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10 college finance tips for 2016

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Let's consider employment. Wage increases have, unfortunately, been sluggish.

When you go in to talk about a new position or to talk about continuing to work for your same employer you really need to be aggressive about asking for a raise.

People who negotiate actually get $5,000 more on average than people who don't negotiate.

If you don't ask, they answer is always going to be "no."

Whether you're sending your child to college for the 1st time in fall 2016, are in the thick of determining how to pay for the next year of education, or you're getting a head start on the 2017 academic year, some tweaks to the system could make college financing easier, although not necessarily more affordable.

College finance advisers say the biggest changes this year are related to the Free Application for Federal Student Aid, or FAFSA.

Here are 10 college finance tips for 2016.

1. File FAFSA twice this year for financial aid

If you're applying for any kind of financial aid for the 2016-2017 school year, you need to complete the FAFSA as soon as possible after Jan. 1.

"FAFSA is the gateway to almost every type of financial aid -- not just federal aid, but also state aid, aid from individual colleges and even some independent scholarships," says Lauren Asher, president of the Institute for College Access & Success in Oakland, California.

Graduation cap on $100 bills © zimmytws/Shutterstock.com

Currently, the FAFSA form is available online beginning Jan. 1 each year and is based on your prior year's income.

"The problem is, state financial aid is often given on a first-come, first-served basis," says Megan McClean Coval, managing director of policy and federal relations for the National Association of Student Financial Aid Administrators in Washington, D.C.

"However, most people don't have their taxes done in January so they delay completing the form, or they have to estimate their income and then reconfirm the information later," she says.

The good news is that, beginning in 2016, the FAFSA process will change in 2 important ways.

First, the form for financial aid for 2017-2018 will be available beginning Oct. 1, 2016. Second, the income considered will be the "prior-prior" year's income -- in this case, your 2015 income.

"This way, nearly everyone will have their taxes for 2015 completed, and they can use the IRS digital retrieval tool to automatically input their income information," McClean Coval says. "This simplifies the process."

Moving the date to October aligns the financial aid process with the application process, which should result in receiving financial aid offers earlier.

"Right now, students typically get a letter of acceptance followed sometimes months later by a financial aid letter," McClean Coval says. "This should shorten the time frame and give families more time to evaluate their aid packages."

2. Keep your college applications confidential

A key change to the 2016-2017 FAFSA form: While the colleges you apply to will receive your form, they won't get a list of the other schools it's been sent to, says David Levy, editor of Edvisors.com, a college finance information site based in Las Vegas.

"In the past, all colleges would see the names of other colleges you listed, and it was kind of an open secret that they would view the list as your order of preferences, which could influence their admission and financial aid decisions," Levy says. "Some schools might offer less financial aid if they were on the bottom of a student's list."

Beginning with next year's FAFSA, the list of schools will be seen only by the federal government and the state financial aid office. Levy recommends listing at least 1 state school among your preferred schools to maximize your options for state financial aid.

3. Check out the updated College Scorecard

In September, the Obama administration released a new version of the College Scorecard, which provides data about every college to compare costs and average levels of student debt.

"The College Scorecard is by no means perfect, particularly because the information is based only on students who receive federal aid and only counts full-time students who are 1st-time college enrollees, not transfer students or nontraditional students," Levy says. "However, students and their parents can get a sense of how much it will cost to attend a school, how many students graduate within 6 years and what the typical level of student debt is."

McClean Coval says families need to understand that while the College Scorecard can be used to compare a couple of institutions, the information is far from individualized.

Look for the best student loan rates at Bankrate.com.

4. Compare the net price calculator for each school

Every college is required to have a "net price calculator" on its website that takes into consideration the full cost of attendance including tuition, room and board, books, and fees, and then estimates your potential financial aid package to come up with the amount of money the student and parents would need to save, earn or borrow to pay for a year's attendance, says Asher.

"It's not the same as a financial aid offer, but it can help you decide where to apply based on affordability," she says.

Levy says students and parents should use the net price calculator to compare schools before applications are sent.

"The cost estimate is a powerful reality check," Levy says. "It's much better to tell your student that you can't afford a school before they apply rather than after they're accepted."

5. Look early and often for scholarships

Levy says it's never too early to look for scholarships.

"You don't have to be a senior in high school to apply, either. For instance, Jif Peanut Butter has a $25,000 college scholarship that requires the kids to be between 6 and 12 to apply. They just have to invent an unusual peanut butter sandwich," Levy says.

McClean Coval says early financial planning is essential because federal and state government grants and loans as well as institutional and private grants and loans have different requirements and deadlines. College students need to reapply for financial aid every year and can continue to apply for scholarships throughout college.

6. Understand your financial aid package

Asher says the most essential thing students and parents can do when it comes to paying for college is to ask for an explanation of your financial aid package.

"If there's anything you don't understand, such as whether something is a grant or a loan or how much you can expect to pay, contact the financial aid office immediately and have them clarify it," Asher says. "Unfortunately, no 2 financial aid letters will be in the exact same format, so you need to make sure you understand them before you can compare offers."

7. Look to federal loans first if you must borrow

"The financing piece of college has to be a big part of the fit," says McClean Coval. "There are so many different institutions that could meet your needs, so be sure to think hard about how much you really want to borrow."

If you decide you need to borrow some money for college, McClean Coval says to always look first for federal loans because they have more generous repayment options and can be forgiven under some circumstances. Private loans offer less repayment flexibility.

8. Review your new repayment plan options

Federal loan repayment options have been revised several times to make it easier for borrowers to repay their loans based on their income. Asher says various programs cap your monthly payments at 10% to 15% of your discretionary income, and any remaining balance after a period of up to 25 years may be discharged.

"While it's helpful that there are income-driven options to repay your federal loans, keep in mind that those programs are longer than the standard repayment term," says McClean Coval. "Do you really want to be paying your loans for 20 years?"

9. Compare potential future earnings

The College Scorecard and sites such as College Insight provide data on how many students graduate and their average debt load as well as data about their post-college income.

Levy suggests PayScale.com as another resource that ranks earnings by major at every college.

"The best way to use all this data is when you're thinking about where to apply for college," Asher says. "Look at graduate rates and earnings after finishing school to get an idea of your potential income."

10. Focus on graduating

Asher says the odds of defaulting on student loan debt are higher among students who fail to graduate and therefore lack earning power.

"Some students decide to take a semester off and work, take fewer classes or work a lot of hours while in college to offset the costs. But all of these lower your chances of completing your degree," Asher says. "Borrowing federal student loans isn't necessarily all bad if it means you'll graduate, particularly as long as you understand your loan terms and repayment options."

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