Athletic Scholarships: Myths and Misconceptions

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Athletic scholarships are rare.  “Full Rides” even more so.

Regardless of beliefs/misconceptions held by parents, even by the students themselves, only 4%-5% of high school athletes will ever play a sport in college.  Of those that play for their school, only D1 athletes will receive a “full ride” and those rides are limited to 6 sports – basketball and football for men, basketball, gymnastics, tennis, and volleyball for women. 

Those rides are further limited by the number of scholarships a school is permitted to award, as well as the scholarships that may be available in any given year.  All other collegiate athletes receive either partial or no athletic scholarship money.

So, let’s avoid those myths and misconceptions…

Myth 1: Every athletic scholarship is a full ride. 

The average athletic scholarship is less than the annual cost-of-attendance ($18,000).  All sports other than those mentioned above are considered “equivalency” sports.  This means the coach can divide available money among players, without restriction on who can receive how much.  Further, while D1 schools may provide multi-year scholarships, the vast majority are year-to-year and may not be renewed.

Myth 2: Scholarships are available only for Football, Basketball, and Baseball.

Not true.  Partial scholarships are available for a multitude of sports.  Families should weigh partial athletic scholarships against other financial aid offers.  Families may receive more in need-based financial aid then through an athletic scholarship.  An athletic scholarship may not be in the best financial interests of the family.

Myth 3: Scholarships are only available at the D1 level.

Also untrue.  Athletic scholarships are available at the D2, NAIA, and Junior College levels.  Even D3 makes merit-based, not-athletic scholarships available to prospective athletes.

Myth 4:  Good grades aren’t needed.

Good high school grades are a must.  Students signing a Letter of Intent face many stipulations, including the need to maintain a minimum GPA and to exhibit good conduct.  Let’s face it, the school is paying the student to play, providing education, food, room, board, etc.  Coaches won’t recruit athletes they believe may not do well in college and high school grades can be a good measurement of future success. 

Myth 5: College coaches will contact players.

They may, but more than likely they will not.  Coaches face a number of restrictions on how, when, and how often they may contact a player.  There is no limitation on how often a student or his high school/club/travel coach can contact the college coach.  A failure to communicate can be tied to a number of reasons, from looking at the wrong school for you, it’s the wrong program, or the coach is prohibited from making contact.  The burden is on the player to market themselves.

Do Rich Students Get More Financial Aid?

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While every school has its own financial aid formula and offers aid based on a family’s estimated financial need, schools now tend to dole out more aid based on accomplishment.  A recent report suggests that schools spend more to attract wealthier students.

According to a 2019 National Center for Education Statistics report, students in the highest 25% income range received a greater amount of non-federal aid on average compared with all other income levels. 

This isn’t new to us or to our clients.  Schools usually award the best aid packages to those in the top 25% of any given incoming class; they done so for years, decades even.

Nevertheless, it seems that schools award more aid to the wealthy.  Why does it appear that way?

Schools actively pursue children of “wealthy” families, wealth being determined via the admissions office and desired demographics for the incoming class.  Non-need based aid is used to attract high-performing students of wealth.

Decisions are rooted in the desire for prestige.  Schools tend to choose students that will boost their rankings, whether it be the desire to attract students whose admission they’ll deny, thereby creating a higher statistical ranking in “prestigious” school reviews, or the desire to attract better-prepared students who are more likely to graduate and donate to the school as alumni.

Rankings are partially based on performance metrics.  Students from wealthy families tend to be better prepared for academic success, both high school GPA and high standardized test scores.

Moreover, schools compete for students.  The more attractive the student, the greater the award. 

Yet, financial aid budgets are limited.  There’s only so much money available in any given year.  Schools must make choices regarding how much is offered in aid to whom. 

Schools have different aid formulas and different budgets.  Families must choose those schools that will award them the most “free” money in the offered financial aid package.

It’s a game of leverage.  Do you know how your family can qualify for the most need-based aid possible?  Do you know how your child can make themselves an attractive candidate to schools?  Do you have the resources needed to help your student qualify for the most merit-based aid possible?  Do you know how to find the schools that will compete with each other? 

Most importantly, do you have the time needed to devote to your family’s college planning campaign(s)?

If you’re concerned and confused, please contact us to schedule a free, no-obligation consultation.  We are waiting to hear from you!

The Benefits of Borrowing for College

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With the media focused on an “alleged” student loan crisis, parents and students fear student loans.  This fear, however, may be somewhat misplaced.  The crisis typically affects those:

  • who have failed to obtain a degree,
  • who continue on into graduate or professional schools, and
  • who have taken on the burden for those who either have failed to graduate or have obtained a degree in a field with little to no hope of employment.

