6 Steps to Beating the Shortage of Financial Aid

Apply early, study harder, or head north to get more scholarships.

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Although nearly every college student wants a scholarship to help pay tuition, only about 50 percent of college students are expected to receive free money in 2011 and 2012. And the shortage of scholarships is expected to be especially severe in 2011 and 2012.

But financial aid experts say there are six steps students can take right now to improve their odds of being in the lucky 50 percent:

 1. Apply early: Many scholarship programs are "first come, first served." The state of Illinois ran out of its state grant money on April 18 last year, turning away more than 138,000 qualified students who had waited too long to turn in their applications. Paul Palian, spokesman for the Illinois Student Assistance Commission, urges students to file their Free Applications for Federal Student Aid by Feb. 15.

[Read about fun videos that can help you complete your FAFSA.]

 2. Take advantage of demographics: Dozens of well-respected private colleges in the Midwest and Northeast are suffering from declines in the numbers of 18-year-olds in their regions, according to an analysis by John Nelson, managing director of Moody's health care, higher education, not-for-profit, and infrastructure rating teams. He says many of those schools are offering comparatively large scholarships to recruit students from other regions. Some public colleges in areas with few students, such as North Dakota, are also using scholarships to lure students from other states.

[Read about how to get in-state tuition.]

 3. Look scholarship horses in the mouth: Because cash-strapped students are starting to shy away from expensive schools that don't offer top quality, some lower quality colleges are starting to recruit students with bigger scholarships, Nelson says. But wasting four years at a school that doesn't challenge you—no matter how low the cost—is a waste. So investigate how the college fits your needs and indicators of quality such as graduation rates before committing.

[Check out your college's U.S. News ranking.]

 4. Spread your scholarship search net wider: Now that federal Pell Grants aren't increasing along with tuition, and many states are cutting their scholarship programs, a growing number of students are left with gaps between their college costs and the money they have on hand, notes Faith Sandler, executive director of the Scholarship Foundation of St. Louis. For many, the only way to fill those gaps is to find other cash sources, such as local charities like hers, or new build-your-own scholarship websites.

 [Get other tips about paying for college.]

 5. Study harder: To rein in the explosive demand for scholarships, many financial aid programs are setting higher grade, test score, and other requirements. Georgia legislators, for example, are discussing tightening standards for the popular Hope Scholarship, which, until now, only required a B average.

 6. Cut your costs: Every dollar you save by choosing a less expensive college, or living in a cheaper dorm, is a dollar you don't have to borrow or raise in scholarships.

 Searching for a college? Get our complete rankings of Best Colleges.