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Since 1998, the average price of tuition in the U.S. has increased by 168% for students at private universities, 200% for out-of-state students at public universities, and 243% for in-state students at public universities.

That's a monstrous price tag ranging from nearly $11,000 for in-state students to more than $43,000 for private universities per academic year. Inflation has come nowhere near justifying those fees, with average prices only 56.78% higher than they were in 1998. With these swelling costs in mind, financial aid has become an ever-more essential tool for students whose families can't stomach higher-education's hefty price tag.

What Is Financial Aid?

The term financial aid covers a range of monetary support that both a university and other sources can provide in covering the costs of a student's education. It can go toward tuition and fees, room and board, books, supplies, and transportation. It may come in the form of gift aid like grants, scholarships, and work study; or as federal and private loans students have to pay back.

How to Get Financial Aid 

Think About How Much Aid You Need

One of the most important but often overlooked steps in getting financial aid is thinking about how much you'll need. What this means is setting a budget from which you can assess the costs that'll go into your education. These should go beyond tuition to include thinking about how transportation, food, housing, and supplies could all affect college's price tag. By setting a ballpark estimate of what you can afford and comparing that to how much it's all going to cost, you'll be better prepared for assessing whatever financial aid offers come your way.

Fill out FAFSA and CSS

Once you've thought out a few colleges to apply to, you have to deal with the most critical (as well as intimidating) part of the process, filling out the Free Application for Federal Student Aid (FAFSA). This application provides the bulk of financial aid for most college students, determining eligibility for federal Pell grants along with work study, and it's a hurdle that many stumble on. For the 2017-2018 academic year, as many as one in seven college students eligible for financial aid never submitted their FAFSA.

While it looks like a long, byzantine application, in reality, filling out your FAFSA typically takes less than a half-hour. The toughest part comes from getting all the paperwork in order. You'll need your parents' income tax from the previous year (including their W-2s), their Social Security number along with your own (or Alien Registration Number if you're not a U.S. citizen), records of your parents' investments, assets, and untaxed income, and your driver's license or state ID number. Once you've found all these though, filling out the application on fafsa.gov is a breeze.

While each school and state has its own FAFSA deadline, as a rule, you should fill the application out as soon as possible. It can always be modified later if information changes,  like what colleges you're applying to. Completing it early carries numerous benefits. Many colleges can give early financial aid estimates to those who've already filled out their FAFSA, giving you more time to compare the offers of different schools. A number of scholarships look at FAFSA results to determine eligibility. Fill out the application too late and you could miss the deadline on some of them. But most importantly, several states start doling out aid as soon as the application opens on Oct. 1, which means a real possibility exists for them to run out of aid if you wait too long to fill it out. So make sure to get that form done. It's free, after all, (and don't forget you have to re-apply each year).

CSS

Along with the FAFSA, a good number of students will have to submit a College Scholarship Service profile, or CSS, for the schools they apply to. Unlike FAFSA, this determines your eligibility for non-federal financial aid, and only about 400 colleges and universities require it, typically the big-name private institutions. Also, unlike FAFSA, this application comes with a $25 fee for the first school it's sent to and an additional $16 for each one after (though the fee can be waived, usually for households making around $40,000 or less).

For better or worse, the CSS takes a closer look at your family's finances than the FAFSA. The application broadens the scope of your financial assets, labeling cash gifts such as those given from relatives for college under parental income. At the same time, it'll look at other factors like prior medical expenses and the cost of raising siblings when considering your family's financial need.

Apply for Scholarships

There are hundreds of scholarships out there all with different instructions, benefits and deadlines. The general rule for these is to apply early and apply often. However, it can sometimes feel overwhelming clicking through all of the applications out there.

A good way of sorting through them is by thinking of what specifically applies to you. Filter scholarships along the lines of what caters to your hobbies, interests, ethnicity, gender, educational goals, and more to find scholarships looking for applicants specifically like you.

Another way of getting around scholarship fatigue is by talking with your guidance counselor to see if they have any specific recommendations for you.

What Types of Financial Aid Are Available? 

Grants

Grants, unlike scholarships, are need-based rather than merit-based, and unlike loans, never have to be paid back. They're often the main tool in bringing the cost of college within reach for the average family, and can come in the form of federal Pell grants or private grants from the institution.

Remember though, these grants change each year with the re-submission of your FAFSA and CSS. You may get substantial aid during freshman year if your family was going through a rocky time two years prior. But if any significant changes to that financial situation happen in the time after, a sizable adjustment to the money in your grants could follow.

Federal Work-Study

Another need-based form of gift aid, federal work-study gives you access to part-time employment at the university you attend. You must be paid monthly and are guaranteed at least the federal minimum wage. You may find jobs that pay higher than this, but remember that your income is ultimately capped at whatever amount is listed in your federal work-study provision.

Scholarships

Again, scholarships come in all different forms, so there aren't too many strict rules that apply to them other than that they tend to be merit-based and don't have to be paid back. Some are for one year while others renew every year. Some come from the college or university itself while others come from outside sources. Some come in the form of cash given directly to you while others are sent straight to the university to cover tuition.

One important consideration when applying for scholarships is that many schools ask you to report your scholarships, and whatever amount of money you receive from scholarships will be subtracted from your grants in a process called "scholarship displacement." It's a frustrating process that can have many students and parents scratching their heads over what all the hard work put into getting scholarships is for, but it's done under the belief that universities are providing the aid a student genuinely needs, and when outside sources provide additional help, they reduce that need.

This shouldn't deter you from seeking scholarships, though. You never know what your financial aid package will look like, and many students have successfully advocated to reverse their own scholarship displacement once it occurs.

Loans

One of the trickier and more-publicized forms of financial aid, student loans are a form of aid that, with a few rare exceptions, have to be paid back. They come in a variety of federal and private loan options, but generally, federal loans will be your most secure option. With them, you'll have fixed interest rates, require no co-signer, and have no obligation to pay them back until after leaving school or graduating.

Unfortunately, with the ballooning educational costs, students are increasingly having to look beyond federal loans to private student loans. These can come with higher interest rates and various payment plans, so it's best that you tread carefully when considering these options. Look for low or fixed interest rates if you can, and remember to read the fine print before making one of the first major financial decisions of your adult life.

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