College tuition is rising an average of 7 percent a year, which will seem less like a statistic if your child is going off to college this fall. If you are applying for financial aid, your new best friend has got to be the internet.

It’s now possible to apply online for student aid and even compare interest rates and programs from various consolidators. But whether you choose to apply online or on paper, if you want the cash, you’ve got to take the first step.

“The process of applying for student aid starts with completing the FAFSA, the Free Application for Student Aid,” says Michael O’Brien,

But many students don’t even bother applying because their families feel like they don’t qualify for financial aid, but that isn’t necessarily true.

“In the worst case, they’ll say we can’t give you anything. In the best case, there will be some additional money in the form of student loans or institutional grants,” O’Brien says.

But you better get moving.

FAFSA applications can be filled out from January until a year from June, so you have 18 months to apply. But what some students don’t realize is that the sooner you apply, the more likely it is you’ll get the cash you need because the government doesn’t have unlimited money to fund student loans. So if you wait until June to apply, it might be too late. Applying online speeds up the process.

“It’s two minutes. It’s really fast. You will it out once,” says Mauro Montevecchi, a medical student.

“Since I’ve done it, I’ve helped two other people go through and get other loans and it took just a day,” says Juliette Hudlow, a college student.

“It takes about three weeks for it to come back. If you complete it in a paper format, it will take significantly longer,” O’Brien says.

Another common mistake is not looking at all the financing options you have. Or thinking a home equity loan is your only choice.

“Some families use home equity to pay for college. Home equity loans range in price from 5 percent to above 10 percent. If someone took that money instead of the parent plus loan, which has interest rates as low as 2.2 percent, they would be doing something that is not financially smart,” O’Brien says.

You’ve got to be smart about how you finance college or graduate school when the numbers are so high.

“All four years, we pay $50,000 a year. The total in loans when you get is $200,000 around there, maybe a little bit more,” Montevecchi says.

For many students, the debt hangs like a weight even though they hope it’ll pay off with a higher-paying job down the line.

“It’s very difficult to know that you’re always so far in debt. You just live poor,” Montevecchi says.

And hope you one day earn enough to pay it all back.

Depending on the school they go to and the degree they pursue, college graduates will earn between $1 million and $3 million more over their lifetime than someone who does not graduate with a degree from college. So taking out a loan to pay for your higher education is a smart move.

RESOURCES – The Department of Education – FAFSA application

Try to apply for scholarships that will reduce the amount of debt you have to carry to finance your college or graduate school career.

National Association of Student Financial Aid call (800) 4-FED-AID.

Feb. 5, 2004.