156 | How to Pay for College with Scholarships using the Scholarship System

Welcome to episode 152 of The Retirement Years on Profit Boss® Radio! In this episode, we’re talking about how to use scholarships to pay for college.

We’ve all heard the horror stories of those who graduate with hundreds of thousands of dollars in student debt. Many of my clients are faced with the very real tradeoff between making sure their kids graduate with no (or minimal) debt and funding their own retirement. 

To make matters worse, there’s so much conflicting information around the topic of financial aid that it can be completely overwhelming. It takes practice to learn the difference between a marketing scam and a real opportunity, and few students discover how many incredible scholarships are out there for the taking.

If you’re trying to make sense of it all and can’t figure out how you (or your kids) will pay for college or university, today’s episode of Profit Boss® Radio is for you.

I’m joined by Jocelyn Paonita Pearson, founder of The Scholarship System. Over the course of her college career, Jocelyn secured over $126,000 in college scholarships, graduated with zero student loans, and even received overage checks to cover her expenses. And now, she’s teaching others how to do the same. Her 6-step system for finding scholarships has helped families secure over seven figures in scholarships!  

So, are you ready to learn how to avoid crushing student debt, find scholarships you never knew existed, and learn how to actually win them? Then you don’t want to miss this episode. Tune in to Profit Boss® Radio today!

Here’s what you’ll find out in this week’s episode of Profit Boss® Radio

  • Why searching for scholarships almost always leaves families feeling totally overwhelmed – and how to start making sense of this complicated process.
  • The difference between need-based and merit-based aid.
  • Why the income and asset thresholds that determine your Expected Family Contribution are much lower than most people think.
  • How to find out whether the top tier schools that are on your radar are actually financially doable – and why no one needs to go to a second-rate school.
  • Why should every student submit the FAFSA (Free Application for Federal Student Aid), regardless of family income and wealth.
  • How to tell the difference between scams, sweepstakes, and real scholarships.
  • How to meaningfully budget to pay for schools you actually want to go to.
  • Why it’s almost always better to be deeply involved in a small handful of activities than engaged at a surface level with a ton.
  • The best time of year to start actively looking for scholarships.
  • Easy steps you can take to improve your essays and letters of recommendation.
  • The biggest reason people don’t get scholarships – and how to take things one step at a time to get real results.

Tweetables

Free Workshop

Do you want to learn the exact system that Jocelyn followed to secure over $125k in Scholarships and Funding? Get her free webinar→ 6 Steps To Quickly Secure Scholarships For College (…And Avoid Student Loan Debt)

Resources and Related Profit Boss® Content

Call for Listener Stories

Hey Profit Boss® Radio listeners! If you reach a financial goal you’re proud of, tell me about it! I will continue to share listener win stories throughout 2019. Remember, the Profit Boss® community is here to support you and that includes celebrating with you when you accomplish something incredible. 

  • If you crush a specific financial goal, I want to hear from you.
  • If you’re thankful for something that has happened in your financial life or career, I want to hear from you.
  • If you are making big financial or career plans, I want to hear from you!

Your financial success is possible and so many of you are already making that a reality! So, don’t keep your wins to yourself! Share them with me so that I can air them throughout the year on Profit Boss® Radio.

Email your audio clip to [email protected]. And we’ll be in touch if we plan to air your story. Thanks, ladies!

#AskHilary

And let’s not forget that this show is powered by you and your stories and questions. Every month I’ll be doing an #AskHilary episode where I answer listener financial questions.

  • So, what’s that top of mind money question that’s been pinging around in your brain?
  • Where have you been stopped?
  • What have you been arguing with your spouse or significant other about?
  • What tip or tool aren’t you sure about?
  • Do you have questions about saving? Spending? Budgeting? Investing?

Pick up your mobile phone right now. Yes, right now. And open your voice recorder app. Yep, go ahead and open that app and record yourself asking me that question. Just say your name, first name only is okay, and then what city you’re from, and then ask away.

Anything you want to ask. And once you’re done recording, export that beautiful little recording and email it to [email protected]. I can’t wait to hear your questions!

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Transcript

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[INTRODUCTION]

 

Hilary Hendershott: I’m Hilary Hendershott, your host, and this is Profit Boss Radio The Retirement Years Episode 156. The Retirement Years on Profit Boss Radio is your weekly wealth building and retirement mastermind. Profit Boss is also a movement for women who want to reach their full wealth potential and be financially free. Let me be your guide as you defy the odds. Take control of your money, grow your wealth, and retire well. Do you want the secrets of wealth and retirement to be yours? This is the place. I’m Hilary Hendershott. I’m a certified financial planner running a leading advisory firm for women and couples and I’m sharing with you real stories from real life and real people who are making it happen. Forget Wall Street. You ready? Let’s do this. 

 

Hilary Hendershott: Paying for college is a big deal. Today’s episode can save you tens of thousands of dollars. You’ll hear my guest on today’s episode, Jocelyn Paonita Pearson talk about how she raised more than $100,000 to pay for her own college and now she gives away her learning through this scholarship system. She founded the scholarship system to share her experience of graduating from college with zero student loans. College looked unaffordable for her so she got into action. She secured over $126,000 in college scholarships, even receiving an overage check for expenses. It wasn’t easy. It took her years to figure out exactly what to do to be selected for scholarships but now she helps families learn how they can do the same by teaching them her six-step system. Families have secured over seven figures in scholarships and growing using her system. She lives in Charleston, South Carolina, and she’s married to her husband, Donny, and she has what she describes as a pleasantly plump fur baby named Jaffe. Enjoy my interview with Jocelyn Paonita Pearson of The Scholarship System and head over to HilaryHendershott.com/156 for more details.

 

[INTERVIEW]

 

Hilary Hendershott: Jocelyn Paonita Pearson, welcome to Profit Boss Radio.

 

Jocelyn Pearson: Thanks for having me. I’m excited to be here.