With the cost of an education ever-increasing, school loans, whether by parent, student, or both, will be part of the package.  Some parents will pay for the education entirely, others will leave the burden entirely on the shoulders of their children.

Loans will be part of the package, typically federal student loans and Parent PLUS loans.  Why not consider a third, perhaps better option for the parents?  Why not consider private student loans?

These loans typically require a cosigner.  Yes, parents who cosign can be left “out to dry.”  But, the benefits outweigh the possible cost.

  1. The loan can help build creditAs the primary borrower, the balance can be found on their credit report.  It will be reflected on the parent’s credit report as well.  But, a positive payment history can help your student establish good credit, even if you are making the payments.
  • Parent PLUS Loans typically have higher interest rates.  Don’t rush to take a PLUS loan before reviewing the private loan options.  With good credit, you might obtain a better interest rate.  Even if the private loan results in a higher rate, it doesn’t make it less expensive.  PLUS loans have an origination fee.
  • PLUS loan repayment begins when the loan is disbursedWith private loans, ou can choose the repayment option that works best for you.  Payment can be deferred until after graduation or payment can start while the student is in school, whether a full monthly payment or interest-only payment.
  • The private loan lender may offer a co-signer releaseAfter one to three years of on-time payment, your child can apply to have you removed from as cosigner, thereby eliminating your responsibility.  This helps your child cover costs without burdening you for decades.

College Planning in a Pandemic???

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Now that we’re tucked into our houses, apartments, or places of abode, either through quarantine or “stay-in-place” orders, enjoying the benefits of social distancing and at-home children, college planning likely occupies a lower position on the “honey-do” list than it once did. 

Makes sense.   When considering the worldwide threat to our very existence and the massive blow to our personal wealth, why plan?

After all, you’ve likely experienced a 30% or more decline in your 401k balance.  That’s a loss that will never be recouped.  Sure, if you can stick it out long enough, what’s left might grow back into what once was.  But, you’ll never be back to where you were and could have been. 

If only you had worried about the return of your money, not the return on your money, you wouldn’t have lost a penny in the recent downturn.  Our grandparents and great-grandparents who followed the advice of Will Rogers (who quoted Mark Twain) had it right. 

Retirement, let alone raiding the retirement fund to help pay for the kids’ education, seems hopeless right now.  It’s not, though…

Now, let’s look at 529 plans.  These plans are the financial vehicles that Wall Street and our financial advisors tell us have the greatest “odds” of having the money for school when we need it most.  Yet, one of the very first questions asked of parents is where, of the options available under the plan, do they want to invest the funds?

That doesn’t sound like a savings plan to me.  If I have a chance of losing money, of having less when I need it, less than the amount I’ve actually contributed to it, I’m not saving, I’m gambling.

Since the investment options are tied to the market, I wonder how 529 plans have fared lately.  Perhaps the same as the 401k plans?

These are just the vehicles those in the “know” tell us to put our hard-earned money.  These are the vehicles that bend to unknown market forces, vehicles that restrict access to and use of your money, vehicles outside your control. 

And, these are the vehicles to which you entrust your money???

If you had access to a financial vehicle that has weathered depressions and recessions alike without loss, a vehicle with few restrictions on access to your money and no restrictions on use of your money, a vehicle that remains in your control, where would you have placed your money?  In 401k and 529 plans?  Or, in that vehicle, a vehicle that had, and will continue to have, a net positive gain year-in and year-out?

That vehicle will be of utmost importance to you moving forward through and out of the pandemic.  It’s where you’ll need to save your money, safely assured of the return of your money, unworried about the return on your money.

This vehicle is of even more importance because the colleges and universities likely will have even less financial aid available to award.  Why?  Because their endowment funds were invested in the market, just like your 401k and 529 plans.  Their losses were so much greater than ours, not in percent, but in amount.

College planning is now even more important than you may have otherwise believed.  Not only does your student need to be the most attractive to schools as possible, you need to save your money in a vehicle that won’t negatively impact the financial aid for which you qualify.

Do you know how to make them more attractive?  Do you know how to find the right school at the right price for your child, based on academics, size, location, and budget?  Do you know what steps to take when throughout your child’s high school career?  Do you know the entire process is so much more intense than it was when we were looking at schools? 

If you’re confused and worried, please contact us to schedule your next (or first) college planning campaign meeting.  We look forward to assisting you on your journey.