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August 26, 2003: 2:10 PM EDT

New York (CNN/Money) - Scholarships offset or eliminate the climbing cost of college tuition and have turned the dreams of many young students into reality.

Those lucky enough to land an award often graduate with little to no debt. Others get to attend their top pick schools, or focus on mid-terms rather than part-time pay. It doesn't hurt your pocketbook either, of course, since any dollars your child receives softens the blow to your bank account.

Yet, all too often, families fail to explore tuition awards for which they might be eligible, assuming their household incomes are too high, or that their kids can't compete with their over-achieving classmates. They're making a big mistake.

According to Peterson's, there are 1.6 million scholarships, grants and other awards available, totaling $5 billion. Much of that money comes from Uncle Sam. In fact, nearly 40 percent of enrolled college kids receive free government money in the form of Pell Grants. Such awards are granted to needy families who meet certain financial criteria. The average size of a government scholarship runs $2,303 in the 2001-2002 school year.

To apply for a federal grant, submit the Free Application for Federal Student Aid (FAFSE), which determines how much loan and grant money a student qualifies for and what a family should contribute toward tuition.

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If you have questions, don't guess or leave blank answers. Instead, contact the U.S. Department of Education at (800) 433-3243 for help filling out the form or talk to a school guidance counselor. More on federal grants is included in Chapter 3.

By contrast, private scholarships are awarded to needy and non-needy students alike. Applications for private scholarships vary, but students often can re-use essays. In some cases, a student can get feedback from a scholarship committee about a written application after a grant's been awarded. If your child doesn't win, the essay can be modified and resubmitted the following year.

Here's a roadmap for scoring scholarships:

1) Start early. Deadlines for scholarships generally don't come due until students become high school seniors. But experts agree that college-bound kids and their parents should start searching for grants as early as their freshman year. By identifying potential awards, students can choose classes and participate in activities that will boost their odds of winning free cash.

For example, a student who's achieved Eagle Scout status – the top rank for the Boy Scouts of America – would do well to stick with Scouts through high school. That's because the National Eagle Scout Association awards various scholarships, including one that's worth $48,000 and four $20,000 scholarships. Note that applicants must be a graduating senior or entering college when they apply.

Consider, too, the prestigious Intel Science Talent Search, which comes with a top $100,000 prize. Students must develop and submit their own experiments to be considered for this award. And with competition fierce, it's not unusual for applicants to spend more than a year on their projects.

2) Let the Internet be your guide. Tracking down scholarships is a lot easier thanks to the Internet. Petersons.com contains one of the largest databases available with more than 1.6 million awards worth nearly $4 billion.

The best Web sites enable students to submit a personal profile online, then receive a list of matching scholarships for which they might qualify. Offer as much detail as possible. For example, someone who lists "engineering" as their chosen major may not get as many scholarship listings as someone who specifies "chemical engineering." That's because various professional groups use grants as a way to attract talent.

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Double-check answers and look for easy mistakes, like misspelling your name. Don't leave answers blank. Students can modify and resubmit their profiles to see what other scholarships match. It's also smart to sign up with at least two sites. You'll find that there's plenty of overlap, but you can rest assured you've identified most of the scholarships available.

Finally, never ever pay fees to obtain a listing. There are enough free databases out there and paying money to identify grants and awards does not improve your chance of success. In fact, one study by a group of colleges found that less than 1 percent of students using fee-based searches actually won money.

3) Think small. It's no surprise that mega-grants such as the Coca-Cola Scholars Program and the Gates Millennium Scholars Program have certain appeal. After all, they come with big prizes that add cachet to a student's resume.

But there are good reasons to think small. For starters, thousands of students apply for big-name grants so competition can be tough. Smaller scholarships that are worth less than $1,000 or grants from community organizations often are easier to obtain. That's also true for scholarships from local groups, such as the Parent-Teacher Association, the area Lions Club or your local church or synagogue. Many employers even offer scholarships for employees' children.

What's more, winning a smaller scholarship may boost your child's chances of snagging something bigger down the road since it indicates that he or she is worthy of an award. You can find out about local scholarships through a high school college counselor. Another good source is financial aid offices at community colleges, which tend to be good, if not better, about advertising local scholarships.

Beware of Scams

Lastly, you've no doubt heard that billions of dollars in scholarship funds lie dormant each year because no one applies. Sorry to burst your bubble, but that's not exactly true. Some say the rumor began in 1987 when reports misquoted a student-lobbying group that testified before Congress about employer tuition-assistance program money that goes unused. The data was misconstrued and the myth is still propagated today by con artists who promise to track down unclaimed prizes for a fee.

Unfortunately, that's not the only scholarship scam. Between 1996 and 2002, the Federal Trade Commission has returned more than $560,000 to individuals who have been ripped off by various schemes. One of the newer scams is a "seminar" where students and families are invited to hear how to win scholarships, but end up listening to high-pressure sales pitches for expensive services that never materialize.

Steer clear of offers that cost money or require a fee. Ditto for anyone who guarantees to get you scholarship money or who requests a credit card or bank number to "hold" a scholarship. More details about scholarship scams are included in Chapter Four. You can also log onto the FTC Web site at http://www.ftc.gov/bcp/menu-jobs.htm. Or, if you think you've been a victim of a scam, call the agency at (877) 382-4357.

Finally, once your child is in college, don't assume the scholarship quest has ended. There are plenty of scholarships specifically geared for college sophomores, juniors and seniors. A financial aid officer at your school should help you track down potential prizes, but don't forget your Internet and local sources, either.

The excerpt you just read is from Get a Jump! The Financial Aid Answer Book, which includes contributions from CNN/Money editors. If you're interested in more of the practical and money saving financial aid advice the book has to offer click here.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.