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Increasing Your Income

Now that you have increased your financial aid package from your selected school as much as possible, you also need to see what sources you can locate outside of traditional school and government programs. And one of the best strategies you can take is to apply for as many private scholarships as you can.

The Arguments For and Against Scholarships

TIP…Seek out special organizations that may offer financial aid awards based on your particular background and interests.

Who Should Try This: Everyone!

In recent years, there have been many warnings from financial advisers and other pundits not to go the private scholarship route.

Saving for College Photo


One valid reason applies to cases in which students go to “scholarship services” and pay $100, $200, or even more to get a list of scholarships they are “guaranteed” to win. Many of these services, as their victims have discovered, are fraudulent. You should never pay anyone for a supposedly guaranteed listing of awards.

The other claim against applying for scholarships is that when the FAA at your selected school learns that you have won an award, he or she will lower your school-sponsored financial aid package accordingly. For example, if you originally had a $7,000 aid package from Alpha University and then won a $2,000 scholarship, the FAA would write you a letter thanking you for bringing the scholarship to the university and then tell you that your aid package has been lowered to $5,000. In the end, you still only get $7,000.

Some advisers therefore tell students they shouldn’t bother to apply to scholarships.

However, this discouraging advice is not valid for several reasons:

A good financial aid adviser (FAA) will always reduce loans before grants should a student win a scholarship. Most college aid packages are a combination of grant money and loans. So, if in the example above half of the package ($3,500) was in loans, the FAA would replace $2,000 in loans with the scholarship. Although your package is still $7,000, you now have significantly reduced your loan amount to $1,500. If your FAA is reducing your grant money instead of your loans, then that’s a point you should argue when negotiating your aid package.

TIP…Check out departmental grant opportunities in your sophomore, junior, and senior years. You may be eligible for awards that were out of reach in your freshman year.

Who Should Try This: Undergraduate and graduate students

An FAA has no control over the amount of scholarship money you win. If your original aid package is less than the scholarship money you win, why not take the scholarship money and forget about the aid package?

This argument is especially valid for students who are not getting much help from their schools. If you, for example, only have a $1,000 grant from your selected school but are able to win a $2,500 scholarship, then you’re $1,500 ahead, even if the school decides to withdraw your original aid package.

You will never get less than your original aid package. Even in a worse-case scenario, you will always get at least the original offer, so you have nothing to lose by trying to win more through scholarship competitions.

Not all schools that offer financial aid packages will award you the difference between your expected family contribution and the cost of tuition. The amount of tuition and fees that is unmet by the EFC and award package is called the “gap.” If there is a gap in your school’s aid package, then using scholarship money to eliminate it makes good sense.

Finally, there are hundreds of organizations across the country and the world that have set up scholarship and grant funds. Why would so many people put so much effort into creating free aid to students if they didn’t think it was helping? So ignore all those cynics and “pundits” and apply for as many awards as you can!

Specialized Aid

TIP…Enlist in the military for two to four years. Estimated savings: $10,000 to $50,000.

Who Should Try This: High school seniors

Financial aid is available to anyone who is willing to look for it. Through funds from federal, state, or private organizations, millions of dollars in aid are offered to students based on ethnic background or other personal qualifiers. Minorities, women, and physically challenged students are eligible to receive financial assistance not offered to the general student population. The purpose of offering extra assistance is to encourage members of these groups to continue their post-secondary education, and to increase the number of minorities, women, and physically challenged students currently attending a college or university.

These sources of aid also provide opportunities for students planning to pursue a career in certain professions. Education, health, and public service are just three of the areas that need more people to fill the employment positions available. In reaction to the lack of students entering these fields, federal and state governments have created incentive programs that offer scholarships and loans to anyone willing to earn a degree in one of these areas of study. The majority of the loans offered can be repaid or “forgiven” through a commitment to work as a teacher, public servant, or health professional for a certain period of time following graduation. This work may be located in rural areas of the United States with a shortage of people trained in these professions.

