, Knights of Columbus, Masons, Elks, Rotary, Community Chest, American Legion, and others.
  • Businesses: Local businesses may offer scholarships to area students. They are a common way for business owners to provide a benefit to their community while also benefiting from positive publicity.
  • Parent-Teacher Associations: There’s one in every school district, but the PTA’s that are most likely to sponsor scholarships are at the county level.
  • Local Philanthropical Groups: There are foundations and individuals in some communities that seek only local applicants for their scholarships. The public library usually has bulletin boards that posts opportunities.