Just when it looks like there might be a little bit of good news on the economic horizon, things are tightening up for college students.

Last year, when the economy was in free-fall and there was real concern about filling enrollment, private colleges sharply increased grants and scholarships offered to incoming freshmen. The result: in many of these schools, more students accepted these offers than anticipated, creating an unanticipated shortfall in the halls of academe. Now, as the economy appears to be stabilizing, loan officers at many private colleges are beginning to roll back the amounts of financial aid packages.

For private colleges and universities, operations costs have continued to escalate, with the bulk of tuition payments going to faculty salaries and facilities maintenance. Adding to this economic dilemma is that many of these institutions have seen a dramatic decrease in alumni gifts and reduced revenues from endowment funds. As a result, admissions and loan officers are taking a harder look at financial aid. Even with the recent increases in Pell grants, this is expected to take a toll on the incoming freshman class next fall.

State and other public universities are also feeling the pinch and the impact of tuition increases is hitting students hard. A recent decision to increase fees throughout the University of California by 32% has provoked heated debate and sparked campus demonstrations. In Michigan, the Promise Scholarship Program is on the block.

What is the projected impact on the incoming Class of 2014? Education experts predict admissions officers will be taking a harder look at prospective candidates. While none of these schools will eliminate their scholarship and financial aid programs, they will be looking for the best, most promising students – and, hopefully, ones that can pay their own way. At many of these public colleges and universities, tuition caps keep cost down for state residents. As a result, predictions indicate these schools will be offering more spots to out-of-state students who pay higher tuition and fees.

In the final analysis, most observers agree that for the majority of college-bound students, the best advice is to get all financial forms filled out early and as accurately as possible. Make sure explore the variety of options available and be flexible – don’t put all your academic hopes and plans into one school. Consult with your advisor or log on to one of the many on-line advice forums like Top-Colleges to get valuable facts about college admission and finances.