State government aid includes grants, scholarships, loans, and work study programs. Most programs are based on financial need, although some are based on other criteria, such as academic performance. One program, the State Student Incentive Grant Program, is jointly funded by individual states and the U.S. Department of Education. Each state has its own name for this program, as well as its own eligibility criteria, award amounts, and application procedures.

College and university aid includes grants, scholarships, loans, student employment, and cooperative education programs. Aid may be based on financial need, academic performance, proposed field of study, special talents or abilities, or some combination of these or other factors.

Some colleges also offer tuition-savings programs, including tuition installment programs that allow families to spread tuition payments over a longer period of time, stabilized tuition plans that allow families to avoid annual tuition increases by paying for all four years in advance, or credit-by-exam programs that allow students to shorten the time it takes to get a degree.

When evaluating a family's financial need, many colleges use an alternate set of formulas in addition to the federal ones. Unlike the federal formulas, these more stringent college formulas take home equity into account and also include a minimum expected contribution from students.

Private aid includes grants, scholarships, and loans. Sponsors include foundations, religious organizations, employers, labor unions, community organizations, civic groups, fraternal organizations, financial institutions, and commercial organizations. Some programs offer assistance to all families, some base aid on financial need, while others base assistance on special criteria, such as academic achievement, special talents, athletic ability, proposed field of study, ethnic heritage, religious affiliation, or community activities. Scholarships awarded from these private sources are often for small amounts and represent only a small percentage of the financial aid awarded each year.

Be wary of for-profit firms that charge for computerized college scholarship searches. These services perpetuate the myth that large amounts of private sector financial aid goes unused each year. In fact, most scholarship programs receive far more applications than they have funds. Furthermore, you can do your own search for free on the Internet or using software programs at many libraries and guidance offices. The Federal Trade Commission recently launched a campaign to educate consumers about the questionable scholarship search services that continue to spring up, some of which offer guarantees they can't honor and may be fraudulent.

If you do receive a scholarship, colleges will incorporate it into your aid package. That means your out-of-pocket costs won't be reduced unless the scholarship is for an amount that exceeds your financial need, although a scholarship may offset a loan and reduce the amount you have to borrow.