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PAYING FOR COLLEGE2016 EDITION

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TABLE OF CONTENTS

3 CHANGES TO THE FAFSA FOR COLLEGE STUDENTS TO UNDERSTAND

4 WAYS TO MAKE YOUR SCHOLARSHIP ESSAY STAND OUT

GET SMART, SAVE MONEY WHEN BUYING COLLEGE TEXTBOOKS

7 QUESTIONS COLLEGE FINANCIAL AID OFFICERS WISH PARENTS WOULD ASK

6 STEPS TO DETERMINE HOW MUCH TO BORROW FOR COLLEGE

4 STEPS TO FINANCIALLY PREPARE YOUR STUDENT FOR COLLEGE

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Students will see adjustments to when they can file the federal financial aid form and how their families’ assets are counted.

Writing a stellar scholarship essay can help you get more money for college.

A whole array of smartphone apps can help you figure out the cheapest way to go.

Ask if your financial aid package will change after freshman year to better understand and prepare for the true cost of the degree.

As long as you’re prepared and frugal, student debt can be helpful, some experts attest.

Talk about finances now, but know when to let your child slip up.

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3 CHANGES TO THE FAFSA FOR COLLEGE STUDENTS TO UNDERSTAND

Students will see adjustments to when they can file the federal financial aid form and how their families’ assets are counted.

Some important changes are coming to the Free Application for Federal Student Aid next year, but Joseph Orsolini, a college financial aid adviser in the Chicago area, hasn’t fielded many questions from parents.

“It’s still so new and fresh that people don’t realize these changes are going forward,” says Orsolini, who runs College Aid Planners, advising 250 to 300 families each year and conducting financial aid nights at local schools and libraries.

The changes, which will be implemented over the course of 2016, will significantly affect the process of filing for federal financial aid and, for some families, the amount of aid they’ll

receive. As Megan McClean, the National Association of Student Financial Aid Administrators’ managing director of policy and federal relations, puts it: “There are some biggies this year.”

For families of current and prospective college students, here are the changes to be aware of – and how to manage them.

OLDER TA X DATA WILL BE ACCEPTED

The current FAFSA filing system requires students and parents to complete the federal form as soon as possible

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after Jan. 1 – typically before they’ve filed the previous year’s taxes, which aren’t due until April. Families often have to estimate their income and other data and then update their information later.

A new policy, announced by President Barack Obama in September, aims to rework that fraught process.

The fresh timeline will take effect beginning with those who apply for financial aid for the 2017-2018 school year. Applicants and their families will be able to start the FAFSA in October 2016, using the same data they reported on their 2015 tax returns. The use of older data means families can start the process earlier and most won’t have to rely on estimates.

The aim is to reduce inaccuracies and the need for verification, give institutions more time to review documents and potentially allow them to mail award letters earlier in the application cycle. “I think it’s a really positive change for students and families and the application process in general,” says McClean.

When the new process debuts, students may endure some rough patches as universities work out the details. “I’m afraid it may be a bit bumpy,” says Eileen O’Leary, assistant vice president of student financial assistance at Massachusetts’ Stonehill College, who, despite that concern, is an advocate for the change.

ASSET PROTECTION WILL PLUNGE

When parents report their financial information on the FAFSA, a portion of their assets – certain savings and investment funds – are not counted by the federal government toward the amount of money they are expected to contribute to their child’s education. That can mean a higher federal financial aid award than their student would otherwise qualify for. However, that protected portion will plummet next year, continuing a downward trend.

The sheltered asset amount varies, depending on the age and marital status of the student’s parents, among other factors. For the married parents of a dependent student, where the eldest parent is 48, that asset protection amount is $30,300 in 2015-2016, says Mark Kantrowitz, senior vice president and

publisher at Edvisors, a higher education resource site. The next academic year will see their allowance nearly halved, to $18,700.

That change could hit families in the pocketbook. Kantrowitz estimates that every $10,000 decrease in asset protection cuts a student’s financial aid eligibility by up to $564. “It’s on the order, for most families, of a few hundred dollars from one year to the next,” he says.

