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Watch Out for Front-Loaded Scholarships

Many sophomores, juniors and seniors begin the school year with a rude awakening: The financial aid packages they received as freshmen have shrunk.

Scholarships and grants, which make aid packages so wonderfully enticing for first-year students and their families, often melt away starting the second year of school. Students are often given less aid overall or they’re offered mostly loans.

This concept is known as scholarship front-loading or bait-and-switch financial aid. About half of colleges front-load their grants, according to Mark Kantrowitz, financial aid expert and founder of FinAid.org.

As students and families are weighing their college choices, they’re only dealing with financial aid awards for their first year of school. Even net price calculators only return results based on first-year award estimates.

Source: The Chronicle of Higher Education

Why scholarship front-loading happens

There are a variety of reasons why grants and scholarships can dry up after freshman year:

  • Colleges use fat financial aid packages to recruit freshmen.
  • Families’ financial situations may vary from year to year.
  • Colleges’ revenues vary from year to year.
  • Scholarships can fall away if students don’t meet the GPA requirement during their freshman year.
  • Federal rules allow students to borrow more in loans with each progressive school year. The limit on loans is the lowest for first-year students.

What to do about it

Awareness is the first step toward protecting students and families from feeling like they’ve been hit with a scholarship bait-and-switch. As you’re comparing schools, ask financial aid officers how much grant and scholarship aid you can expect in your second, third and fourth years. If possible, get it in writing.

Meanwhile, not all colleges front-load scholarships for college freshmen. Contact My College Planning Team’s academic department for help in selecting colleges that don’t front-load scholarships.

Teddy Nykiel

Teddy Nykiel is a journalist specializing in student loan repayment and college financing. Her work has been published by outlets including the Associated Press, USA Today, MSN and Reuters.

Teddy is passionate about helping students and families get the biggest return on their college investment by maximizing free financial aid and minimizing student debt. She has written extensively about student loan repayment plans, forgiveness programs, consolidation and refinancing options, and student debt relief scams. She has also covered FAFSA completion and understanding financial aid award letters.

Most recently, Teddy was a staff writer and student loans spokesperson for NerdWallet, a personal finance website with more than 10 million monthly visitors. She has a bachelor’s degree in journalism from the University of Missouri.

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