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Tuesday, June 18, 2024

Why would applying to as many scholarships as possible reduce your student debt?

Key Takeaways: Four Core Reasons to Submit Many Scholarship Applications

  1. Increased number of applications means more chances to secure free grant aid
  2. Accumulating small scholarships incrementally reduces loan principal borrowed each semester
  3. Treat grant awards as ongoing income stream, allowing less work study needed
  4. Excellent ROI on time spent applying by lowering loan interest payments later

The time investment required to apply for multiple matching scholarship opportunities pays off exponentially with thousands in potential free aid. Small amounts add up to make a big reduction in money owed after graduation.

Applying to as many college scholarships as possible while pursuing your undergraduate or graduate degree is one of the smartest ways to lower student debt. Unlike confusing student loans with varying interest rates and payback terms, scholarships offer “free money” that does not need to be repaid. The time and effort to submit multiple scholarship applications pays major financial dividends down the road by reducing loan principal balances and interest owed.

More Applications Means More Chances to Win Needed Funding

Statistics show that there are over $46 billion in available scholarships from more than 28 million different awards nationwide. Major national scholarships can offer tens or even hundreds of thousands of dollars to assist with educational expenses. Smaller niche and local scholarships may only provide a few hundred or thousand dollars. But together, they truly add up. Every $1,000, $500 or even $100 in free assistance won means less money you must finance using student loans.

For example, prestigious Merit Scholarships like the Cooke College Scholarship award high achieving students $40,000/year to attend university. The Coca-Cola Scholars Scholarships gives $20,000 grants to 150 students every year. But lesser known regional awards like the AQHYA Scholarship ($1000) or unique criteria scholarships like the Vegetarian Resource Group Scholarship ($10,000) also help chip away at total tuition owed. Casting a wide net by submitting 10, 20 or 30+ applications ensures you have the greatest probability of securing funding.

Even Small Scholarships Reduce Needed Loans

Let’s use a fictional example to demonstrate the power of accumulating these smaller value scholarships. Sarah is an incoming freshman with $20,000 in total Cost of Attendance each year. She and her family can contribute $2,000 annually. By aggressively applying to 15 different scholarships, Sarah wins 7 of them ranging from $500 to $2,000 in value. This totals $7,500 for Year 1, reducing her loan needs to only $10,500.

In Year 2, she continues applying which allows her to renew some awards plus win new ones. Now her free aid totals $8,000, lowering debt for sophomore year to just $10,000. Sarah continues maximizing scholarships each subsequent year, ultimately only needing $36,000 in loans versus $48,000 if she borrowed the remainder of costs. That $12,000 savings reduces future monthly payments and interest expense.

Treat Scholarships Like an Income Stream

In addition to loans, some students cover expenses via income from part-time campus jobs. However working 10-15 hours weekly takes time away from academics and scholarship applications. Awards won can replace some or all work income. Each year students should calculate their “scholarship salary” and reduce work study hours if reasonable.

Viewing grants as an ongoing income stream also encourages resubmitting updated applications annually to retain renewable awards. The effort to reapply is small compared to searching for that first win. Establishing multi-year support from a mix of scholarships further minimizes debt each semester.

Return on Time Investment Applying is Well Worth It

Yes, seeking out scholarships and submitting all components does require significant time. But in terms of reducing student debt, the ROI on hours invested is impressive. Let’s assume our prior student Sarah spent 50 hours researching options, answering essay questions, gathering transcripts and letters or recommendation and more. Her $12,000 savings works out to an effective hourly “wage” of $240 for efforts during college!

And beyond monetary value, less loans means less interest builds up while enrolled. What might seem like small 5-10% rates add up substantially over 4+ years. That same $12,000 at 10% accrues $4,800+ in interest by graduation. But with scholarships covering that amount instead, the savings of not paying interest increases total benefit 3-4x upfront time spent.

Tips to Streamline Submitting Multiple Applications

  • Create system to track deadlines, requirements if each scholarship has customized forms
  • Reuse essays, edit to fit different prompt questions
  • Request teacher recommendations once, submit for multiple
  • Enroll with scholarship matching sites to find suitable options

The bottom line is applying to every potential scholarship that matches your skills and demographics can make an enormous long term dent in money owed after college. An incremental $500 here or $1,500 there provides financial assistance to lessen loans avoiding accruing interest costs down the road. Given billions in aid available, taking the time maximizes both merit and need based chances to win “free money” towards your degree. The payoff comes via reduced monthly payments over years ahead thanks to keeping leadership debt in check from the start.

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