Editorial Robert Franek, SVP, Publisher Kristen O’Toole, Editorial Director David Soto, Director of Content Development Pia Aliperti, Editor Random House Publishing Team Tom Russell, Publisher Alison Stoltzfus, Publishing Manager Ellen L Reed, Production Manager Jake Eldred, Associate Managing Editor Suzanne Lee, Designer The Princeton Review 24 Prime Parkway, Suite 201 Natick, MA 01760 E-mail: edito rialsu pport@ review com Copyright © 1993, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016 by TPR Education IP Holdings, LLC All rights reserved Published in the United States by Penguin Random House LLC, New York, and in Canada by Random House of Canada, a division of Penguin Random House Ltd., Toronto This publication is designed to provide accurate information in regard to the subject matter covered as of the date of publication Since tax laws, financial aid regulations, and government regulations change periodically, it is sold with the understanding that neither the publisher nor the authors are engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent professional person should be sought The draft version of the 2017–2018 FAFSA that appears on this page–this page is for informational purposes only It should not be submitted The U.S Department of Education did not review or provide any of the other information contained in this publication Source: The EFC figures provided for the case studies on this page–this page are courtesy of the College Board College Board, CSS/Financial Aid PROFILE, and the acorn logo are registered trademarks of the College Board All rights reserved ISBN 9781101920428 Ebook ISBN 978101920435 The Princeton Review is not affiliated with Princeton University v4.1 a FOREWORD I was the first person in my family to go to college After completing my undergraduate studies, I went on to law school, and after that—before I entered political office—I was a law professor at the University of Arkansas The time I spent in the classroom was vital to my professional growth, and I was able to pursue higher education only because I had the help of scholarships, loans, and jobs along the way Though it wasn’t always easy—as an undergrad, I lived on just a few dollars a week—it was far from impossible, and the investments I made in both time and money have paid immeasurable returns My schooling, as well as the friends I made and the life experience I gained throughout, gave me opportunities, confidence, and hope for my future A college education should never be considered unattainable by any American There are many avenues for funding available, but knowing how to look for assistance, as well as where to find it, is critical Fortunately, our country has long recognized the importance of access to higher education The land grant college system was established under Abraham Lincoln, the GI Bill after World War II, and the Pell Grants in the 1970s My Administration established the HOPE Scholarship and the Lifetime Learning tax credit, which together have provided billions of dollars in tax credits to tens of millions of American families paying for college We created AmeriCorps, one of my proudest accomplishments as President, which gave young people the opportunity to serve their communities while earning money for college We also expanded the Federal Work-Study program, cut student fees and interest rates on all loans, and increased repayment options Students saved more than $9 billion during my terms in office through the reductions in loan fees and interest rates While it has long been a key source of opportunity, a higher education is a necessity in today’s world The challenges of today’s lightning-paced and information-driven global society mean that investing in the minds of our young people is the most important thing our nation can Every American child, regardless of race, religion, or income, will need an education to guarantee our future success as a country and our competitiveness in the world, and I am committed to inspiring more young people to attend and finish college Both my Foundation and the Clinton Global Initiative, along with many other fine public and private institutions, are working to not only spread the word that the cost of tuition shouldn’t be an obstacle to attending college, but to also improve access to education in measurable ways The good news is that there is more help than ever before for collegebound students and their families Paying for College Without Going Broke is a comprehensive guide to the “ins and outs” of financing a college education This straighttalking volume gives much-needed direction to students and the families who love and support them If you invest in your future through education, you’re taking the long view Both the efforts and the sacrifices you make today will yield great rewards tomorrow —Bill Clinton ACKNOWLEDGMENTS Geoff Martz and I are most grateful to those who have helped with this and prior editions of the book First of all, we wish to thank President Bill Clinton who has honored our book with his Foreword Thanks also to Shannon Ashford and Felton Booker, Domestic Policy Interns with the William J Clinton Presidential Foundation