The Best Places to Find College Cash

(MoneyWatch)  Private college scholarships are overrated. Sure it would be nice to win a private scholarship, but the big money comes from colleges themselves which tend to dispense merit awards like Tic Tacs.

You're more likely to shrink the cost of college if you search for schools that hand out their own cash rather than applying scattershot to private scholarship contests. Not convinced? Here are seven reasons why you should spend more energy pursuing in-house merit awards, which are given to students regardless of their financial need:

1. Merit scholarships are bigger. Each year colleges award more than $11 billion in in-house scholarships while private scholarships from places like the Rotary and Lions Clubs generate $7 billion in free cash. The average merit scholarship is $5,000 versus $1,000 to $2,000 for a private scholarship.

2. Merit scholarhips last longer. Institutional merit awards are typically renewable, while private scholarships aren't.

3. The odds are better. One in four undergraduates earns a merit award. In comparison, about 7 percent of students snag a private scholarship.

4. Merit scholarships are less work. The sponsors of private scholarships make kids jump through lots of hoops. A kid will often have to complete a lengthy application and write an essay. (Ugh.) In contrast, many colleges automatically consider their applicants for merit awards which means no additional paperwork is needed.

5. You don't have to be a superstar. I don't want to suggest that all you need is a pulse to win a merit award, but some schools dispense cash for students who are no more than average. MeritAid.com insists that even teens with unexciting GPAs of 2.0 can often qualify for money since plenty are based on students' interests, intended major and even where they grew up.

6. Private scholarships can hurt financial aid chances. Students who capture a private scholarship can jeopardize a portion of their financial aid. Federal rules require that a school consider outside scholarship money when calculating a student's financial aid package. So a student who receives a $4,000 private scholarship might lose that much in need-based aid.

7. Merit scholarships are easy to find. Lots of families know about private scholarship search engines, but I think there's a much more user friendly resource available for those scouring for merit awards. MeritAid.com is a great free resource to find merit scholarships at more than 1,800 colleges and universities.