A common question I hear is, "I know that scholarships are out there, but how do I get them?" There are several parts to this: how do you apply, what are you applying for, where does the money come from, and how do you get the money?

First, taking a step back, there are three primary types of scholarships:

• Need-based financial aid

• Institutional merit scholarships

• Outside scholarships

This post is about need-based financial aid. I'll cover the other two in different posts so that you can eat your breakfast and go about your life today instead of just reading an over-long blog post.

How do you apply for need-based financial aid? You file the FAFSA and, if the college requires it, the CSS Profile. The FAFSA gives you access to several pools of money:

• Federal student aid

• Any financial aid programs offered by your state

• Institutional need-based grants offered by the college(s) you're applying to

Students are automatically considered for federal and institutional aid simply by submitting the FAFSA (and the CSS Profile if required by the college for its own grants). Most states also award aid automatically; however, some states require additional steps or have their own forms. (You can google "[your state's name] student aid" to learn if additional steps are required. Make sure you only go to websites ending in .gov or .edu to ensure you're getting correct information-- there are plenty of sites out there that scam students and families with promises of scholarships for a "nominal processing fee.")

Colleges automatically review your FAFSA and offer financial aid awards to students who meet their criteria for aid eligibility. You do not need to take any additional steps with the college to receive need-based financial aid. However, not all colleges offer financial aid on the basis of need; of those who do, not all meet 100% of need; and of those who meet 100% of need, not all do so with grants-- many include student loans and work-study and sometimes even Parent PLUS loans in their financial aid awards. Net price calculators can be helpful in identifying upfront whether a college will meet your need; just google "[college name] net price calculator" if you can't find it on the school's website. In addition, websites like Collegedata and College Navigator let you search colleges to see what types of aid they offer and how much need they meet.

Where does money come from? A financial aid package can include federal, state and institutional funds. Federal funds include Pell grants, direct student loans and work-study; each college decides whether and to what degree to include those funds in their aid packages. States have their own grants that are included for eligible students. However, all of these amounts tend to be small relative to the overall cost of attendance at a college. This year, a first-year student could get a maximum of $7,395 as a Pell grant, $5,500 in direct student loans, and $5,000 in work-study-- just under $18,000, which is far less than the cost of most residential colleges.

That's where institutional grants come into play. Colleges may choose to meet a student's need with their own funds. In some cases that aid will cover the federal student loan; in other cases a loan is part of the package. In most cases, the college's aid package will only cover the difference between a student's financial need as calculated by the FAFSA or CSS Profile and the school's cost of attendance, less any federal funds included in the aid package. However, a handful of colleges set income thresholds where all students whose family income is below a certain level receive a 100% tuition scholarship or even a scholarship covering room and board in addition to tuition. Colleges are under no obligation to meet student financial need, so do your homework via net price calculators and Collegedata/College Navigator before applying to reduce nasty surprises.

Finally, how do you get the money? Financial aid is allocated by the colleges themselves. Your aid award will spell out all the components of your package-- federal, state and institutional. As long as you file the FAFSA, you automatically get any federal aid you're eligible for as part of your package. The college can then add its own aid on top of federal dollars, or replace federal dollars with their own funds-- the latter being more typical with student loans than with any federal grant money. You can also choose whether or not to accept any part of your aid package. There is little, if any, reason to decline scholarships or grants, but you might choose to decline a student loan if you don't need it.

There are a couple of important points that flow from the fact that the college allocates the money:

• Most colleges don't create your financial aid package until they have reviewed your application. That means you likely do NOT need to file the FAFSA or the CSS Profile immediately when they become available (Oct. 1 for the Profile and Dec. 1 for the FAFSA this year). In fact, filing on the first day is usually a recipe for frustration because literally millions of people are trying to access the same site, resulting in frequent crashes and other outages. If you want to do something now to get ready to file, create your FSA ID on studentaid.gov. There's no need to do anything else right this minute. And don't file the FAFSA that's on the site right now; that's for last year.

• You need to indicate on your FAFSA and Profile which schools to send it to. Because the Profile charges $25 for the first school and $16 for each additional school, you should wait until you actually submit an application to send in your Profile.

• The Department of Education does not run out of Pell grants or student loans. Filing your FAFSA on Dec. 1 does not get you a larger federal grant or loan than filing it at the deadline.

• Many state grants and some institutional grants have limited funds that are allocated on a first-come, first-served basis. You should check if that's the case in your state or at any college you're applying to (hint: usually these are private colleges that do rolling admissions). If so, you'll want to file as early as possible. If not, find out when the colleges you're applying to require it and determine a good date to file based on that and your personal circumstances. (Scroll through previous blog posts here for more on that.)

• Most colleges have a priority submission date, which may be earlier than their actual deadline. You'll want to submit by the priority date so that you get your financial aid award when you get your acceptance.

• If you apply Early Decision this year, you are likely to get a tentative aid offer if you're accepted. This is due to the FAFSA's delay. Anyone applying ED should DO THE COLLEGE'S NET PRICE CALCULATOR and also ask what their deadline is to submit both the Profile and the FAFSA and when they expect to offer financial aid packages.

Whatever your aid package, you probably won't see it in your bank account. Federal aid dollars go directly to the college to be applied against the student's direct-billed costs. Likewise, institutional dollars offset your bill. Only if the student has aid in excess of direct-billed costs will they receive a refund of those extra dollars-- and only once the college has collected everything due it. For example, a student with a full tuition scholarship who lives off campus and uses a direct student loan to pay room and board costs will receive the proceeds of the loan after the college settles their bill for tuition and fees.

An important piece of this: check your aid award for Parent PLUS loans. I hear regularly from parents who are surprised to see that they've taken out student loans since they never saw the money. Colleges are allowed to include these in their financial aid packages, and you don't want to be surprised to learn you've borrowed $10,000 every year your student was in college.

In addition, with few exceptions, financial aid is allocated equally across academic terms. That means that a first-year student at a college on semesters will get $2,750 in direct student loan funds applied to their bill each semester.

In summary:

• The FAFSA and CSS Profile are the applications for need-based financial aid from the federal government, states and the colleges themselves.

• Filing the FAFSA and CSS Profile do not guarantee that you will get need-based aid at your first-choice college, other than federal funds you qualify for.

• Colleges themselves allocate and distribute financial aid to students, and they don't usually do that before they review the student's application.

• Loans may be included in your package, and you might not realize that because the money won't come directly to you.