 

Hilary Hendershott: Oh, my goodness. This is such a hot topic and interestingly, a little bit divisive like there seems to be some controversy about whether it’s actually possible to get scholarships to pay for college. But you actually did it. Is that right?

 

Jocelyn Pearson: Yes, I did. And so, I’m excited to share it.

 

Hilary Hendershott: Yeah. And there’s just a massive amount of information out there and you can imagine, I took some listener questions about this topic. And I would say the thing I perceive people are feeling most is just totally overwhelmed and not understanding how to navigate what’s out there. So, if I could start with such a broad question like how many scholarships are actually out there or maybe if it’s impossible to answer that question, how can people begin to categorize like merit-based, athlete-based, how can we even start the conversation about what’s out there? 

 

Jocelyn Pearson: That’s a great question. And giving a number for how much is out there is kind of impossible because it’s always changing. Organizations are offering money one semester, not the following, and so on and so forth. But still, there is so much money out there. We just need to know where to find it. But your second question about, well, how can we really just break this down into categories? I tend to look at paying for college when it comes to money for college in a few different categories. First and foremost, where most people think about money is financial aid so that is usually need-based aid, which families can get through FAFSA primarily in the CSS Profile. Then we have like you mentioned merit-based aid. 

 

So, merit-based aid is based on a student’s qualifications. I actually personally include athletic scholarships within that because it’s usually awarded by the university. A lot of times universities will look at athletes and they’ll say, “Okay, you qualified for this academic and this athletic one. Which one do you want?” So, it’s usually either/or. Of course, you take the bigger one, but either way, it’s still based on their merit as far as their athletic skills. So, merit money is typically through the university and again, it’s based on qualifications, whether it’s test scores, GPA, leadership, athletic skills, something that you are qualified for. 

 

Hilary Hendershott: Okay. So, the financial threshold that maximizes the family’s expected family contribution on the FAFSA is relatively low given the cost of living. I mean, I know I talked about the cost of living on my show a lot because I live in Silicon Valley, but it’s just true that colleges expect parents to pay a maximum amount of money based on an income or asset level that actually isn’t that high. Do you know that current number for this year and is it true that families who have a threshold of income or assets disqualify their students for scholarships?

 

Jocelyn Pearson: So, actually, it varies by university. So, expected family contribution, you get your EFC number from FAFSA. So that, of course, is one set number but when you take it to one university versus the other, one might say, “Oh, that means you can pay for all of it,” where another one may say, “Okay, that means that you get this amount of funding.” So that number, even though you would think it would give you an answer across the board, it just doesn’t. So, it’s really just the starting point. You have some families where it depends on where you are in the pool of candidates within that university. So, say for example, our family makes $150,000 and we are going to Yale. If we’re going to Yale with $150,000, we are probably towards the bottom of the income threshold, very on the lower part of it. And so, our chances of getting aid are a little bit higher. Now, if we make $150,000, and we’re going to a small, local-based University, we’re probably at the upper end. And so, our chances of getting funding are a lot less. 

 

So, actually, this is what makes paying for college so challenging is that there’s so many gray areas when it comes to FAFSA, EFC, expected family contribution, and what a university uses to calculate what they can pay or not. And the thing is it’s just totally unrealistic. I mean, there are these calculations that they’re coming back with. People are making 100,000. Okay. You’re expected to contribute 30,000 a year. What family has $30,000, a third of their income to contribute to college? The good news is if you have multiple children, it is divided by them so that is one good thing but, yeah, it’s not a set formula where you can say, okay, if you make this much, you are just blanketed across the board, not going to get money at any school. And so, that’s why so a lot of people look at the schools, decide on schools, and then they see if they can pay for it. But if they can flip that search, and this is what we work with our families on a little bit, if you could flip the search and instead say, “Okay, here’s our credentials, here’s our family situation, what schools would offer us money?” and then start seeing, okay, now let’s narrow down which ones do we like. 

 

If we can start looking at it that way, you’d be amazed and this doesn’t mean going to schools that are not high quality. We had one family that they never even thought Duke would ever be a possibility for them. But by doing the research, they actually found that they fell in the right threshold and were able to afford Duke and their daughter was able to get in. Never did they even consider it being something affordable. So, it doesn’t have to be a second rate school or somewhere that they don’t want to go but by opening up the doors by saying, first let’s find schools that we can afford and then let’s see which ones we like. We have a lot of families find schools that were not on their radar but actually are doable.

 

Hilary Hendershott: And when you say aid, that means loans, right? 

 

Jocelyn Pearson: So, aid can be a mixture of grants or loans. It could be a mixture of financial aid from the government, it could be a mixture of merit money from the school, and it can be a mixture of loans. So, when we’re talking about money for paying for college, the first step is to try to maximize how much we can get through the university and there’s two avenues. First is through merit-based so that’s okay, hey, I’m applying here because I’m top 25% of your applicants so I know I’m going to get a merit scholarship based on my stats, but then there’s also, okay, we’re also going to submit FAFSA and based on FAFSA, you’re going to give us money from the government as well. And then there’s outside money and those are third-party external scholarships. So, that’s actually the third category that I was going to mention earlier. So, these are all the different so we say, you know, first and foremost, let’s find a university that’s going to give you something that closes the gap as much as possible, then, if possible, let’s see if we can get money from FAFSA. And lastly, that would bring the bill down to as little as possible that that brings our gap to what it can really be and then let’s look for outside money to pay for that. 

 

Hilary Hendershott: I guess I just think like a financial advisor in terms of loans are far less interesting to me than scholarships or grants. I hear people graduating from college with multiple six figures of debt. And that’s what you mean by FAFSA. FAFSA is loans, right? 

 

Jocelyn Pearson: No, no, no, no.

 

Hilary Hendershott: Oh. 

 

Jocelyn Pearson: I’m not talking about loans in any of this. 