during the Summer 2003 Session, for preparing the “Special Message to First-Generation College Students and Their Parents” that appears in the beginning of the text We would also like to thank Robert Franek and Kristen O’Toole at The Princeton Review, Scott Harris and his production team at Best Content Solutions, and Tom Russell and Alison Stoltzfus at Penguin Random House Special thanks to Jeanne Krier, our publicist for this book since its inception in 1993 Her understanding of the many complex issues surrounding financial aid and college funding as well as her keen suggestions for future editions have been an ongoing source of help and support Her skill as a public relations expert and the high regard that many members of media have for her professionalism have also contributed significantly to the success of this project We are also grateful to Victoria Malone, Michele Brown, Anita Gross, Daria Adams, and Jeanne Saunders at the U.S Department of Education as well as Susan McCrackin and Cindy Shelberg at the College Board who have been a tremendous source of help for many editions of this book I would also like to thank Isidore Matalon, my longtime friend and a constant source of new ideas; Steven Levine of the accounting firm of Lederer & Levine in Lyndhurst, New Jersey, for his helpful suggestions regarding tax law; Catherine O’Connor, my associate at Campus Consultants without whom I could never have managed; my friends Stuart Foisy and John Brubaker for their assistance with the worksheets at the back of this book; the high school counselors and independent college consultants who have entrusted students and their parents to me over the years; and my own parents, who somehow managed to pay for my college education without the benefit of having read a book like this Last but not least, I would like to thank my clients who have provided me with the opportunity to prove that financial aid planning really works —Kal Chany WHAT’S NEW If you are reading this book for the first time, you can safely ignore this page However, if you’ve read prior editions of this book, here’s a quick summary of the major changes that will be impacting aid for the 2017-2018 school year CHANGES TO THE FAFSA In previous versions of the FAFSA, you were asked to provide income information for the calendar year preceding the academic year for which you are requesting aid Beginning with the 2017-2018 FAFSA, you will be asked to provide income information for the calendar year before that, which has become known as the prior-prior year or PPY So, for example, the 2017-2018 FAFSA will ask about income in 2015 The 2018-2019 FAFSA will ask about 2016 income, etc etc However, all other items such as asset values and household size, will still be based on your situation on the day you complete the FAFSA form Thus, even though you may have reported 2015 income information on the 2016-2017 FAFSA, you will again have to repeat that same 2015 income information on the 20172018 FAFSA form, with (of course) updated asset and other information The FAFSA filing period will no longer start on January before the start of the academic year you are seeking aid; it will start three months earlier So the 2017-2018 filing period will begin on October 1, 2016 CHANGES TO THE PROFILE The PROFILE will mirror the FAFSA methodology, using PPY to calculate the family contribution under the institutional methodology CONTENTS Cover Title Page Copyright Foreword Acknowledgments What’s New A Special Message to First-Generation College Students and Their Parents INTRODUCTION PART ONE CHAPTER ONE PART TWO CHAPTER TWO CHAPTER THREE CHAPTER FOUR CHAPTER FIVE CHAPTER SIX PART THREE PART FOUR CHAPTER SEVEN CHAPTER EIGHT CHAPTER NINE CHAPTER TEN CHAPTER ELEVEN CHAPTER TWELVE PART FIVE UNDERSTANDING THE PROCESS Overview HOW TO TAKE CONTROL OF THE PROCESS Long-Term Strategies for Paying for College Short-Term Strategies for Receiving More Financial Aid How to Pick Colleges What the Student Can Do State Aid FILLING OUT THE STANDARDIZED FORMS THE OFFER & OTHER FINANCIAL MATTERS Innovative Payment Options Managing Your Debt Special Topics 235 Less Taxing Matters Looking for a Financial Aid Consulting Service Looking Ahead WORKSHEETS AND FORMS SAMPLE FORMS GLOSSARY INSTITUTIONAL METHODOLOGY COMMENTS AND CASE STUDIES KEY THINGS TO KNOW ABOUT THE IRS DATA RETRIEVAL TOOL AND THE IRS TRANSCRIPT VERIFICATION REQUIREMENT ABOUT THE AUTHORS A SPECIAL MESSAGE TO FIRST-GENERATION COLLEGE STUDENTS AND THEIR PARENTS by Shannon Ashford and Felton Booker Paying for college is difficult for everyone these days, but for first-generation college students and their families, it can be even more of a challenge In addition to worrying about coming up with the cash, you also have to deal with a completely unfamiliar process You will face decisions, deadlines, and application requirements that can sometimes seem scarily complicated This section is designed to provide first-generation students and their parents with some basic information regarding college admissions and college funding that will make the process a little less daunting for you both It will also dispel some of the myths about