While this is worrying news for middle-income families relying on need-based financial aid, those in the lowest income brackets should be spared. “Most of our neediest families don’t really have sufficient assets to make a difference,” says McClean from NASFAA.

But even those filers affected by the change shouldn’t direct too much angst toward this adjustment, say experts. Income carries a much heavier weight than assets do in the federal financial aid formula.

SCHOOLS WILL LOSE A DATA POINT

When students file the FAFSA, they can choose up to 10 colleges to get their financial details. In the past, when students sent their FAFSAs to multiple institutions, those schools could see the other colleges on the mailing list. Starting with the 2016-2017 application, universities will lose that insight.

That’s likely good news for students. Some experts worried that universities used the list to make financial aid decisions. For example, a school may have interpreted a student’s decision to list that institution first on the FAFSA as an indication the student would be more likely to attend and less likely to care about the financial aid package. School officials could have then used this as justification in awarding that smitten student fewer institutional dollars.

Now that schools won’t see their competition, “this information isn’t going to be used against (students),” says Kantrowitz of Edvisors. He cautions, however, that the list will still be visible to state agencies, and suggests that FAFSA filers list a state college first on the form to maximize their chances of being considered for state aid.

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4 WAYS TO MAKE YOUR SCHOLARSHIP ESSAY STAND OUT

Writing a stellar scholarship essay can help you get more money for college.

It’s not easy to separate your scholarship application from the crowd. After all, even if you fit the criteria to a “T,” you’re still likely to be one of a number of applicants with similar grades, goals, activities, and aspirations.

That’s where a great application essay comes in. The essay is your best chance to make the case for why you should receive the scholarship; it helps the scholarship provider learn about the person behind the application, and gives them a much more detailed look at your school and home life.

If you use them right, those few paragraphs can help your application stand out—and could mean the difference between

getting a “thanks for applying” E-mail and an award check.

Of course, putting so much emphasis on an essay may make it seem like a daunting task, especially if you don’t consider yourself a great writer. By following these four tips, just about anyone can create a standout essay.

KNOW YOUR AUDIENCE

Although we’re looking at scholarship essays as a whole, it’s important to realize that every scholarship provider is looking for a specific student who meets unique criteria. When you get your application, look closely at the questions,

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the organization giving the scholarship, and any past recipients you can find.Are they emphasizing classroom performance? Looking for someone who’s dealt with adversity at home? Interested in character or community service more than grades? Whatever the answer, your research will put you a step ahead of applicants who are copying and pasting “one-size-fits-all” essays.

PLAN FAR IN ADVANCE

You can also avoid the “one-size-fits-all” essay by getting an early start on each application. Begin your research and planning a week or so before you think you should, and you’ll be able to take enough time to turn out something great.

This will also give you time to craft an outline, which can help your essay stay concise and on target. Think of two or three main points you want to make in response to the essay question, add some supporting information under each of them, and consider a sentence or two of introduction and conclusion. Before you know it, you’ll have built the structure and thesis of your essay, and you won’t have to rush to write it.

MAKE IT PERSONAL AND PASSIONATE

When you do start writing, don’t forget that the main purpose of your essay is to convince the scholarship provider that you’re the student they’ve been looking for. Answer the questions you’ve set out in your outline, but make sure every point you make is illustrated with a specific detail that shows

you care about the subject.

Don’t just mention that you work with disadvantaged kids; tell them how your love of soccer got you into coaching those kids. Don’t just tell them about your acting awards; show how the stage helped you conquer your shyness. Putting your unique interests and perspectives on the page will go a very long way toward creating a memorable essay.

FIND AN EDITOR

Last but not least, make sure you have time to run your essay by a good editor, whether it’s a parent, teacher, or grammar-nerd friend. Even a well-researched and passionately written essay can be derailed by spelling mistakes or awkward sentences, and if you’ve spent a lot of time looking at your words, it’s easy to miss basic mistakes.