 

Hilary Hendershott: Oh! 

 

Jocelyn Pearson: So, when I talk about financial aid, financial aid can be debt-free money.

 

Hilary Hendershott: Got it. Okay. Good. I’m glad I asked. Okay. 

 

Jocelyn Pearson: Yeah. Yeah. Yeah, because I agree. I mean, the goal is to avoid student loans as much as possible. Now, if we have to take out student loans, the best options are the ones that you can get access to through FAFSA because the interest rates and the terms are usually much more forgivable, but no, everything I’m talking about is debt-free money. So, to get debt-free money through FAFSA, it is based on income but there are I forget what percentage. I want to say it was like 30% of families that made under 150,000. They got something through FAFSA that was debt-free. So, some people think you have to make below the poverty line to get anything and that’s not true. Like I said, it depends on the school even. So, we actually say it does not matter how much you make. Family should always submit FAFSA. Maybe it’ll get them some of the debt-free money through FAFSA, but at the very least it could open up the doors to some better loans. But no, everything I’m talking about here it’s debt-free money. 

 

Hilary Hendershott: Great. And you had a positive experience in your own college attendance. Based on what you know now, is it worth talking about what you actually did to get that money or is that too anecdotal and we should just talk about what you’re teaching now? 

 

Jocelyn Pearson: Yeah. No, absolutely. What we’re teaching now is my own system that I created and got myself through school. And I not only got my entire education covered, but I actually got paid to go to school. Every semester, I had an overage check but through me, for me, I knew where I wanted to go to school. And so, I was not one of those students that do what I say. Do what I say, not as I do, right? I chose the school regardless of the fact that they only offered me I think it was like 2,000 a year is what I got. So, I knew that I had to hit the road running when it came to finding outside money. So, I found in the end, I got over $126,000 in scholarships between everything and it was primarily those outside scholarships that I use to fund my education. 

 

Hilary Hendershott: And how did you find these scholarships and what qualified you for them? 

 

Jocelyn Pearson: Yeah, absolutely. So, when we’re talking about outside scholarships, there are so many organizations and businesses and associations that offer money. In fact, us through the scholarship system, we’ve actually given out scholarships for the last this year will be our fifth year giving out scholarships to give back. So, that’s why I say there’s no set number for scholarships because every year someone new is giving them, someone less is giving them But that said, when I started off looking for scholarships, I got sucked into scams. It was such a painful process and maybe some families can relate. When they go on Google and they search the word scholarships, which most families do if you’ve done this, it’s totally fine, we will get you through it, but it often comes up with sweepstake scholarships is what I call them. And these are scholarships where it’s based off of luck. It’s enter your name to win. It’s just based on a weekly drawing and that’s all. You have no control over your chances of winning. 

 

And me as a typical teenager, those were the ones I went after because they took five to 10 minutes. So, I was able to tell my parents, “Hey, yeah, I’m applying for scholarships,” and in reality, I was just submitting my name to all of these just spammers basically. 

 

Hilary Hendershott: You were buying the lottery tickets.

 

Jocelyn Pearson: Exactly. 

 

Hilary Hendershott: Exactly, while watching Grey’s Anatomy or whatever show it was. 

 

Jocelyn Pearson: So, I’m sure you’re not surprised to hear my first year. This was junior year in high school. I didn’t win anything. Until my final at the end of the school year, I found a small local scholarship that was $500 and I had to write an essay and I was like, “Okay, I can do this. It’s not too painful,” and I won. And I finally got that $500 scholarship, which many parents hear this and they’re like, “Oh, gosh, that’s not even textbooks,” but that $500 showed me, okay, wait a minute, those that I was applying to were not getting me anywhere, but this one did get me somewhere. And so, through trial and error, I started realizing which ones were worth my time, which ones weren’t, and fine-tuning it. And by my sophomore junior year in college, I was getting 50% of the ones that I was applying to. And there’s lots of golden nuggets in here and I hope some families might have picked up on it. It’s that my journey did not end at the end of high school. I continued applying for scholarships all through college years and got more and more money every single year as I went. 

 

Hilary Hendershott: Okay. Yeah. There’s so much in there I want to ask you about and what you just said dovetails into many of the questions that I got from listeners. So, many of the questions are some version of how do I filter scholarship lists into the ones that are most applicable? There are emails from scholarship databases that offer paid plans or charge for their services. Are those even worth it? Seems like a ton of spam. How can people know what’s actually viable? 

 

Jocelyn Pearson: Absolutely. And it’s such a fair question, especially these days with internet marketing. The email that I used when I was applying to what I now know were not worth my time, they were scams, that email has over 20,000 unread messages, it was just totally destroyed by all of these “scholarships”. They were really just affiliate marketers. So, whenever I tell my families how to differentiate between a scholarship that’s worth their time and a scholarship that’s not, we’ll cover that first and then I can give some suggestions on how to find legitimate ones a little bit easier. So, on one side of the spectrum, we have those fast scholarships, that quick and easy scholarships, the no essay scholarships. That’s another phrase that you’ll often see. So, these are the ones that, again, like I was doing students can knock out in 5, 10, 15 minutes and when you’re looking at them and looking at what they’re asking for, in reality, you realize, okay, this is simply based on luck and numbers. Those we tell our families, it is not worth your time. And I will tell you 99% of the families that come to us, they have all at one point applied to them just like I have. So again, if any of your listeners are listening to this, and they’re thinking, “Oh my gosh, we’ve been doing those,” it’s okay. I promise everyone. 

 

Hilary Hendershott: Don’t feel bad. 

