Article provided by nextSTEP Magazine

As you prepare for college, ask yourself this: who is going to pay for the dorm room, the classes, the books and the food? In this day and age, education does not come cheaply, and most families are unable to pay for college directly out of their pockets. Luckily, scholarships, grants and loans can help relieve the financial burden. Still, many students cringe at the prospect of applying for financial aid.

It may seem overwhelming, especially when you are bombarded with information to sort and decisions to make regarding this new step in your life. Yet upon closer inspection, any high school student can easily tackle the financial-aid process. It’s simply a matter of getting answers to the right questions. Why should I participate in the financial-aid process? Why bother with all that financial-aid paperwork when you can just leave it up to your parents, right?

You will quickly find out that this is not the case. "When a student is here on campus, they are the ones we contact," explains Anne Barton, associate director of financial aid with Hobart and William Smith College. "They need to be knowledgeable of the information and the paperwork." What you do now will determine how much money you will owe later.

"Because a good deal of the financial-aid package is borrowed with the student as the primary borrower, they are fully aware of the potential debt," says Elaine Yednak, vice president of marketing of PNC Bank.

Rick Ross, the New York state customer relationship manager for educational loans with M&T Bank, agrees: "In today's college finances, most will borrow a student loan. That's their debt, not their parents." Taking an active role in applying for financial aid may also make your time in the classroom seem more valuable.

"It helps to broaden students' understanding of finance and gives them an appreciation for the education," says Liz Henry, marketing director of Key Education Resources.

When should I get started?
It's never too early to begin thinking about financial aid. But if you weren't filling out applications as soon as you could grasp a crayon, don't worry. There is still plenty of time.

Your junior year in high school is the best time to get into financial-aid mode. You can do some research on schools to see what is available. Henry says that early awareness of your options is the key to making the most of what's offered.

What do I do?
Taking action is perhaps the most intimidating part of financial aid. You know you should apply for money, but you just don't know how to go about it. Simply follow these steps and you will be well on your way to creating a beneficial financial-aid package.

Step #1: Research and make contact
Make use of your high school counselors, college financial-aid offices and Web sites. Ross recommends making early contact with colleges. "Contact the top three schools of interest to you and talk to the financial-aid office and maybe the admissions office, and ask what is needed to apply," says Ross. He also suggests making the office aware that you are an incoming freshman, so you will be transferred to the correct department.

You don't need to be planning to attend a specific school in order to call and ask questions or even set up a meeting with the financial-aid office. "We encourage students to call the financial-aid office long before they've even applied to the institution to find out what their options are. We prefer that," Barton says.

The Internet is another resource of which you should take advantage. "Talk to your high school guidance counselor," suggests Melissa Marks, product manager for UNIPAC, a company that processes student loans. "They often have compiled lists of Web sites to help." UNIPAC's Web site, www.attheu.com, is one of many sites geared towards high school students in search of answers.

If you won't go in search of the information, it will probably find its own way to you. "We as lenders try to put all sorts of information together," says Henry. Be on the lookout at your high school for packages concerning financial aid, and take the time to look over them.

Step #2: Fill out the FAFSA form
The FAFSA form, or Free Application for Federal Student Aid, is as important as filling out your college application. "It determines a student's eligibility for Stafford loans, grants and scholarships," explains Pam Hayes, manager of customer service at Fleet Bank's educational loan division. "You must file FAFSA before you can apply for loans," says Yednak. In other words, without the FAFSA form, there is no financial aid. Check with your high school guidance counselor for the form and filing deadlines, or apply online at www.fafsa.ed.gov.

Step #3: Apply for scholarships
No one can argue that the best money is free money. Scholarships are one way to cover the cost of education without getting into debt. "I don't think students are taking advantage of scholarships. There are so many types of scholarships. They don't take the time to explore and shortchange themselves," says Henry.

Indeed there are scholarships with criteria that can be applied to almost any student. You can get a scholarship based on ethnicity, academic achievements and extracurricular activities, just to name a few. "Look into scholarships as early as possible," says Yednak. "There are a lot of scholarships out there and a lot of scholarship money goes unclaimed."

Step #4: Apply for grants
Like scholarships, grants are a source of funding which need not be repaid. The Pell Grant, a grant through the federal government, is the form most taken advantage of by college students. However, you may also receive a grant through the college you will attend or through an educational grant foundation.

Step #5: Apply for federal loans
Due to the high cost of schooling, scholarships and grants often aren't enough to cover the cost of education. In this case, you may find yourself relying on loans. Federal loans, such as the Perkins Loan, Stafford Loan and PLUS Loan, are examples. Because they are awarded through the government, these loans fall under federal regulations. You won't have to repay them until after graduation, but they will need to be repaid.

The Stafford Loan may be subsidized, meaning you won't have to pay interest on it while enrolled in school, or unsubsidized, meaning the interest payments fall on your shoulders even while you attend classes. Both the Stafford and the Perkins loans are taken out in your name. Your parents, on the other hand, borrow the PLUS loan, the amount of which is based on their income.

Even though federal loans are available, shop around to find a lender willing to work with you to meet your specific needs. "We recommend working with a school's financial-aid office, and they will tell you their preferred lenders," says Yednak. "Apply early and stay in touch with them."

Unfortunately, even while utilizing federal loans, you may still fall short on cash for college. "The most common misconception is that a student can take out as much as they need in federal loans to cover the cost of education," says Barton. "Then, they are forced to fill the gap with private loans. It's a rude awakening."

Step #6: If necessary, apply for private loans
If you must take out a private loan, pay close attention to differing interest rates and repayment terms. For starters, make sure the loan won't need to be repaid until after you graduate from college. Secondly, be aware of any forbearance or deferment options. A forbearance or deferment will allow you to delay repayment if you don't have the money immediately upon finishing school. This may come in handy while you are looking for a job and coping with new living expenses.

Be aware that once you've applied for a loan, whether it is federal or private, your work is not done. Barton expresses her concern over the debt many college students accrue. "It's very easy to sign on the bottom line. It's important to keep track and monitor your loans, projecting if you will be able to afford it based on the job you are going into."

What if I don't apply in time?
Your ultimate goal should be to cover as much of the cost of education as possible with scholarships and grants. If you delay in applying, you may miss your chance to take advantage of free money.

"Timing is everything," advises Yednak. "Don't miss any deadlines." While people at financial institutions and schools are very willing to help you, they will be busy processing information from early applicants if you wait too long to get in touch. "Those who wait till the last moment may run up against a hurdle," says Ross. So do yourself a favor. Get out there and apply for financial aid!