A few minutes of proofreading by a trusted editor can make a huge difference. I also recommend reading your essay aloud to yourself, so you can hear how it flows.

Scholarship essays are a big component of your applications, and can be a major headache, too. But by starting early, answering the right questions, and describing what makes you unique, you’ll be writing standout essays without the stress.

Matt Konrad has been with Scholarship America since 2005. He is an alumnus of the University of Minnesota and a former scholarship recipient.

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GET SMART, SAVE MONEY WHEN BUYING COLLEGE TEXTBOOKS

A whole array of smartphone apps can help you figure out the cheapest way to go.

Smart book buying is one college skill you might want to master quickly. Incoming freshmen may assume the campus bookstore and Amazon.com amount to the list of choices, but upperclassmen know better.

These days, there’s an entire arsenal of apps that streamline the process of buying and selling books. Or renting them. Pick your favorites and start searching for the best deals from your phone.

The higher-tech book acquisition methods appear to be saving students serious money. The National Association of College Stores published a report in July revealing that

students bought the same quantity of course materials in 2014 as they did in 2007 but spent 20 percent less on average – $563 versus $701.

Because of the many options now available, which include buying new or used books, renting, choosing e-textbooks and using custom-created course packs, “we do see students doing their research,” says Elizabeth Riddle, director of NACS OnCampus Research.

The report found that for the spring 2015 semester, 38 percent of students shopped around using their smartphone and 23 percent used a tablet. The number of students who

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chose to rent, whether via app, online or in the store, has doubled since 2011.

Although campus stores were still the top source of textbooks, online retailers like Amazon are gaining ground. Apps for Amazon, Chegg and the many other textbook retailers can turn the book-buying chore into a bargain-hunting adventure.

A Chemistry 100 textbook available in one campus bookstore this fall for $205.75 new or $154.50 used was recently available through the Chegg app for $30.99 as a rental, $103.50 as an e-textbook rental, $122.99 as a used textbook and $164.49 as a new book – still 20 percent less than the same version at the campus store.

Some apps, such as CampusBooks and Bigwords, do the comparison legwork for you, examining prices available through the most popular textbook apps and at other retailers to find the best deal. You can complete the entire transaction from your phone and email titles and prices to your friends.

If you’d rather not lug any books around at all, renting or buying e-textbooks can be an appealing way to bring your costs down. Apps such as Intel Education Study and CourseSmart allow students to rent e-textbooks and read them on any device.

Intel Education Study, formerly known as Kno, lets users highlight, take notes and master flashcards, for instance. Using

the CourseSmart app, students can buy textbooks, search for topics in the book, add notes and print pages.

Rather than buy a politics book at the campus store new for $89.95 or used for $67.50, say, students can rent the e-textbook for a semester from CourseSmart for $44.98. Although renting or buying an e-textbook is usually cheaper than getting a physical copy, one potential downside to consider is that you won’t be able to sell it back.

When your textbooks are novels or other trade books, the apps available for reading via Kindle, NOOK and iBooks might be a good bet. If a textbook you purchased is republished with new content, iBooks lets you download the updated version for free. When the time comes to get rid of your books, there are apps that can help with that chore, too.

Using Textbook Buyback, CampusBooks or Bigwords, you can scan the barcode on your book and see what different retailers would be willing to pay you; you then send the retailer the book, often with free shipping. (The three outfits also have websites where you can get a quote by entering your book’s ISBN number.) Cash4Books lets users scan all their barcodes at once and get an instant quote for the grand total.

This story is excerpted from the U.S. News “Best Colleges 2016” guidebook, which features in-depth articles, rankings and data.

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7 QUESTIONS COLLEGE FINANCIAL AID OFFICERS WISH PARENTS WOULD ASK

Ask if your financial aid package will change after freshman year to better understand and prepare for the true cost of the degree.

Before college begins, students and parents should enter the financial aid office armed with a list of good questions.

Which ones are essential? We had financial aid officers weigh in on what they wish college hopefuls and their parents would ask. Skip these and you risk missing out on aid, borrowing too much or misjudging the affordability of a college.

