*Updated January 28, 2019
U.S. student debt is rising at an alarming rate, hitting $1.56 trillion in third quarter 2018. Students are graduating with $37,000 in average student loan debt, with one in six students leaving college with debt that exceeds their income, according to Marketwatch.
So, students desperately need help paying for college. And thankfully, people like you are doing something about that by starting a scholarship fund.
To show our thanks, we have created this 11-point checklist to make it easier for you to help students through brand scholarships.
1. What is the right scholarship amount?
There’s no magic number. But, the scholarship should be large enough to make an impact and encourage more students to apply. In our experience, awards between $2,500 and $5,000 work best. If you are going to offer less than $2,500, you should consider making the application process a little easier. While some big brands have the resources to fund big scholarship programs, don’t let a small budget keep you away from sponsoring a scholarship. To a broke college student, every dollar counts!
2. How many scholarships will you award?
This will depend on your budget and why you want to start a scholarship program. If you are working with a small budget, you likely will want to award one scholarship. If you are a brand with a big budget, however, you should consider multiple scholarships to attract a wider audience and help more students.
For example, Taco Bell’s Live Más Scholarship, which is aimed at inspiring the next generation of innovators, creators and dreamers, helps it connect with its young customers, ages 16-24. In 2018, the Taco Bell Foundation awarded $3 million in scholarships, with students receiving $5,000-$25,000 awards. Given the average scholarship size, Taco Bell has been able to help many students through its scholarships.
3. Who is eligible for the scholarships?
More than 700 million students could be your target audience. There are nearly 21 million U.S. college students and more than 200 million worldwide. Additionally, there are nearly 16.5 million U.S. high school students and more than 500 million secondary education students around the world. Knowing your target audience will help you shape your program and deliver it to the targeted students — academic, art, athletic, ethnic minorities, women, STEM (science, technology, engineering and math), etc.
You can make the applicant pool as broad or as narrow as you like — for example, all college students and all high school students, all college students but only high school seniors, women, students pursuing STEM degrees etc. As an example, PepsiCo partnered with the Society of Women Engineers to sponsor a scholarship intended to encourage female students to pursue STEM education. Taco Bell went a different route with this. Rather than focus on academics, or athletic ability, Taco Bell focused on passion.
4. Will your scholarship be a one-time award or recurring?
This will depend on your purpose or cause, whether it’s the launch of a new product, marketing products for specific seasons or time of the year, etc. In our experience, most companies test the water with a scholarship their first year, and come back with another scholarship once they realize how great the benefits are. In many cases, they go bigger after the first time. Taco Bell, for example, raised their awards from $3 million in 2018 to $4 million in 2019. You don’t need to have that kind of budget, but it proves the point that even big brands find the ROI on scholarships.
5. What is your optimum schedule?
The purpose and amount of your scholarship(s) will help determine the first and last day of scholarship applications, the announcement of the winners, and when the award(s) would be made. Be sure to allot sufficient time between the application period and the announcement date to sort through all the applications and pick the winner(s). Also, from our experience, 90 percent of the applications come in at the very end, so make sure you are ready for that.
6. How much will a scholarship program cost?
First, there’s the actual scholarship amount. Then, there are the soft costs — time spent on setting up and administering the program, as well as the cost of outsourcing the process (if you prefer not to manage the process internally).
7. How will you integrate your values into the scholarship?
A scholarship is a great way for a company to tell its story. Think about how you will tell your brand story in your scholarship. Club Thrifty is a good example. It’s all about helping people get out of debt, so it offers a scholarship to students who submits the best essay on how they will avoid student debt and save money while attending college. The Nikon Storytellers Scholarship does a nice job of introducing the brand to the next generation of creative visual storytellers.
8. How will you promote your scholarship?
What good is a scholarship if no one knows about it? So you will need to promote it. While Kia’s Super Bowl commercial for “The Great Unknowns Scholarship” may have set the record for scholarship promotion costs, you don’t need to spend a ton of money to get the word out. You can post it on TUN’s scholarship engine for FREE by filling out the form here! You should also promote it on all of your social media platforms and make sure to have a clear link on your website for it.
9. Should you integrate social media into the application process?
While we like to keep the application process simple, there are ways to have your applicants apply through social media, which gives you the added bonus of more exposure. Take a look on how we did that with our Broke College Student Scholarship.
10. How will you select the winner(s)?
Someone is going to have to cull through the hundreds, if not thousands, of entries. Is this something you will do in-house or will you outsource it? If you intend to do this in-house, be sure to allocate the people for it ahead of time and develop a grading system. In cases where we have handled this for clients, we always recommend that they choose the final winner(s) from a short list that we come up with.
11. How to avoid tax issues with the scholarship award?
For U.S. tax purposes, scholarships will not be considered “taxable income” to the student if they are used for educational expenses. In this regard, we usually recommend that your scholarship funds go directly to the school with a caveat that they can be used for any educational expenses, not just tuition. This can help students with respect to their other financial aid. You may also need to keep track of the scholarship(s) over time. Not all students are ready to redeem the scholarship once it has been awarded.
We have created this checklist from our own experience of managing and promoting our own scholarships from small start-ups to Fortune 100 companies. If you have a scholarship question, please contact us at email@example.com and we will help you as best we can. If you already have a scholarship, please let us know about it here and we will share it with students.
Susan Chu is a writer and editor who likes to write about trends in higher education.