With college tuition prices on a steady incline that’s outstripping inflation, more and more students may need to rely on financial aid to help pay for school. nnTrying to decipher what your financial aid award letters mean can seem complicated, but we’ve got some basic guidance and insider know-how for you to help make the process a little more manageable. nnnFind Free Money First, Private Student Loans LastnnThe rule of thumb when it comes to making the most out of your financial aid options and minimizing your student loan debt when you graduate is to first seek out funds that won’t need to be paid back — the scholarships and grants that are essentially free money.nnNext, take advantage of all your available federal financial aid, like work-study and government-backed student loans (
http://www.nextstudent.com/). In order to qualify for need-based federal grants, work-study, and student loans, you’ll need to submit the Free Application for Federal Student Aid (FAFSA) each year.nnFinally, if you’ve maxed out your scholarships, grants, and federal financial aid but still have education-related expenses to pay, you may be able to get the additional money you need from private student loans (
http://www.nextstudent.com/private_loans/private_loans.asp). Because federal student loans typically offer more attractive terms than private student loans, you should always look into your federal financing options first.nnnScholarships & Grants nnScholarships and grants should be the first funding source you look to because they don’t require repayment and they won’t necessarily require that you demonstrate financial need. Except for the rare full-ride scholarship, most scholarships and grants won’t cover all your college costs, but you should still use them, whenever possible, to help you tackle your education expenses. nnSchools will often deduct the amount of any scholarship and grant awards from your student loans (
http://www.nextstudent.com/student-loans/student-loans.asp) before reducing your institution-based aid. And anything that can help you keep your student debt to a minimum is a good thing.nnSome scholarships and grants can be highly competitive; you should start searching and applying as early as possible to maximize the number of awards you have a chance to apply for. nnBusiness Week magazine recommends paying close attention to the terms, restrictions, and requirements of grants and scholarships because they can be very specific and costly if mismanaged (“Comparing Financial Aid Offers,” Feb. 3, 2008). nn• Check award length. Grant and scholarship award durations can vary from a semester to multiple years, and you’ll want to know how long you can plan on that award amount in your budget.nn• Keep requirements in mind. Some scholarships may require you to maintain a certain GPA to keep your award or may stipulate that the money can only be used for specific purposes like tuition payments or textbook costs. nn• Know the consequences. Failure to adhere to your scholarship and grant requirements could cause you to lose your funding. Improper use of scholarship funds could even result in you having to pay taxes on the money you received. nnnFederal Work-Study AwardsnnLike scholarships and grants, work-study awards don’t have to be repaid and may be able to reduce the amount of money you need to take out in college loans. nnThe Federal Work-Study Program helps subsidize the wages for certain school-approved part-time jobs that are reserved for financially qualified students. Federal work-study jobs are required to pay at least the federal minimum wage. nnIf you qualify for work-study, you may be able to find a work-study job related to your academic or personal interests that could not only help you pay for college, but also boost your professional résumé for the future. nn nFederal Student Loansn nMany financial aid packages will include federal student loans when scholarships and work-study aren’t enough to cover your full cost of attendance. nnAlthough federal student loans (
http://www.nextstudent.com/student-loans/student-loans.asp) will need to be repaid to the government, they offer low, fixed interest rates, low fees, and deferment and forbearance benefits.nn• Subsidized Stafford loans are awarded on the basis of financial need. The federal government pays the interest on these students loans while you’re in school at least half-time, in your grace period, or in an authorized period of deferment. nn• Unsubsidized Stafford loans are awarded without regard to financial need. Although you won’t be required to make any payments on these student loans while you’re still in school at least half-time, interest is accumulating, and you’ll be responsible for paying all accumulated interest, in addition to the principal. nn• PLUS Loans are credit-based loans awarded to eligible parents of undergraduates. These college loans are awarded without regard to financial need and in amounts up to 100% of your cost of attendance.nnnPrivate Student LoansnnYou should only turn to private student loans (
http://www.nextstudent.com/) as a source of funding once you’ve exhausted all your other college financing options. nnPrivate student loans are credit-based, not need-based, student loans. They typically carry variable interest rates and may not offer the same deferment and forbearance benefits you get with federal college loans. nnSince federal student loans generally offer more attractive terms than private student loans, you want to make sure you take advantage of your available federal student loans first. nnnLearn more about Private Student Loans and Private Student Loan Consolidation (
http://www.nextstudent.com/private-consolidation-loans/private-consolidation.asp).nnn