Like HowStuffWorks on Facebook!

How Financial Aid Applications Work


With all the different steps involved in various types of financial aid applications, it can be easy to get confused.
With all the different steps involved in various types of financial aid applications, it can be easy to get confused.
Comstock Images/Getty Images

It's no secret that college tuition costs are skyrocketing. From 2004 to 2009, tuition at private universities rose 15 percent, and at public schools the increase was 20 percent. Yet increases in financial aid have more than kept pace with rising tuition. The net cost of an education, after subtracting grants and federal tax benefits, actually went down by $1,100 at private colleges and by $400 at state colleges over this same period [source: College Board: Trends]. For many students, financial aid can be critical to covering the costs of education. To obtain it, it's important to know when, where and how to apply.

Start thinking about aid applications early. Some scholarships require you to participate in clubs or service activities for a number of years. Because there are so many different financial aid opportunities out there, the sooner you start looking, the better.

Go for grants and scholarships first. This is "free money," or funds that offset your college expenses and that you don't have to pay back. A student loan, which must be repaid, may also be part of your financial aid package, but getting scholarships can help you to avoid debt.

Need-based aid is given based on your or your family's ability to pay for college. Merit-based aid is given for things like academic excellence, participation in athletics and other achievements. You can search for opportunities using online scholarship search engines, like those at Fastweb.com, Collegeboard.com or Scholarships.com. These free sites filter the hundreds of financial aid opportunities and point you toward those that are suitable for you.

Many of the scholarships you can apply for are competitive -- there's a limited amount of money, and it's usually awarded to the most qualified applicants. That's why it's important to pay close attention to your application. Applying properly and avoiding mistakes can put you ahead of the others who are seeking the same money.

Read on for suggestions about filling out aid applications to maximize your chances of getting help with college expenses.