The following organizations will provide you with information about scholarships and loans offered by the federal government. Contact the financial aid office or counselor at your college or university for additional state and private aid programs.

Physically Challenged Students

American Council for the Blind
1155 15th Street NW, Suite 720
Washington, DC 20005
(202) 467-5081

The Alexander Graham Bell Association for the Deaf, Inc.
3417 Volta Place NW
Washington, DC 20007
(202) 337-5220 (TDD and regular)


TIP…See whether you can “barter” some of your services in exchange for cuts in tuition or fees.

Who Should Try This: Undergraduate and graduate students

The Bureau of Indian Affairs of Higher Education
1849 C Street Northwest
MS 3512-MN Code 522
Washington, DC 20240
(202) 208-6156

Minority Access to Research Careers Program (MARC)
National Institute of Allergy and Infectious Diseases
Division of Extramural Activities
Solar Building
Room 4C10
Bethesda, MD 20892

National Action Council for Minorities in Engineering
Empire State Building
350 5th Avenue
Suite 2212
New York, NY 10118-2299
(212) 279-2626

National Advisory Council on Indian Education
1250 Maryland Avenue SW
Room 6211
Washington, DC 20202
(202) 205-8353

Youth and College Division

4805 Mt. Hope Drive
Baltimore, MD 21215
(410) 358-8900


1. Health

TIP…Enter specialized music, essay, and other academic and talent competitions to win money that is sent directly to you rather than your school.

Who Should Try This: High school, undergraduate, and graduate students

Department of Health and Human Services
200 Independence Avenue SW
Washington, DC 20201
(202) 619-0257

National League for Nursing
61 Broadway, 33rd Floor
New York, NY 10006
(212) 363-5555

2. Journalism

Journalism Scholarships Program

The Freedom Forum
1101 Wilson Boulevard
Arlington, VA 22209
(703) 528-0800

3. Public Service

Harry S Truman Scholarship Foundation
712 Jackson Place NW
Washington, DC 20006
(202) 395-4831

4. Teaching

TIP…Borrow against IRAs or employee retirement plans.

Who Should Try This: Parents of students; adult, nontraditional students

Paul C. Douglas Teacher Scholarship

Contact your state agency for information


Business and Professional Women’s Foundation
2012 Massachusetts Avenue NW
Washington, DC 20036
(202) 293-1200

United Engineering Center
345 East 47th Street
New York, NY 10017-2330
(212) 705-7000

Women’s Sports Foundation
Eisenhower Park
East Meadow, NY 11554
(516) 542-4700

Renew, Renew, Renew

TIP…Reapply to all awards that can be renewed.

Who Should Try This: Undergraduate and graduate students

One of the biggest mistakes students make is forgetting to renew their scholarship awards. Although some grants that come directly from your college may renew automatically, most require some action on your part before they will be disbursed a second or third time. While some scholarships are one-time deals, many are renewable.

Departmental Grants

Once you have taken a semester or two of courses, you should check into awards given by departments in your field of interest. Most colleges and universities have special programs for students who have proven themselves in a particular field. Freshmen or sophomores who have proven they have an aptitude for chemistry, for example, should approach their professors and ask whether there are special grants they can apply for in the chemistry department. Or, if you are an athlete with proven ability in a particular sport, you should ask your coach if he or she knows of any scholarships you may be eligible for. Remember, just because you didn’t receive an award your freshman year doesn’t mean you can’t get one in your sophomore, junior, or senior year.

TIP…Work directly with private foundations to create grant proposals that will help fund your tuition and other expenses. This strategy is most applicable to graduate-level students.

Who Should Try This: Graduate students

Another rather unique strategy is to approach a professor or coach and offer your personal time and services to help them in exchange for assistance with your tuition or fees. This is sometimes called “bartering” for additional aid, and it is not commonly encouraged on campuses. But if you show persistence and initiative, you may be able to impress someone enough so that they agree to your proposal. Some of the tasks you might offer to do include: repairing college-owned vehicles or computer equipment, counseling students in the career center, performing grounds maintenance, or doing desktop publishing for the school’s press. If you have a valuable skill, this is one way of taking advantage of it.


