13 Sep

More Bad News for Financial Aid Hopefuls

Students hoping for “institutional” financial aid–those helpful funds that come directly from the college itself–in the 2010-2011 school year have yet another strike against their chances: significantly dropping annual funds.

Less Give…

A recent study for 2009 (a year that already saw many schools making big aid cuts) showed that donors gave less than usual to collegiate “annual funds,” the yearly funds from which institutional financial aid is drawn. Schools have seen participation in their donation programs decrease so significantly that the study showed an average 13% decrease in revenue overall, with public schools typically seeing a more significant decrease than private schools.

The only schools that didn’t see their revenues plummet were those who focused more energy than usual on their donor outreach programs. By reaching out to their younger alumni, for example, Rice University was able to obtain a 10% increase in revenue to their annual fund–but they were by far in the minority. Most schools noticed a drop in the number of donors participating (showing an average decrease of 3.5% from the year before), and of those donors who still decided to give, the donated amount dropped by an average of 8% per person.

Means Less Take

This drop in giving is not surprising considering the belt-tightening attitude caused by the current economy, but it is concerning for students who are counting on institutional aid to help cover their tuition bill. Smaller institutional funds mean less money to divy out among students.

What Can You Do?

If your child’s award letter is disappointing this year, you may have to make some adjustments to your 2010-2011 college funding plan:

Start by helping your student search for other sources of income. Students holding down a part-time job have actually been shown to do better in school, and the extra income can go towards anything from tuition to traveling home for breaks. They should also explore ways to boost their normal income, like these 7 easy ways to make extra money. And don’t forget about private scholarships, either. They may be a little tougher to find this year, but there are still thousands of scholarships available–you just need to identify the right ones for your student.

Once you’ve looked at boosting your child’s income, you can also consider reworking your cash flow. Find ways to save on everyday costs, and redirect those savings toward college costs. You might be surprised how much you can do by adding up the dollars and cents you save just by paying closer attention to your spending.

Finally, you have the last-ditch option of having your student take out student loans. I’ve written a lot about these, so I encourage you to look through the loan archives for details and tips about how to make them work best for your family. Just remember, when it comes to student loans, you always want to borrow federal loans before you turn to private loans.

All the best,
Deborah Fox


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