Answers have been edited for length and clarity.

DANIEL M. TRAMUTA, associate vice president for enrollment services, SUNY—Fredonia

Is there additional financial aid available?

That question opens up so many more doors. I’m like JetBlue. I’m going to overbook. I might have 6,000 applications for admission. I’ll accept 3,000 and only want to enroll 1,100. When I go in and cancel aid for students who decide not to come here, I have the ability to go back and award more money. Making that call and having that conversation is critical. If you don’t make that call, I assume you’re OK with your award.

JAMES KASTER, director of financial aid, Washington and Lee University

What happens if my financial circumstances change during the time my child is in school?

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Families aren’t only making a financial commitment for the first year, but three years after that. It’s good to know how a university will assist you if something bad happens, say, there’s a loss of employment or death in the family.

Some schools will say, “That’s the award we’ve given you and there’s nothing we can do about it.” Some schools will give you a period of time to appeal. We always have the door open during the four years that a student is at Washington and Lee and will re-evaluate financial aid from that time forward.

ANGELA HOVAT TER, director of financial aid, Frostburg State University

Do my taxes need to be submitted before I complete the Free Application for Federal Student Aid?

I don’t care what your neighbor told you, you can file the FAFSA without having your taxes completed. A lot of parents don’t understand that and they miss school deadlines and miss out on potential financial aid. You can use last year’s taxes or your W-2. Actually, the FAFSA has an answer that says, “Will File,” letting everyone know that you’re doing this to meet a deadline.

LORI VEDDER, director of the office of financial aid, University of Michigan—Flint

How many years is my child’s program of study and what will it take to graduate in four years versus five, six or seven?

Obviously the fewer years it takes, the less borrowing, fewer tuition increases and fewer potential years of lost wages from not graduating and getting a job. Students often take all the loan funds offered to them, not realizing if they take longer to graduate they may run out of loan borrowing potential not only annually but on an aggregate level. They need to have a plan from the outset.

KATHLEEN BROWN, director of financial aid, Saint Mary’s College

What happens to my child’s financial aid after the first year?

Go through your financial aid award line by line and ask, “What could stay the same? What could increase? What could decrease?” Someone might have a one-time-only award. If a school is giving you a scholarship or grant, ask, “What do I have to do to keep it? Maintain a certain GPA? Stay in a major?”

MARK WARNER, assistant provost for enrollment management and director of student financial aid, University of Iowa

What percentage of graduates leave without debt?

Often the media, when reporting average student debt, forget to report the percent of students graduating without debt. Generally a higher percent of graduating seniors without student debt means a more affordable institution. I’m not saying it’s the highest priority but it’s certainly one of those points of information you should be aware of when considering your options.

BEN KOHL, assistant director for the office of student financial assistance, Kansas State University

What is the whole cost of your university?

Many times cost is only communicated in terms of tuition and housing. The full cost of attendance is actually what it costs for a student to eat, live, sleep, breathe and attend the college or university for one academic year at a time.

Simply put, families need to seek information and discuss what their student will actually spend, not just on tuition and housing, but on items including food, miscellaneous and personal expenses, all transportation expenses, campus and course fees, all books, supplies and equipment for all courses in order to be much more financially prepared for the college and university experience.

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6 STEPS TO DETERMINE HOW MUCH TO BORROW FOR COLLEGE

As long as you’re prepared and frugal, student debt can be helpful, some experts attest.

Student loans are a popular way for students to cover some of the costs of college. But is borrowing for an education a good idea?

“Taking out a loan to pay for your education is an investment in yourself and your future,” says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. “At the highest level, it’s a very positive use of debt. But like any debt, you do want to make sure you are not taking out an excessive amount, and that you will have the ability to repay it.”

There’s no one right number for all students to borrow, de Baca notes, but following these steps can help you arrive at a manageable amount:

ESTIMATE YOUR FULL COST OF COLLEGE

Figuring out what college will cost is not often a quick calculation—but it’s a crucial step toward borrowing the correct amount of loan debt for you, de Baca advises.