 

Jocelyn Pearson: Yeah. We’ve all been there. So, that’s one end of the spectrum. On the other end of the spectrum, we have scholarships that ask for everything shy of your Social Security. I mean, we’re talking essays, we’re talking recommendation letters, resumes, maybe even an interview, lots of different transcripts, lots of different criteria. And these, of course, take more time upfront. However, the chances of actually receiving money from them are way higher because they’re actually legitimate. And the other reason that we want to go after once closer to this end of the spectrum is because when we’re submitting scholarships that are based on luck, the only way to increase our chances is simply submitting over and over and over which some of them don’t allow that either way. It’s just not worth your time. However, when we’re applying to scholarships that are based off of these materials, those are within our control. Those, we can always write a better essay, we can always improve our resume, we can always get a better recommendation letter. That is how we can increase our chances of winning scholarships by improving those materials. 

 

And so, we want scholarships that are making their decision based off of what I am submitting, and things that are within my control. And that’s how we can improve our chances. Because you’ll see a lot of winners, including myself, we reused materials over and over. Once we started winning, we just had to just rinse and repeat over and over. So, once you kind of crack the code and figure out which materials are best, you just kind of resubmit them over and over. And that’s because you can control those things. So, whenever we’re looking at scholarships, when we’re finding them and saying, okay, is this worth our time or not, ask yourself, is this based on luck or is this based on competitiveness? Does my student have the opportunity to sell themselves? Or is this simply based on numbers? We don’t want to waste our time on ones that we don’t have within our control.

 

Hilary Hendershott: That is fascinating. And I did see something on your website about essays that wins scholarships consistently. So, it sounds like you have some value to add there. But let’s back up just a little bit. So, in terms of how parents can know, are their scholarship database sites that are valid and not valid? Are you offering consulting services to help people know which scholarships are potential? Or are you saying the criteria is, parents, you need to go look at these scholarships and say, which ones are merit-based and those are the ones that are probably worth your time? 

 

Jocelyn Pearson: Yeah. You know, I will say that our families that have the most success, it is a team effort. So, a lot of the parents are doing the finding and the students are doing the applications. It just seems to work really, really well. That said, it doesn’t have to be that way. My parents weren’t finding them for me but for some people, that does seem to work pretty well. But when it comes to databases, I never say don’t look at them at all, because there are good legitimate scholarships that are just kind of sprinkled in there. The thing is you have to filter through a lot of junk. So upfront, you think that it’s way more efficient, because I can pop in my name, my year, my GPA, and it gives me this nice list. But the other thing we have to remember is those databases, that’s where everyone’s going. And so naturally, the ones that are popping up are probably going to be more competitive than ones that are not on those databases. And you have to pay to list your scholarship on there. So, there are a lot of scholarships that are not on these databases. So, we’ll get to where to find those. 

 

So, when we’re doing these databases, again, I never say rule them out completely. One tip I will suggest that I will share is to create a separate email for those databases. So, whether it’s [email protected] or whatever it is, keep it professional, but I would highly recommend creating a separate email for the logins to those databases. There are some databases that do charge, honestly, from what I’ve seen, they have the same scholarships that the other databases have. One exception is Scholly. They were on Shark Tank and so they did find some smaller scholarships that are less known. I found some local law offices on there and stuff, but I think they charge maybe like $2 a month or something like that but as they’ve been growing, I’m noticing more spam in there but it’s still nowhere near as bad as Fastweb. Fastweb I just avoid at all costs. So, there are some databases. 

 

Another great one and this isn’t one where you can just plug and play but JLV College Counseling. That is a great website. She does an amazing job at collecting lists of scholarships, but you do have to go through all of the pages yourself. You can’t just populate a database or populate information and then it gives you this nice list. But again, I like that because that means a lot of families are not willing to go to page 8, 9, 10 and so the chances of the competition being higher are better. The way, though, that we honestly mostly find our scholarships is we avoid the databases and instead we use Google. And a lot of people are probably like, “Oh, gosh, really? Of course, I’m using Google.” But we are using Google in a very smart way. Google is so intelligent and if you get very specific with your searches, you’d be amazed at what Google can uncover for you. So, this is actually something we had at Q&A with our members last night, and we were walking them through this. And one of the things that we can do is get very specific with our search for specific topics. 

 

So, one that people always think about is their major. So, for example, last night, we had someone, what was it, it was some type of engineering. So, I’ll just say, let’s say civil engineering. So, we can look up, we can google “scholarships for civil engineers” or “civil engineering scholarships”. We can also get more specific and say “scholarships for high school seniors, civil engineering”. We can also where I like to go. So, those are the kind of the more obvious ones, but then what I like to do is I like to look up “civil engineering associations” and then I’ll add the word “scholarship” because a lot of times associations in the various areas, whatever the major or career path are, they offer scholarships. So, when we’re doing these Google searches, a lot of times you’ll see Fastweb come up or Scholarships.com come up or the other search engines but what we do is we avoid those. We keep scrolling down and we find the actual websites. 

 

So, instead of going Fastweb.com/CivilEngineering, I’m going to keep scrolling down the results and look for say it’s CivilEngineering.com/Scholarships. That means that I know the source is the one that’s actually being linked right there and they’re probably legitimate. I mean, CivilEngineering.com or CivilEngineeringAssociation.com, that’s probably a legitimate organization that’s offering scholarships, and, hey, I want to do civil engineering. That’s perfect. So, upfront, the searching takes more time, but we’re uncovering ones that are most likely not in the databases, so they are way less competitive. They’re also most likely legitimate because we’re going right to the sources. They’re on their actual website. We can validate the company and so the chances of actually winning are just slowly getting dialed higher and higher and higher as we make these little changes in our strategies. 

 

[MONEYWISE]

 

Hilary Hendershott: Welcome to this week’s Moneywise segment designed to empower you financially and make you smarter than your neighbor. Today’s Moneywise segment is on the ever exciting and gripping topic of contribution limits. How much money can you put in those retirement accounts? Okay, I’m going to cover this relatively quickly, but you can find a full article on my blog, of course, linked to in today’s show notes called What’s Changing In 2020? Everything You Need To Know About Retirement Contribution And Income Limits if you want more detail. 

