Q3. In 2011, you produced a 19-page report that stated, on average, white students tend to receive an overwhelming number of private scholarships and merit-based grants versus any other ethnic group. Why is that and how can African-American students improve their odds?
A. It is unclear why Caucasian students are 40% more likely to win private scholarships than minority students. Perhaps the private scholarships perpetuate historical inequities in the distribution of scholarships by race. When a donor establishes a new scholarship, the selection criteria tend to reflect the donor's values. Often these criteria then resonate with students of the same race.
For example, African-American students are less likely than Caucasian students to participate in equestrian sports, water sports and winter sports. They are more likely to participate in basketball, track & field, handball and football. The sponsor of a rodeo scholarship does not intend to discriminate against minority students; they just want to promote rodeo. With time, the balance of scholarships may shift to a more equitable distribution, especially if the minority student "pays it forward" by sponsoring scholarships of their own when they achieve success. In the meantime, minority students must apply for all the scholarships for which they are eligible. Some scholarship sponsors will notice the increased demand for assistance and will respond with increased funding.
Q4. How should families approach student loans with the selection of a college AND a college major?
A. Families must evaluate the tradeoffs between college affordability and college quality. A college's net price -- the difference between the total college costs and just the gift aid (money that does not need to be repaid, such as grants and scholarships) -- is a good measure of college affordability. It is the amount of money the family must pay from savings, income and loans to cover college costs. A higher net price correlates well with more debt at graduation. Families should try to minimize debt. Borrow as little as you need to and do not treat loan limits as targets. Live like a student while you are in school so you don't have to live like a student after you graduate.
Total student loan debt at graduation should be less than the expected annual starting salary, and ideally a lot less. If total debt is less than annual income, the borrower will be able to repay the debt in 10 years or less. If total debt exceeds annual income, the borrower will struggle to repay the debt and may need alternate repayment plans, like extended repayment or income-based repayment, to afford the monthly loan payments.
Multiply the first year debt by the length of the educational program to get a reasonably accurate estimate of debt at graduation. Borrow federal first, since federal loans are cheaper, more available and have better repayment terms than private student loans.
Needing to borrow private student loans may be a sign of over-borrowing. Since debt should be in sync with income, that suggests that students who will be majoring in less lucrative fields of study should borrow less, since they can afford to repay less debt. This doesn't mean abandoning one's dreams, but rather enrolling in an in-state public college instead of an expensive private non-profit or for-profit college. Of course, students who obtain a Bachelor's degree in nursing, engineering, mathematics or science, will be better able to provide for their families.
Q5. Please discuss your current books.
A. My most recent book, Secrets to Winning a Scholarship, is available from Amazon.com for less than $10. It gives good insights and practical advice about increasing your chances of winning a scholarship. My previous book, Fastweb College Gold: A Step-by-Step Guide to Paying for College, provides a clear pathway for how to get financial aid for college.
Q6. Is there anything else that you would like to share?
A. We have several free quick reference guides on scholarships, student loans, evaluating financial aid award letters and good rules of thumb (financial aid wisdom) at www.finaid.org/quickref.
If you are interested in learning more about other helpful programs and resources, order my book by clicking here.