“The first thing that any student needs to do is really, truly understand what the cost of their education is going to be,” de Baca says. “People look at tuition and think, ‘Oh, that’s what I need.’ They don’t really make a good list of all the different expenses that are involved, and then match that with various ways to actually meet those needs.”

When you’re comparing financial aid packages from colleges,

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make sure you’re factoring in costs including room, board, school materials, and transportation. Don’t forget to factor in other means you’ll use to cover costs, including grants and scholarships from schools, savings, and potential earnings from a part-time job.

TAKE ONLY WHAT YOU NEED

Student loans aren’t free money. You’ll pay back what you take and then some, after interest is accounted for—so make sure to be frugal when possible, de Baca recommends.

“Student loans are really intended for tuition, books, and room and board,” she says. “The room and board is probably where there’s some fungibility in terms of how a student might be thinking about their money. Students should try to keep their living and entertainment expenses as low as possible and not use those funds in inappropriate ways.”

RESEARCH YOUR EARNING POTENTIAL

For a student loan burden to be manageable, the total amount you owe should be less than your starting salary after graduation, notes Mark Kantrowitz, founder of FastWeb.com and FinAid.org.

“If your total student loan debt is less than your annual income, you’ll be able to repay that debt in about 10 years,” he says.

Forecasting your future at age 17 might seem hard, but researching the published salaries of recent graduates—both from colleges you’re considering and majors you’re interested in —can pay off down the road. To get started, explore online offerings such as NerdWallet’s college comparison tool, which lists average starting salaries by major and college.

THINK LONG TERM

It can be challenging to think about bills that won’t come for years, but it’s critical to consider the month-to-month implications of what you borrow. That’s a commonly skipped step when it comes to taking a student loan, de Baca of Ameriprise Financial says.

Students can find repayment calculators online, including through financial aid sites FinAid.org and PayBackSmarter.com, that can help estimate monthly student loan payments.

If you have a rough estimate of an average starting salary for your intended field, that’s even better. Experts typically advise that monthly payments of roughly 10 percent of your income is manageable.

“It’s always better for students and parents to be informed, and think about what the end will look like—not just what the first year looks like,” notes Brian Lindeman, financial aid director at Macalester College in St. Paul, Minn.

WEIGH LOAN OPTIONS

Ultimately, your monthly payments may be affected by the type of loan you take.

Student loans fall into two main categories: federal and private. Federal loans, which are offered through the government, come with fixed rates and borrower protections, including the ability to lower or postpone payments if you experience financial hardship. Private loans may have fixed or variable rates and don’t typically offer flexible student loan repayment options.

Even if you were to borrow the same amount, you could end up paying more for one loan than another, in interest or in missed opportunities to have some debt forgiven. Make sure to thoroughly research your options to see which best fits your situation.

KEEP A HEALTHY MINDSET ABOUT DEBT

The horror stories of students drowning in hundreds of thousands of dollars of debt are, in reality, quite rare, financial aid expert Kantrowitz wrote in a recent paper, “Who Graduates College with Six-Figure Student Loan Debt?” Before you start to fret about student loans ruining your life, keep in mind that well-researched, manageable amounts of student debt can add a variety of positive aspects to your educational experience, including motivation and real-life training, financial aid experts have noted.

“I think we’ve given the impression to some parents and students that borrowing at all is dangerous when it comes to college,” says Lindeman of Macalester College. “So, it’s a nuanced message that’s difficult to deliver quickly and easily, but I think a reasonable amount of student debt can be one of the best investments a student will ever make.”

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4 STEPS TO FINANCIALLY PREPARE YOUR STUDENT FOR COLLEGE

Talk about finances now, but know when to let your child slip up.

Heading off to freshman year of college is a gateway to new experiences—a time to explore academic interests, meet new people, and, for some students, embrace newfound financial independence.

“Sometimes, this is the first time that they’re actually starting to manage money on their own, without their parents being right there with them to help them along the way,” says Doug Schantz, director of the Office of Student Accounts at Ohio’s Wittenberg University and founder of CheapScholar.org. “For those of us who have been managing our finances, you assume that this is basic financial information—but the fact of the matter is, it really isn’t.”