What is the difference between competing for a scholarship and entering a competition? Scholarships are usually based on certain criteria such as financial need, academic excellence, personal characteristics, or student affiliations, and they are often renewable from year to year. You have to have special qualifications before you can even be considered for a scholarship. A competition, on the other hand, is a one-time event that almost anyone can enter. Most academic competitions involve submitting a paper of some sort, so to increase your chances of winning a competition, it’s a good idea to hone your writing skills.

If you’re finding it hard to get an on-campus job, you can always start your own small business and work as much or as little as you want.

Who Should Try This: Undergraduate and graduate students

What is really unique about competitions is that, unlike most scholarships, your winnings are not reported to your college or university. The money is given directly to you, and so it will not affect your aid package. You do, however, need to report your winnings on your federal income tax.

Negotiating for Foundation Fellowships

Most privately sponsored sources for grants that give funds to students are national or local associations or private trusts, but another source can be found in private foundations.

The reason that most students don’t acquire money from foundations directly is because these organizations typically give grants in lump sums to universities or colleges, or to particular departments or research centers within these institutions. They rarely grant funds directly to an individual.

However, this does not mean that you can’t do something to acquire foundation money. With a little work, you can get foundation money indirectly. One way to do this is to offer to help write a grant proposal in a subject you’re interested in for your college that will then be submitted to a foundation as a request for research funds. The idea is that the funds your school receives will then go toward your project, as well as toward your personal tuition and fees.

You can also approach fellowship funding from the other direction and offer to work with the foundation itself to put together a grant proposal that would then go to the government or, perhaps, a charitable corporation that helps fund the foundation. The foundation can then donate the money to your school, which can then, in turn, offer you a grant for your research project and tuition.

Negotiating for fellowships in this manner can be rather complicated, and is a strategy more applicable to students at the graduate level. If you are interested in working directly with a foundation, however, you should start by working with the graduate department at your school. You can also find a great deal of information about foundations by contacting a national organization called The Foundation Center, a nonprofit clearinghouse of information about foundations and corporate giving across the nation. To contact them, write, telephone, or send e-mail to:

The Foundation Center
79 Fifth Avenue/16th Street
New York, NY 10003-3076
Phone: (212) 620-4230, or (800) 424-9836
Fax: (212) 807-3677
E-mail: (for research questions only) [email protected]

Employer Tuition Assistance Programs

These days, many companies have a vested interest in developing their employees by furthering their education. What was once the terrible burden of trying to go to school while working at the same time has actually turned into an advantage for many employees. If you are employed full- or part-time, check with your human resources office to see whether or not your company offers assistance. The level of aid usually depends on whether the employee is taking courses in a field related to the job, as well as how well he or she does in class. For example, an employer might offer to pay 100% of the fees if workers get an “A” in a course; 75% if they receive a “B”; 50% if they get a “C”; and nothing if they fail.

TIP…Employed students should check with their human resources departments to see whether their company offers tuition assistance. Estimated savings: 50% to 100% of tuition.

Who Should Try This: Adult, nontraditional students

Join the Armed Forces

As anyone who watches the television ads knows, the Army, Navy, Air Force, Marines, and National Guard all have tuition assistance programs as an incentive to enlist. For a couple years’ service, you can earn $8,000, $10,000 or more to pay for tuition. This is enough to handle the majority of the expenses at a state college or university. More information about the benefits of military service are discussed in The Financial Aid Report.

Summer Jobs

If you’re not attending courses during the summer, this is a good time to earn extra cash for tuition. A college student can earn up to $1,750 a year before having to pay taxes on earned income. That’s a total of $7,000 tax-free dollars over a course of four summers! This can easily be earned even working minimum-wage jobs for three months. If you’d like to try something better than slinging burgers during the hot summer months, though, here are some sites that explain unique opportunities for out-of-the-ordinary jobs:

TIP…Earn up to $1,750 in tax-free money by working a summer job and use the money for tuition and fees.