the admission and funding process Later sections in this book will discuss in greater detail the various options and strategies covered here PARENTS For parents of a first-generation college student, the amount of new information to absorb, financial records to collect, fees to pay, and forms to submit can be overwhelming The pressure of feeling that your child’s educational future may depend on how each admission and aid form is completed doesn’t help Here are a few topics some parents may be faced with as they tackle the college process for the first time APPROACHING COLLEGE ADMISSION AND FUNDING AS A COLLABORATIVE PROCESS It is ironic that just at the moment when parents are supposed to be giving their child more autonomy in making his or her own decisions, along comes one of the most critical and expensive decisions that a young adult will ever have to make—a decision bound to test the resolve of any parent trying to let go The typical response of many parents, understandably so, is to take control However, the reality is that many parents are just as much in the dark about the process of selecting, applying, and paying for college as their sons and daughters We’ve found that the most successful way to approach all this is to view the college process as a collaborative effort between parents and their college-bound child, with help from resources such as high school guidance counselors, college administrators, and reference guides like this one In this collaborative process, parents and children serve as reality checks for each other Will you be paying for everything, or will your child carry some of the burden? While you don’t need to go into the minute details of your finances, it is a good idea to tell your child what you can really afford As a parent, are you looking only at schools with very high admission standards? It might be a good idea to work together to select at least one college with a high acceptance rate where your student’s standardized test scores and GPA are above the average for the typically admitted student You may also come to realize that you and your child have differing expectations about college You might want your son to attend school near home, while he actually wants to go to school three states away Your daughter may want to major in literature, while you’ve always thought she would be an engineer Although you may suspect that you know best, please take some extra time to consider the incredible opportunity—and daunting challenge—that this period of time presents to your child as a young person on the brink of adulthood DON’T BE PROUD, BE HONEST Many parents traditionally view their family’s financial information as highly personal and perceive questions asked in financial aid applications as invasive, and more plainly, none of the school’s business As parents, you should be very proud of your efforts to provide for your family That pride, however, may often result in parents being either hesitant to apply for financial aid or misrepresenting their family’s information when applying Neither is helpful to the family’s objective: ensuring that their child is financially able to attend a school of his or her choice Therefore, you don’t want to overstate the value of your income and asset information on the forms The purpose of these questions is to determine the accurate level of financial aid that may be available to your child Any overstatement of the parent’s wealth or education may prevent your child from being offered the level of financial aid they are qualified to receive and may require in order to attend college On the other hand, it is never a good idea to exaggerate your family’s need Colleges have sophisticated procedures to verify information in order to ensure that ultimate monetary awards accurately reflect your family’s financial situation Despite the complexity of some forms, it is very important that your financial information be accurate Later in this book, you will see how to accurately represent your situation to your best advantage Remember, there is more than $235 billion in financial aid awarded each year, and millions of students and their parents apply for that aid, so you shouldn’t feel selfconscious about being one of them It is understood that a large percentage of students will not be able to pay for school entirely on their own That’s why each school has a financial aid office whose responsibility is to allocate public and private funds to college students FINANCIAL AID MYTHS You may have heard a lot of myths about financial aid: that you can’t get it if you own ... much how to get into college, but how to pay for it once you are there In the following pages we will show you how to pay for college This is not about ripping off the system, or lying to get... smart, and Paying for College Without Going Broke will show you how to just that About the Authors of A Special Message to First-Generation College Students and Their Parents Shannon Ashford is... Long-Term Strategies for Paying for College Congratulations! If you are reading this section you’ve had the foresight to begin planning early for the expense of paying for college What we mean