You’re excited about your college career, but the biggest question facing you is this: How will I pay for it?

For several decades now, college tuition has been rising steadily. The sticker shock of tuition costs has students and families scrambling for options. Financial aid and student loans are two of those options. But, what should you consider prior to pursuing one of these options?

Understand the difference between need-based and merit-based financial aid

Merit-based and need-based aid are different types of financial assistance, and it is crucial to understand the difference between the two.

Needs-based aid only takes into account the capability that you or your family have to pay the college tuition. You may be able to obtain need-based financial aid through federal or private student loans and grants.

Merit-based aid is awarded based on academic performance and achievements as a student. The most common types of this aid are scholarships awarded through private institutions or schools.

Understand grants, loans, and work-study

Needs-based aid generally comes in three primary forms, and understanding the differences will help to ensure that you are applying for the best aid for your specific circumstances.

Grants do not need to be repaid once you graduate. There is a wide array of state and federal grants available to students, and completing the FASFA is the first step towards finding those.

Loans are a type of need-based financial aid, and these loans must be repaid once you are no longer enrolled in upper education or once you fall below half-time enrollment.

Work-study is a federal program that provides part-time employment to individuals who can demonstrate a financial necessity. This allows you to earn money to use towards educational costs while being employed in the field that supports your studies.

The first step in accessing these forms of financial aid is to complete the Free Application for Federal Student Aid (FAFSA). This form is required to help determine eligibility, although private universities may have additional forms as well.

You can do this online at the FAFSA website, which is easy to navigate, although the process will be facilitated if you gather the following items before starting the application:

• Social security number, both yours and your parents, if you will be a dependent student
• Driver’s license number
• Records of non-taxable income
• Federal tax returns or information, including a spouse or parents
• Bank account, real estate, and investment information

Applying for college financial aid can be an education in itself. The educational journey can be expensive, but that doesn’t mean you have no options. With the assistance of loans, scholarships, and grants, you can achieve your objectives without draining your bank account.