Who Should Try This: High school and undergraduate students

Borrow Against Your Investments

Thanks to recent changes in tax law, borrowing from savings plans such as a Roth or Educational IRA, a 401(k), or a 403(b) is less costly when the money is used for educational purposes. It is now possible to borrow from these plans without paying taxes on the withdrawn amount. Plus, when you pay the money back, you are putting it into your own account rather than giving it to a bank. However, here are some words of caution. If you borrow from an employer-sponsored retirement plan and then leave your job, the entire amount will have to be paid back immediately. Also, you should keep in mind how much interest your plan is earning versus how much interest you would pay on, say, a government-sponsored loan. If you are paying 8.25% interest on a PLUS loan, for example, but your 401(k) is earning 11% or 12% interest, it makes more sense to borrow from an outside source rather than lose a good money-earning investment.

Another option, of course, is to take out a home equity loan. Interest rates are very low at this time – sometimes as low as 4% – making this an excellent option for those who are qualified and have sufficient equity in their residence. To find out about home equity loan rates in your state, try contacting:

TIP…Take out a home equity loan.

Who Should Try This: Parents of students; adult, nontraditional students

Another option you might consider is borrowing from your life insurance policy. The advantage of taking funds out of your insurance is that you can determine your own payback schedule; the disadvantage is that you may not get a very good interest rate on the money you borrow. The exception to this is if, for example, your parents took out a whole-life insurance policy some twenty years ago when policies were available that allowed people to borrow money for as low as 5% to 6%.

TIP…Borrow against your life insurance policy.

Who Should Try This: Parents of students or adult students

If you (or your parents) have a stock portfolio you have a great source of funds for college expenses. You can either sell off some of your stocks and bonds or take out a “margin loan,” which is a loan borrowed against the value of your stocks. What’s great about this strategy is that it will lower your EFC and make you eligible for more government aid. You will, of course, have to pay capital gains taxes if you sell stocks or bonds at a profit, so bear this in mind before pursuing this course of action.

Start a Small Business

There are many ways to earn a little extra cash by performing some basic services to other students, or even to faculty and other college staff. Many students run typing or resume services out of their dorm rooms or apartments, for example. Some other options include pet sitting or walking services, furniture moving (it’s handy if you have a pickup truck), building lofts for student dorm rooms, or fixing typewriters, computers, stereos, or television sets, or even starting your own Internet service.

TIP…Take money out of your stock portfolio, simultaneously acquiring money for college while lowering your EFC.

Who Should Try This: Parents of students; adult, nontraditional students

Running a small business, however, means you’ll have to do a little extra paperwork. You will have to file taxes quarterly instead of annually (file a Schedule “C”) and keep very accurate records of your expenses and sales.


FinancialAidFinder talked with financial aid and admissions counselor Randy Spaulding at the University of Washington, Bothell, about his advice to students who want to maximize their financial aid package. He offered these words of advice:

Applying for Financial Aid can be an intimidating process, but with proper planning and attention to detail you can make the most of your financial aid package. Here are some tips to ensure that you receive the best financial aid award.

Start early!

When applying for financial aid it is important to start early and be aware of deadlines. Every school has to stretch limited financial aid resources to serve as many students as possible. To do this many schools have a priority deadline that is much earlier than the deadline listed on the Free Application for Federal Student Aid (FAFSA). One of the most common mistakes families make when applying for aid is waiting too long to apply. You can use estimated tax information, when you fill out the FAFSA, and you will have plenty of opportunities to make corrections to the FAFSA later if your estimates are a little off. The FAFSA can be mailed in as early as Jan. 1 for aid that summer or fall. Applying for admission as early as possible will also ensure you will be considered for aid early. Generally, schools want your financial aid applications early in the year, but they do not review your eligibility for financial aid until you are offered admission.

Contact the schools.