 

Let’s start with contribution limits for 401(k)s and other employer-sponsored retirement accounts. Good news, if you’re under age 50 and contributing to a 401(k) where in 2019, the max you could contribute was 19,000, now you can pop in 19,500. That number is the same for 403(b) plan participants, 457 plan participants, and the federal government’s Thrift Savings Plan participants. If you work for a company with 100 or fewer employees, you might have access to a SIMPLE retirement program. That is an acronym, not an adjective. And if that’s the case, your contribution limit went from $13,000 a year to 13,500. 401(k) catch-up contributions if you are age 50 or over, the new annual limit for catch-up contributions increased from 6,000 to 6,500. That means if you’re 50 and over, you can actually put in 19,500 plus 6,500, so a total of $27,000. And that’s the first time that government has increased the catch-up contribution since 2015. You also want to remember that even if you don’t turn 50 until the last day of 2020, December 31, you can still make that $6,500 catch-up contribution. 

 

Now, let’s talk about income range adjustments for the tax-deductible, traditional IRA, and the non-tax deductible Roth IRA. So, before deciding to contribute to an IRA or a Roth, you’ll need to determine if you even qualify to do that. For example, if you or your spouse are covered by a workplace retirement plan in 2020, you might not be able to contribute to an IRA or a Roth IRA. Check with your tax preparer or your financial advisor for answers there. The key point to remember is that for 2020, the income phase-out ranges for contributing to these types of accounts have been increased. For example, for single taxpayers covered by a workplace retirement program, the phase-out range to contribute to an IRA or a Roth is now between $65,000 and $75,000 of adjusted gross income. That’s a slight increase from last year. 

 

For married couples filing jointly or the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is now between $104,000 and $124,000 of AGI. Meanwhile, for an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, remember, you have to have earned income to contribute to these kinds of plans, the deduction is phased out if the couple’s income is between $196,000 and $206,000. 

 

Let’s talk a little bit about Roth IRAs. Taxpayers making contributions to a Roth IRA will face a limit in their ability to contribute between $124,000 and $139,000 of AGI if the individual is a single or head of household. For married couples filing jointly, that phase-out ranges between $196,000 and $206,000. It’s important to keep in mind that the amount you can contribute to either a traditional or Roth IRA still sits at $6,000 a year with a catch-up contribution of $1,000 if you’re age 50 or over. 

 

Make sure you be a profit boss and max out those contribution limits. 

 

[INTERVIEW]

 

Hilary Hendershott: So earlier, you talked about how the family has $150,000 in income. They’re probably low in terms of the spectrum of family’s income at Yale versus they’re probably high at a local college. When families are beginning their search, should they be sorting by colleges where they think their family income is on the lower end of the spectrum? Are these scholarships college-specific? Or like in this example of civil engineering, are most of them profession or field of study-specific? 

 

Jocelyn Pearson: That’s a great question. 

 

Hilary Hendershott: So, like four questions in one.

 

Jocelyn Pearson: These are all fantastic questions, though, and I really love them because you know what, when I’ve been doing this for over 10 years and a lot of times we just assume someone understand something or that, oh, of course, that’s obvious. And so, I really love that you’re making me take a few steps back and explain it so I appreciate that. So, a lot of these that I’m talking about as far as using our Google search method, we call it our savvy Google search method but when we’re doing this, we’re finding outside scholarships. Outside scholarships are typically based on the major or whatever characteristic they get them for, and can go to any accredited university. So, unless it specifically states a certain school, it can usually be for any school that they choose as long as it’s an accredited university. So, if it’s for civil engineering, as long as they do civil engineering, they can receive that scholarship at an accredited college unless it specifically says it has to be in a certain zip code or a certain state or at a certain university, which that definitely does exist. 

 

Now, the ones where you’re talking about looking for merit money based off of what we make, parents can use two databases. There’s CollegeData and there is College Navigator. So, those are the two main search engines that you can use. It doesn’t help you find necessarily scholarships, but it helps you find universities that are based off of your student’s statistics, off of their qualifications. And you can actually say, you can say exclude statistics based off of financial aid. So, if you click that, then it’ll say, okay, 25% of students received money from this university that did not have financial aid. So, you can actually select. You can check a box that can really exclude those financial aid numbers. So again, it’s CollegeData. I think it’s CollegeData.org and then if you google College Navigator, it’s a dot-gov website. The link is something crazy, but College Navigator is another resource. So, that’s for merit money. And again, merit money is through the university but the Google method is for outside money that can be used at pretty much any university as long as it’s accredited.

 

Hilary Hendershott: Okay. It is a lot of information. You’re right. I can tell you’re steeped in it. Let’s take the example of a high school junior and let’s just take civil engineering since it sounds like you’ve done the search somewhat recently. Where does someone like that start? Should she look at colleges that are local that she thinks she can afford? Or should she start by looking for civil engineering scholarships and sort of see where that takes her or maybe both? 

 

Jocelyn Pearson: That’s a fantastic question. So, we have two programs, one that’s all focused on just scholarships where we talk about qualifications, how to apply, improve your essay, all this stuff. We have another complimentary program where we walk families through the stage from, oh my gosh, what do we even do all the way to how do we close the gap? And the reason I’m bringing this up is because I think that the stages that we use to organize that program would answer your question so perfectly. So, the first stage when we’re trying to approach this when we say, “Okay, honey, you’re majoring in civil engineering. Where do we want to go to school?” That’s where we need to start at the beginning and say, “Well, actually, let’s take a step back and look at what can we afford?” So, let’s look at how much are we willing to take out in student loans? How much are we willing to contribute from whatever money we have, whether it’s cash flowing it, how much do we have in a college fund and what do we think that maybe you could get in scholarships? So, kind of creating a little rough budget. 

