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Many scholarship search services make exaggerated claims about the number of scholarships listed in their database. This creates confusion concerning the actual number of available awards. This section of FinAid reviews the most reliable data concerning the number and dollar amount of available private sector non-college-controlled scholarships.

Definitions

A scholarship is a form of student financial aid that does not need to be repaid. Selection of scholarship recipients is usually based on a set of criteria, such as academic, athletic, or artistic merit.

A grant is a form of student financial aid that does not need to be repaid. Selection of grant recipients is usually based on financial need.

The terms scholarship and grant are often used synonymously.

A scholarship sponsor is an entity that offers a scholarship to qualified candidates. Sponsors can include individual philanthropists, non-profit organizations, for-profit businesses, and private foundations.

A scholarship sponsor may operate several scholarship programs each of which may offer several scholarships. For example, the Ayn Rand Institute sponsors three essay contests, the Anthem Essay Contest, the Fountainhead Essay Contest and the Atlas Shrugged Essay Contest, which offer 229, 244 and 49 awards, respectively. An individual student can apply to only one contest, depending on year in school, and can win at most one scholarship in the contest.

Counting Scholarships

Scholarship search services usually advertise the number and total dollar amount of scholarships listed in their database, as opposed to the number of award programs (distinct addresses). These counts are prone to several sources of error:

• Distribution Assumptions. Only about 40% of scholarship sponsors respond to questions concerning the number and amount of awards granted during the previous year. If the search service estimates the total by multiplying the averages by the total number of programs, the numbers will often be too high. Such an estimation technique assumes a uniform or normal distribution of scholarship programs according to the number and amount of awards. Unfortunately, the number of awards per program is skewed by the existence of several very large scholarship programs. When these programs are included in the averages, they yield totals that are too high, often by an order of magnitude.

  A better approach would involve multiplying the number of programs by the median number of awards per program. (A third of all scholarship programs have just one award, and three-quarters have four or fewer awards. The median number of awards per program is two.) One could also use the average number of awards per program after removing statistical outliers.

• Substituting Maximum Award for Average Award Amount. Many scholarship databases inflate the dollar amount of awards listed in the database by multiplying the number of awards by the maximum award amount, as opposed to the average award amount. When the award amount depends on the cost of tuition, often the search services assume an overly high value for the cost of tuition.

  For example, the Ayn Rand Institute's Fountainhead essay contest has a first prize of $10,000, three second prizes of $2,000, five third prizes of $1,000, 35 finalists of $100, and 200 semifinalists of $50, for a total of 244 awards. If a scholarship database multiplies the award count by the maximum award of $10,000, they will report $2.44 million for this program, even though the actual figure is $34,500.

• Double-counting Award Programs. Some scholarship databases segment the award programs by selection criteria, causing the same award program to be listed multiple times. They may also list named subawards separately. This can lead to double counting of the number of awards.

• Varying Definitions of What Constitutes a Scholarship. Some scholarship databases include government aid programs, such as federal and state student aid, employer tuition assistance, and college-controlled awards in their totals. For example, including the Pell Grant program and state grant programs in the counts can significantly inflate the totals.

Another problem with the counts published by the various scholarship databases is that they are not independently verifiable.

Expected Number of Valid Matches

The most reliable method of comparing scholarship databases is to count the number of distinct addresses listed in each database. This gives an indication as to the number of different scholarship programs listed in the database, and correlates well with the number of good matches a typical student can expect.

Since the scholarship databases are unwilling to release their proprietary lists of sponsor addresses, the only available option is to use statistical sampling techniques to estimate the expected number of matches for each database:

1. Create a set of student profiles that are designed to reflect the typical student, varying primary characteristics like gender, race, and year in school.

2. Establish a set of population weights according to the prevalence of these profiles in the student population.

3. Use the profiles to search each scholarship database, counting the number of initial matches.

4. Review the initial matches to filter out award programs that do not actually match the profile to arrive at the number of valid matches.

5. The number of valid matches also omits matches that are not up to date (defunct award programs and awards for which none of the contact information is current), duplicated awards (i.e., same award under slightly different names), and scholarship scams.

6. Compute the weighted average of the number of valid matches using the population prevalence rates for the profiles and the number of valid matches for each profile.

National Postsecondary Student Aid Study

The National Postsecondary Student Aid Study (NPSAS) is a large survey of college students to gather data on how they paid for school. It is conducted every 3-4 years by the National Center for Education Statistics (NCES) at the US Department of Education.

The NPSAS is the largest survey of its kind. The 2003-2004 NPSAS surveyed about 80,000 undergraduate students and 11,000 graduate and professional students. This is a statistically significant representative sample of the student population.

The NPSAS's PRIVAID variable (PRIVAIDR in 1989-1990) contains information about private sector scholarships from "outside" sources. It excludes government, employer and institutional aid, such as athletic scholarships. The following tables provide statistics for graduate and undergraduate students based on this variable.