The Myth About College Scholarships

(MoneyWatch)  Have you nagged your teenager yet about finding college scholarships?

You've probably heard that billions of dollars in college scholarships go unclaimed every year. Or maybe it's hundreds of millions. Whatever the number is, you just know that a ton of money is out there waiting for enterprising teenagers to find it. And you also know that your slacker child has failed to grab any of the cash.

If you're ready to lay into your teen again about not hitting those online college scholarship search engines, here's my advice: Go easy on your kid.

Before making your teenager feel guilty -- yet again -- let this statistic from the Institute for Higher Education Policy sink in. In a survey conducted a few years ago, the institute concluded that only 7% of all college grants can be traced to private scholarships. But here's an even more discouraging statistic: The average private scholarship is worth just $1,982.

And folks, it gets worse. If your child wins a private scholarship, a college could reduce his or her financial aid package by the amount of the award. So if your child wins a $2,000 private scholarship for left-handed, red-haired tuba players from upstate New York, the college could reduce the aid package by $2,000.

What's the alternative? Few families realize that the vast majority of scholarships come from the colleges and universities themselves. And what's great about these institutional merit awards is that they typically last for four years. In contrast, private scholarships are typically a one-time occurrence.

One way to find this free money is by visiting the financial aid section of a college's web site. Many schools are quite specific about how teenagers can qualify for these awards.

Another helpful resource is MeritAid.com, which has spent many man hours compiling merit awards at thousands of colleges.

Wi$e-guy money roll image by Gnerk, CC2.0.