 

From there, so that’s stage 1 for us so that’s really setting up the foundation. Stage 2 for us is finding universities so that we can start building our list of options and then seeing, okay, are they coming into this budget at all? Are they near? Are they far? And getting an idea. And when we’re doing that, we want to go to those databases, College Navigator, CollegeData. Even College Board has a search engine as well for universities. For our families, we have a spreadsheet actually where a lot of the data is exported, but you can still use those databases to find it. And so, punch in your student’s figures and see what universities are popping up to see if you have a likelihood of getting money from these universities. So, if they have a high percentage that they give for financial aid and your family would qualify for financial aid, the chances are higher, if you do not think that you’ll qualify for a financial aid, so your family makes half a million a year, chances are probably pretty slim, then you’d want to check that box saying, “Exclude any financial aid offers, and I just want to see the merit money that they offer,” so that way we can see if my daughter can get the merit money based off her skills instead of our financial need, and then start building that college list that way. So, that’s where we would begin. 

 

From there, you can depending on again how much your family makes, I mean, there are strategies even if they’re up to about $200,000 a year that can possibly get them some money through FAFSA or some tax credits or something like something in that arena. There’s lots of different options. But the next stage that we go into is, okay, how can we maximize FAFSA? Can we negotiate with the school? Is there something that we have that we can show them that our FAFSA results aren’t accurate so that we can get that college bill as low as possible? So those are the two focuses in order. That’s stage 2 and 3. And then stage 4 is closing the gap. Okay, so this is how much we think we’re going to have to pay for this college, what is left? So, say we have a gap of 10,000 a year that we need to close or 20,000 a year that we need to close. Okay, let’s start looking for external scholarships. Now, this is the thought process of the flow but I will say that students should start looking for external scholarships as early as they possibly can, because there are scholarships out there for kids as young as 13 years old. 

 

Hilary Hendershott: To pay for college? 

 

Jocelyn Pearson: Yes. Actually, there’s scholarships for kids as young as four years old. They draw a painting or they paint a picture and they can get a bond. But those are of course, a little less common. Yeah. You know, everyone always hears that and they’re like, “Okay, well, I’m going to have my baby start now.”

 

Hilary Hendershott: Right, exactly.

 

Jocelyn Pearson: But the logic of it, the stage flow, I just want people to understand that first, the biggest way to knock off the bill is to find a university where my student can qualify for merit money, then see, okay, can we get money through FAFSA? If not, okay, we moved to stage 4. That’s fine but you may be surprised with FAFSA. You should always try with FAFSA and CSS anyway. And then lastly, we want to try to close the gap with as much external money as we possibly can. But that said, that external money we can start applying for. In my opinion, no family should start later than junior year in high school. But that said, I applied all the way through college. So, my senior year in high school, I had enough money just for my freshman year. By the end of freshman year, I got enough for sophomore and so on and so forth. So, if a family say their student’s already in freshman year in college, it’s not over. They can still change. If they had to borrow for this year, they can change to that next year. That’s 100%. doable. 

 

Hilary Hendershott: That’s really I guess inspiring/empowering and it sounds like you built skill as you went. So, you got more and more effective at actually receiving the scholarships that you applied for, right? 

 

Jocelyn Pearson: Oh, absolutely. And that’s why we call it The Scholarship System, right? I felt like I kind of cracked the code. I kind of figured out this system and made it a well-oiled system. It was beautiful. 

 

Hilary Hendershott: That’s what I like to hear. Okay, going back to our civil engineering junior in high school, what if she’s active in drama? Are there other skills or abilities that she should foster or nurture that make her more likely to receive a scholarship?

 

Jocelyn Pearson: I love that question. 

 

Hilary Hendershott: I’m so glad I’m asking questions you love, Jocelyn.

 

Jocelyn Pearson: Well, you know what, the reason I love this is because I think I give an answer that a lot of families don’t expect. And that is because a lot of families think in order to get money, their student has to be involved in everything under the sun. And I’m here to tell you all and let you guys off the hook and let your student off the hook. It is better to be deeply involved in a few things than to be surface-level involved in a million things. Committees see right through it when students are a seat warmer. So, if they are super passionate about civil engineering and drama and they are very involved in those two things, and maybe they have a part-time job on the side, that is amazing. I would rather see a student gets very involved, take initiative, maybe lead a project here and there within those few things than to try to be in a million clubs. But that said also, a lot of students fall into the challenge of, for example, athletes This is very common. Athletics takes so much from students, but if they’re only in athletics, we do want to see them in something else. But again, they don’t have to be involved in a million things. 

 

But if they are involved in drama or a band or music or whatever it is, they can find scholarships for their hobbies as well. So, it’s not like they can only get scholarships from outside sources based on their major. That’s just the first search. After that, we can start thinking of any kind of passions. We’ve found students that, oh my gosh, we had one that loved horses. We googled scholarships for horse lovers and found her six. 

 

Hilary Hendershott: Horses?

 

Jocelyn Pearson: Yes, found her six different options. 

 

Hilary Hendershott: The most expensive hobby on the planet.

 

Jocelyn Pearson: That’s true. 

 

Hilary Hendershott: The equestrian scholarships. Okay, good. Sorry, I interrupted you a little bit there. So, it sounds like what the students should do is find what he or she is really passionate about, go deep, take a leadership opportunities as they arise or spearhead some kind of project so that committees can see that you are able to get things done and able to get people to kind of come under your wing. Stop me if at any point I’m way off here. And so, parents can stop having their kid have an 80-hour a week gig starting in their sophomore year of high school trying to do everything, candy striping, the 5-point GPA. They don’t have to be all things to everyone. 

 

Jocelyn Pearson: Right 100%. I mean, it’s similar to hiring a candidate. If any parents have ever hired someone, these committees are looking at it in almost the same perspective. So, that’s something to keep in mind. 

 

Hilary Hendershott: Okay, great. And then it goes without saying, a lot of students who start with one major are going to transfer out of that major. Is that hardship if you have a scholarship for civil engineering and then you transfer out of that major in your junior year? 

