Students who are depending on state grants to help pay for college next year might want to think about other ways to cover their tuition.

On Monday, the Illinois Student Assistance Commission (ISAC), which administers the state s Monetary Award Program grant, announced that it was suspending awards for students who haven t yet submitted the Free Application for Federal Student Aid (FAFSA) for the 2010-11 academic year. In March, Arizona s legislature announced that funding for two grants the Postsecondary Education Grant and the Private Postsecondary Student Financial Assistance Program would not be available for the upcoming academic year. Meanwhile, the California Student Aid Commission, which administers the state s grant program, is awaiting a decision by Gov. Arnold Schwarzenegger, who is considering cutting back undergraduate students state grants.

The common problem: state budget gaps, says Vicki Merkel, president elect of the National Association of State Student Grant and Aid Programs. With many states collecting less in taxes and lottery revenue because of the economic downturn, they have less money available for grant programs. What s more, a provision in the health-care law eliminated the Federal Family Education Loan Program, which provided revenue to some states.

In addition, more students are applying for state grants, and many eligible students could be left out. In Illinois, where eligible applications for grants are up more than 30%, some 409,000 students are expected to apply for aid, according to calculations made by ISAC. However, about 189,000 submitted requests before the program was suspended, potentially leaving 220,000 students unfunded. As of Monday, the program ran out of money, says Andrew Davis, ISAC s executive director, whose working budget was $400 million, the same as 2009. We certainly would welcome a larger appropriation, but based on the state s larger financial circumstances, we think it s highly unlikely, he says.

In some instances, students who applied for -- and were awarded a grant -- could end up with a smaller amount. California students, for example, already have been notified if they will receive a Cal Grant. Those awards took into account tuition increases for the upcoming year. So, if the governor decides to lower state grant amounts, so that they don t reflect tuition hikes, students state grant awards will be revised downward, says Diana Fuentes-Michel, executive director of the California Student Aid Commission.

In general, cutbacks mean that students will have to look for replacement assistance at a time when most free aid (e.g., scholarships, grants) has been allotted. That means taking on federal student loans could be the only alternative. And the problem is likely to get worse before it improves because many states set their official budgets for state grants in the next few months. I would imagine more of these things will start coming up in May and June, says Debbie Cochrane, a program director at the Institute for College Access & Success, an independent nonprofit organization that promotes college affordability. Cutting the programs at that time can really be pulling the rug out from students and families.

Here are five tips for students who are concerned about their state grants.

Get in touch with the financial-aid office

Students who are expecting to receive a state grant that might be in question should contact their college s financial aid office; that office will have the most updated information on the grant s status.

Many state grant appropriations aren t officially announced by the state legislature until late spring or as late as the summer. Given that most financial-aid packages are sent to students earlier in the year, colleges often estimate whether a student will qualify for state grant eligibility by using the state s formula or family income threshold requirements, says Mark Kantrowitz, publisher of FinAid.org.

Financial-aid offices typically stay on top of changes and official announcements made by the legislature that could affect state grants, so students should check in with them for updates, says Cochrane. Ask the financial-aid office about your options if the state grant falls through or if it ends up being less than you expected, and ask if you can qualify for other types of aid in light of the circumstances.

If that grant doesn t materialize, it s unclear whether the college would make up the difference or whether the family is left with a gap, says Kantrowitz.

Shop around for free aid

Most students and their parents just finished shopping for financial aid. But they ll have to head back to the drawing board for financial aid ideas if there s a chance their state grant won t materialize.

Ideally, you should try to replace grants with free money that doesn t need to be paid back rather than with student loans. Try searching for scholarship programs within your community and at larger corporations whose deadlines have not yet passed. Another option is to ask the college's student employment office about part-time work opportunities on or near campus that pay per hour.

Think about attending another college

Most colleges require that accepted students inform them if they plan to enroll by May 1. Students should use this time to compare the financial-aid offers they received from the colleges that accepted them, and focus on the out-of-pocket costs they d have to pay to attend if a state grant doesn t pan out. Out-of-pocket costs include anything you ll need to pay back, like student loans and the remaining amount of tuition that s not covered by financial aid. The college with the lowest out-of-pocket costs will end up being the cheapest and likely leave you with the least amount of college-related debt at graduation.

Another option is responding to a couple of colleges with plans to attend in the fall. That way you can lock in your seat and wait until the state grant issue is resolved. In most cases, you can withdraw your acceptance late in the summer, although you'll lose the deposit.

Don t give up on the FAFSA

For students who haven t filed their FAFSA yet, it might be too late to qualify for state grants. But there s still plenty of time to file for federal student aid, including federal student grants and loans. Try to file as soon as possible.

Here are more tips on filling out the FAFSA.

Consider federal student loans as a backup

In a worst-case scenario, if your state grant falls through and if you can t find any free aid, you can contact the college s financial aid office to inquire about applying for more federal student loans.

Federal student loans like the Stafford and Plus (for parents of undergraduates) tend to have lower fixed rates than private student loans. But racking up federal loans to pay for college still isn t ideal since paying them back could take more than 10 years.