For parents, preparing your student to be financially successful in college is a delicate balance between supplying enough funds and know-how for your child to get by and becoming so overly involved that he or she can’t fully flourish, both personally and financially. Here’s what to brief your students on before they head off to school—and what you should let your children learn on their own:

DON’ T DEPOSIT AND DASH

For parents who plan to supply their student with extra spending money, realize that your offer is both incredibly generous and potentially hazardous, if you’re doling out a

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semester or year’s worth of cash without a loose framework of how that money should be divided, notes Houston Dougharty, vice president of student affairs at Grinnell College in Iowa. “Too often, I have worked with [parents] who, upon dropping off their student, say, ‘I’ve put $2,000 in your checking account for the year,’—and then that student is the most generous pizza buyer for the first month of college,” Dougharty says. “[By] October, they don’t have money to do laundry.”

Instead, talk to your students about the importance of intentional, incremental budgeting. Help them set up a month-to-month plan that allows for unexpected expenses, such as an off-campus dinner with hall mates or a few extra loads of wash. That conversation is also a great opportunity to be honest about what they can assume from you; if you expect your student to save money to cover the last two years of tuition, for example, or if he or she will be paying for textbooks out of pocket, mention that now, experts recommend.

EMBRACE—AND LIMIT—FINANCIAL SLIP-UPS

After helping with a budget framework, step out of the process and leave it to your son or daughter to make it work, recommends Jerry Weichman, a clinical psychologist in Newport Beach, Calif. “If your kid runs out of money [one] month, they’re not going to starve—they can buy some Ramen,” Weichman says. “One of the best things parents can do is to allow your kids to struggle financially for a little bit if they mismanage their money, because the consequences are so much easier for them now versus what that would equate to when they’re adults. You learn so much more from your mistakes than your successes.”

Still, parents who remove themselves don’t have to leave their students completely helpless. “You can put limits on how dangerous financial experiences can be,” notes June Walbert, financial planner at USAA Financial Planning Services. Encourage your student to get a debit card or a credit card with a low spending limit, she recommends, and recap his or her financial experience together at the end of each semester or school year. “Much of the learning during college happens outside the confines of the classroom, especially on the personal finance front,” Walbert says. “We want students to be free to make financial decisions, but within boundaries.”

ENCOURAGE FINANCIAL FREEDOM

Often, a part-time job—usually for about 10 hours a week—can help increase a student’s productivity, organization, and time management skills, claims Grinnell College’s Dougharty, in addition to providing a little financial leeway. If your student works, suggest the earnings be used as spending money—whether he or she chooses to put it toward laundry, occasional meals off campus, or extracurricular activities—rather than set costs such as tuition or room and board, Dougharty recommends. By choosing where to allocate earnings, students actively make a connection between money earned and money spent, and will likely be more effective at budgeting after college since, Dougharty says, “That’s what real life is like.”

UTILIZE WEB RESOURCES

Though releasing the tether from your soon-to-be college student may still be a terrifying thought, rest assured that neither you nor your student needs to tackle the upcoming challenges alone. With the help of the Internet, students have financial management resources at their fingertips. Check out Mint.com for help with your budget, recommends Katherine Cohen, founder of Ivywise.com; explore the government-run MyMoney.gov for advice on making informed financial decisions; or see if your school has a virtual financial literacy program that makes money issues fun and understandable, such as the program Schantz is currently implementing at Wittenberg University.

And if it gets tough making the shift from “daily parent to occasional coach,” as Grinnell’s Dougharty puts it, keep in mind that, after years of personal training within your family unit, allowing your student some leeway is a healthy route to tackling problems in school and beyond.

“Money management, conserving, saving for what you need, and tracking your expenses are parts of what any adult needs to be successful, let alone a college student,” counselor Weichman says. “Parents are teaching their kids not just how to deal with college, but how to deal with life.”

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