As you collect materials to apply for admission ask each school for their financial aid deadlines, Title IV number, and any supplemental financial aid forms they require. You can list up to six schools on your FAFSA, so don’t wait to hear if you’ve been admitted to ask about financial aid. If you plan to apply to more than six schools, list the schools you are most likely to attend, and those with the earliest deadlines first. You can add additional schools after you receive your Student Aid Report (SAR).

Avoid sticker shock.

Do not let high tuition scare you away from applying to the school you really want to attend. Wait until you have admission and financial aid offers before you become too concerned with the cost of attendance. Most schools have institutional funds that they can award at their discretion, and since amounts, eligibility, and award policies vary from school to school and from year to year it is always a good idea wait until you have negotiated the best financial aid package before you decide a school is too expensive.


Every school wants good students. Many are in a position to modify your financial aid award if another school has made a more generous offer, or if you are offered aid that won’t meet your budget. If you find yourself in this position visit or write the financial aid office of the school that you would like to attend. Let them know that they have the academic program that most closely matches your goals and that you would like to attend their institution if they are willing to amend their offer.

Report changes in income and budget.

The FAFSA will ask for your previous year’s tax return. For many families the last year’s tax return does not accurately reflect what their resources will be during the academic year. If this is the case for your family, send in the FAFSA with the tax information, but also check with your financial aid office about submitting a revision request. Each school will assign a standard budget based on a set of assumptions about cost of attendance and information submitted on your FAFSA. It is important to look at the budget the school uses and determine if it accurately represents your educational costs. Often students may have special circumstances which require a revision to the standard budget.

Stand out.

Do what you can to differentiate yourself from other students who are applying to college. This is important in the admission process, and can also make a difference if you plan to apply for any scholarships, or merit-based financial aid. Things that will make you stand out may include excellent academics, community service, awards and certificates, sports, or work.

Apply for scholarships.

Scholarships are out there, take advantage of the scholarship book included in this package, also ask teachers and counselors at your high school or community college, and the financial aid office and academic departments at the schools to which you are applying. Other places to check may include members of the community such as: parents’ employers, clubs, unions, community service organizations, business groups, and chambers of commerce.

Financial planning.

The FAFSA will ask for more information about your income and your assets as well as those of your parents if you are considered a dependent student for financial aid purposes. Currently the Federal Methodology (the formula used to determine how much your family can contribute to college costs based on current income and assets) allows greater protection for parents’ assets and income than it does for students. If the student is required to submit asset information (see the FAFSA instructions on assets) it may be more beneficial for those assets to be in the parents’ names.


An IRA may help you manage your college savings in such a way that it will have less impact on your financial aid award. Changes in tax law allow parents and students to use IRA savings for college expenses without paying hefty early withdrawal penalties. Additionally, assets held in an IRA are not typically included on the FAFSA and therefore will not negatively affect aid eligibility. Another change in tax law is the addition of the Educational IRA. Parents within certain income brackets can put up to $500 per year into and Education IRA that is intended to help pay educational expenses. Check with your tax adviser for more information on these programs.

Tax credits.

The Hope Scholarship Credit allows parents or students to take a tax credit of up to $1,500 per student for “qualified tuition and related expenses” for students in their first two years of college. Lifetime Learning Credits may be claimed for an unlimited number of years and allows taxpayers to claim a credit of up to $1,000 per family for tuition and fees for undergraduate, graduate and continuing-education courses. Hope Scholarship Credits will be adjusted for inflation after 2001, Lifetime Learning Credits will increase to $2,000 beginning in 2003. Check with you tax adviser or the IRS for additional information and income restrictions on these tax credits.

Family members in school.

The number of family members in school can make a significant difference in the amount of financial aid the family is expected to contribute for each student. It seems counter intuitive, but if more than one person in the family is considering going to college it may be better if they go at the same time rather than take turns.


A program that will allow you to earn money to pay for college before, during, or after college. Students will work in a domestic community service setting, and they can ask for full-time or part-time assignments. Information on AmeriCorps is available by calling (800) 942-2677.

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