Top5 Ways to Get the Most Financial Aid

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By Stacey L. Bradford,
Associate Editor,

HAVE A CHILD HEADING off to college this fall? If so, you want to apply for financial aid now so you can make sure your family gets all the money it's entitled to. Happily, there's plenty of funding floating around. Last year students received $152 billion in grants, government loans and work-study programs, according to the College Board. Getting your hands on your share, however, isn't always easy. Understanding how the process works will help.

Here are our top five tips for getting the biggest slice possible of the financial aid pie.

1. Apply Now

Don't procrastinate. Financial aid is doled out on a first come, first served basis. So don't put off filling out those forms until after your child is already accepted into school. The Free Application for Federal Student Aid (FAFSA) can be submitted as early as January. Also make sure to check with the individual schools your son or daughter is applying to. They will often have additional paperwork that needs to be filled out, including the Profile, a financial-aid application form used by many private universities. (Click here for a calculator that will help you figure out how much aid you're entitled to.)

Even if you think you won't qualify for any aid, you should fill out a FAFSA anyway. Why? Last year eight million students missed out on aid, including 1.5 million who would have qualified for Pell Grants (money that doesn't need to be repaid), simply because they didn't bother with the forms, according to the American Council on Education. Filling out the FAFSA is also the first necessary step for qualifying for many non-need based loans, such as Stafford Loans, which have lower interest rates than private loans.

2. Check With Your State

The federal government isn't the only source of aid. Individual states have deep pockets too. During 2004 to 2005 (the most recent available data), students received $7.9 billion in financial aid from state coffers, according to the National Association of State Student Grant and Aid Programs. Grants and scholarships are available based on both need and merit. To apply, students first need to fill out a FAFSA and then follow up with the appropriate state forms. Click here to find your state's programs.

More good news: Attend a school close to home and most states will offer students additional financial aid. New York State, for example, gave out $273 million in grants through its Tuition Assistance Program to residents who studied at one of New York's private institutions.

3. Beg for More

Can a piece of paper really describe your situation? Often the answer is no. If money is tighter than it appears on your FAFSA, let the decision makers know. Melissa Diana, a financial aid consultant who runs the Web site Tuition Physician, recommends writing a letter to the financial aid office detailing any situation, such as a future hospital stay, which will affect your budget in the following year. Since FAFSA forms are based in part on last year's income taxes, there's no way for financial aid officers to know what expenses are headed your way.

Even after you receive your financial aid letter you can still appeal your case. The schools have an incentive to give you more money once they know your child is accepted and is considering attending. Schools are particularly sensitive to parents who lost jobs or have fallen ill since filling out the FAFSA forms. While there is always the chance that the school's coffer is empty, Diana says many colleges hold a little money back in a reserve fund for just such situations. Click here for help comparing financial aid offers.

4. Look for Scholarships

Yes, the majority of financial aid is made up of loans and grants. But don't forget about scholarships. You'd be surprised how much free money is out there for the taking. According to Sallie Mae, there is more than $15 billion available. But you'll never get any of it unless you apply. While there are plenty of online database searches students can surf, experts also recommend parents check with their employers, unions and trade organizations.

Read our story for more assistance finding a scholarship.

5. Shop for Best Loans

Nearly half of financial aid consists of loans. Although these are guaranteed by the federal government, loan programs do vary. If parents and students aren't careful they could end up selecting a loan that costs thousands of dollars more in payments than they would otherwise have to pay, says Kalman Chany, author of 'Paying for College Without Going Broke.' Also, keep in mind that a school's preferred lender may not offer the most competitive loan, he says.

Compare the loans side by side to make sure you find the best source of money. While interest rates won't vary, you can save by looking for lenders that offer discounts for on-time payments and ones that pay the government service fees for you, says Martha Holler, financial aid expert with Sallie Mae. Click here for more on student loans.

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