College students–and the parents who help them pay tuition costs–have until June 30 to file a free application for federal student aid (FAFSA) before the window shuts for the 2009-2010 and the 2010-2011 school years.

After June 30, no more federal student aid will be available for students for those school years.

According to the U.S. government’s FAFSA site, the application used to seek federal grants and loans as well as state and school aid must be submitted by midnight Central Daylight Time. Deadlines for states or schools may be different from the federal deadlines and may require additional forms.

This year’s deadline is especially crucial because President Obama signed legislation this spring, the Healthcare and Education Reconciliation Act, which stops private banks from acting as student lenders. As a result, the federal student loan program is expanding, but families no longer have the option of borrowing from the private sector.

“Unfortunately, recent government changes to the student aid program were not as far reaching as we would have liked, leaving many families to fend for themselves,” said Ethan Ewing, president of online consumer portal Bills.com, in a release.

Financial advisors are themselves well advised to notify their clients of the FAFSA deadline because hundreds of millions of dollars of financial aid goes unused even as students and their families struggle to pay rising tuition costs. At the same time, due to changes in federal laws in 1998 and 2005, collection on student loans now has no statute of limitation and with very limited exceptions can no longer be erased through bankruptcy. (For details, visit the Department of Education’s website.)

Bills.com’s recommended college savings strategies include:

? Research all available money resources, including scholarships, grants and loans. Many local organizations offer scholarships.

? Exhaust all grants and scholarships before applying for college loans.

? Exhaust all federal loan programs before applying for private loans.

? Plan to complete taxes early in order to complete the FAFSA application early. Complete the application online to facilitate changes or remedying mistakes.

? Understand what dollars are eligible as sources of money for tuition. Retirement accounts are not eligible, meaning families should maximize retirement savings to increase their chances at financial aid.

Read a story about raising responsible children from the archives of InvestmentAdvisor.com.