 

Jocelyn Pearson: Yeah. So, this comes up a lot for families. So, if it’s through the university and it’s based on their major, they will lose the scholarship if they change their major. If it’s for an outside scholarship say it’s for a onetime year thing that it was based on simple engineering and that was the qualification to apply, sometimes it’ll say if they have to pay it back if they change their major, most of the time they don’t.  Now, that doesn’t mean that you should just go and apply for any major and say, “Oh, I just changed my mind,” because they can see through that, but most of the time, they’re not going to come after a student if they decide to change. A lot of times they do know that and some majors have so many students that change. For example, nursing, it’s so difficult. Actually, it’s very difficult to find a nursing major start in nursing scholarship for freshman or sophomore year in college. Usually, they wait until you’re a junior and you’re in the nursing program, because they’ve found that so many younger students think that they’re going to go into that field and then they don’t, so they’ve actually stopped offering scholarships that early. But again, it’s not a huge issue unless it specifically states if you change your major, you owe this money back. 

 

Hilary Hendershott: Okay, good to know. So, you’ve actually by proxy answered a lot of the questions that I had from listeners today. The last question, is there a schedule, a calendar of the year, a season where scholarship applications come do or is this a year-round kind of a part-time gig? 

 

Jocelyn Pearson: Okay, so it’s both. So, I’m not exactly sure when this is going to be released but I will say that early, early spring semester is just the absolute scholarship Hay Day. That is when there are so many scholarships coming up, even starting around December 15, January, February, March, April. But the good news is there are scholarship deadlines that go all the way until when we are right about to start the fall semester. So, us through the scholarship system, we actually like I said, we give out scholarships and our deadline is in July, and it’s for that fall semester but we are not the only ones that are that late in the game. We do it on purpose so that we can see students that need last-minute money, but there are a lot of scholarships that have May, June, July, sometimes even August deadlines for the fall semester. But the way to think of the scholarship calendar is basically August/September. That starts the new scholarship season and when we’re applying, we’re typically applying for next year. So, sometimes you can find a scholarship for the next semester, but usually, it’s for the next school year. 

 

So, in September we’ll say that’s when we start applying. So, say it’s September 2020. That’s we would be applying for scholarships for fall 2021 typically, but they start off as early as September and they go all the way through round the summer. But the biggest times, I’d say October is a huge deadline month and then we’ve got January, February, and March. Those are the big deadline month, especially for local scholarships. Those are usually January/February deadlines. 

 

Hilary Hendershott: Perfect. And just to reiterate, most of those are for one year worth of money. Is that right? You typically need to reapply each year? 

 

Jocelyn Pearson: It depends. Sometimes I’ve received both. I’ve received ones that are from external sources that are annual. I’ve received some that are a one-time thing. I’ve also received some where it was a one-time thing. However, because I received it once, I was eligible to apply for the following years and I got more and more money. So, sometimes they have you reapply, but it’s more so to decide how much money, not necessarily that you will get money. And usually, the awards do increase as you’re continuing through college just because they’re seeing your success. They’re seeing, okay, the students increasing their chances of graduating every single year that they complete. So, let’s give them more money. So, it varies.

 

Hilary Hendershott: Okay. Top tips on improving the quality of essays and recommendation letters? 

 

Jocelyn Pearson: Yes. So, when it comes to writing essays, the biggest thing first off is to answer the question, and I know that sounds like it would be obvious, but you would be amazed at how many essays we review that the question is danced around or just completely not answered. I think students either they have a pre-created essay that they just want to reuse or sometimes they get so excited and they really want to tell a story about something that they completely missed the mark on the actual question itself. So, what I recommend for that an exercise that we teach our families is to read the essay out loud and ask your parents to guess what was the prompt and see if they’re even close. So, that way we can confirm, okay, we did indeed answer the question. 

 

A second thing with essays is to typically we can sum up almost most essay prompts, ultimately, we can talk about a past experience that happened to us, what we learned from it, and how it’s going to change the trajectory of our life. If you ask me, what do you want to do with your life and why? What are you majoring in and why? The difficult time and how that impacted you? All of these essay prompts usually follow that kind of scenario. But the caveat here what we talked about a lot with our students, when you’re writing these essays, try to tie in values. So, even through that sequence of experience, lesson, life impact from the experience, we can still tie in some sort of value that I got out of it. Because that makes committees easier. It makes it easier for them to relate to you. It shows that there was a deeper impact. 

 

And if you choose an interesting value, something other than, “I’m hardworking,” something that’s a little bit more unique, then it’s memorable. They can usually like we’ve gone through thousands of applications at this point and so many of them will say, “I’m hard working or I’m dedicated,” but the unique ones it’s really funny because we cover the names. And so, we’ll say like, “Oh, that was the innovation boy, right? Like that was the innovation student. That was his value.” And it’s amazing how you can remember someone’s values versus an experience or something like that. So, that’s the second biggest tip is to have your students find some values that are important to them. And if you google value exercise, you’ll see some PDFs come up with lists of values for suggestions. Pick out some top values and see what stories in their life correlate with these values, where do these values come from, and see how we can use those to answer the stories. And just doing that will make our essays so much more interesting and impactful. 

 

Hilary Hendershott: Okay. And then just the question about recommendations, and then I want to leave time for you to talk about how people can go further with The Scholarship System after that. 

 

Jocelyn Pearson: Absolutely. When it comes to improving recommendation letters, the biggest thing we can do is give them ammo. When we want someone to write an amazing recommendation letter about us, we need to give them something to write about. So, our students we give them, they have resume templates and stuff like that. So, if you have a resume, try to have your students send their resume to the recommender. They can even in their request, say, “Here are a few of the projects that I’ve worked on and what I got out of them,” and it makes their life so easy. You might feel awkward because you’re kind of giving them what to say but at the very least, they don’t have to use it. At the very most, you just gave them a bunch of amazing stuff for them to talk about. And also, always give them two weeks’ notice. If you’re asking last minute, they’re going to be in a bad mood if you’re not going to get a good quality recommendation letter. 

