Applying early decision means your teen is agreeing IN ADVANCE (by signing a binding contract) to attend if admitted. He/she may only apply to one private college or university early decision and must rescind all public-school applications when notified of acceptance, usually in January of senior year. Financial aid is usually not offered at the time of admission. Those notices are usually sent in March of senior year.
Early action allows teens to apply early, find out whether accepted, waitlisted or rejected early without any penalty. All other applications can be submitted, and you do not need to notify any college of your choice until May 1, well after you have your financial aid award packages.