 

And another thing, the last thing with recommendation letters is see if it’s possible to get a PDF signed copy of it, and that way, you can submit it over and over on their behalf. And that way, you don’t have to go to them each time. Some committees will require to be sealed and from them, but other committees will let you include it as an attachment or they’ll say, you know, include a piece of supplemental material and you can include that that PDF version of the recommendation letter so that would make their life easier as well. 

 

Hilary Hendershott: I can second that as someone who’s been asked for a letter of recommendation. It isn’t that I don’t have anything positive to say about you. I have plenty to say about you but I want to make sure that I’m targeting what I’m saying to how you’re positioning yourself to whatever organization you’re applying for. And so, just giving your recommender talking points is super helpful. 

 

Jocelyn Pearson: Yeah, absolutely. 

 

Hilary Hendershott: Okay. And what kind of services are you offering to help people maximize their scholarship dollars? How can people go further with the kind of resources you’re making available?

 

Jocelyn Pearson: Yeah. So, what we found the best for families is we have a pre-created course that families can purchase and go through on their own time at their own flexibility. They get an entire year of access. We also have a complimentary Facebook community for members only and we do a lot of Q&As in there. We do scholarship hot seats. Families can post questions and we will give them tons of feedback. We offer essay reviews, but the courses broken down into six steps and something you mentioned early on was that a lot of the questions submitted was simply overwhelm, right? 

 

Hilary Hendershott: Yeah. 

 

Jocelyn Pearson: I think the biggest reason people don’t get scholarships is not because they don’t exist. It’s not because they don’t want them. It’s because when they start to pursue them, they get overwhelmed and they quit. And I can relate to that. I almost quit myself because I got sucked into all the scams. There’s no reason to anymore. There’s no reason to reinvent the wheel. Our families have gotten over $2.5 million in the years that we’ve been working with them. We have a pretty well-oiled system like we talked about earlier and that’s what we break down into six steps so that for students, it’s not nearly as overwhelming. They just have to do milestone after milestone one step at a time. And just the fact that it gets them from wanting scholarships to actually submitting them right there increases their chances tenfold because they’re actually submitting them versus just getting overwhelmed and quitting before they even begin. 

 

So, that said, it’s called The Scholarship System and we have an online course. We have a blog with tons of free resources at TheScholarshipSystem.com. But even if they just want to test it out and see if they are even interested in the information, we have a free webinar that we can include a link to and that webinar will give them a taste of some of the information including some of the myths that a lot of families fall into when it comes to scholarships. So, that’s a completely free resource and a great place to start. 

 

Hilary Hendershott: Awesome. And we will link to that. So as always, if you’re a Profit Boss listener, you know that the show notes including the links for search engines and lists that Jocelyn mentioned are going to be at HilaryHendershott.com/156. If you want to go right to that webinar, just go to HilaryHendershott.com/ScholarshipWebinar and you can see the webinar on-demand right there. Okay, great. Is there anything I didn’t ask? Anything critical that we should cover today?

 

Jocelyn Pearson: I think we’ve covered a ton so I don’t overwhelm people. So, hopefully, this was helpful. 

 

Hilary Hendershott: Perfect. Okay. Thank you for all the resources. I think this is going to be massively helpful for people. I really appreciate your time, Jocelyn.

 

Jocelyn Pearson: Absolutely. Thanks for having me.

 

[ANNOUNCEMENT]

 

Hilary Hendershott: Hey, profit boss. If after listening to today’s episode, you think you might be ready to take meaningful actions with your wealth and perhaps consider working with me and my firm in some way then I’d love to hear from you. Just go to HilaryHendershott.com/Hello. That’s Hillary with one L and Hendershott with two Ts dot com slash Hello. When I’m not sitting behind the mic, I’m running Hendershott Wealth Management. We’re a fee-only fiduciary financial advisory firm. We work with women and couples to take their finances to the next level. Everything I talked about here on the show gets personalized and put to work for my clients. So, I ask you, why wait until tomorrow when you can start realizing your full wealth potential today? The life you want to live it doesn’t have to wait. Just imagine the freedom and joy you’ll experience when you’ve secured your retirement and enjoy the years leading up to it. That’s what I want for you, that’s what I do for my clients, and if that’s what you want for yourself, just head on over to my website right now, HilaryHendershott.com/Hello. All of our initial conversations are totally complimentary. So, let’s just see where a friendly conversation may lead. HilaryHendershott.com/Hello.

 

[CLOSING]

 

Hilary Hendershott: As we wrap things up here for today, I need to review with you the things I have to disclose as a fiduciary financial advisor offering wealth management services through my firm, Hendershott Wealth Management LLC. You should know that the opinions I express on Profit Boss Radio are my own and they can change. The content I provide in the show is for general education. It’s not intended as specific investment advice, nor do I recommend any specific financial products. Unlike how I roll at home with my husband, I can’t guarantee that my statements, opinions, or forecasts are always 100% right. Of course, I wish I could peek into that proverbial crystal ball but so far, I haven’t found it. Past performance is not indicative of future results. I talk a lot about indexes and I want you to know you can’t actually buy an index because, of course, when you take a list of companies and create a product that allows people to invest in those companies, there are fees and expenses involved that reduce returns. Remember, all investing involves risk, which as you know, means you could lose your money and I have to tell you that there is no guarantee that any investment plan or strategy will be successful. And that should keep my lawyers happy. Have a great day!


[END]

 

Disclaimer

Hendershott Wealth Management, LLC and Profit Boss® Radio do not make specific investment recommendations on Profit Boss® Radio or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of Hilary Hendershott, CFP®, MBA.