Textbook prices have been increasing at twice the rate of inflation for the past 20 years, and while publishers have profited, students and their families are feeling quite a pinch. That’s why I was intrigued when I came across Book Renter (www.bookrenter.com), a website that allows students to rent their textbooks instead of buying them!

How it Works

The book renting process is relatively user-friendly, and seems to be streamlined for use at any campus. The company offers 5 rental periods to accommodate courses that last several weeks to several months, and even allows students to extend their rental by up to 90 days. So, how does it work?

1. The student searches for the title, author, or ISBN of the textbook, and rents it for the length of the school term.
2. The book is quickly shipped out in new or like-new condition. The student can use it for the entire term, taking care to keep it in good shape.
3. When the student is finished with the book, he or she prints out a free UPS return shipping label, and sends it back.

The catch? If the student marks or damages the book, he or she has to buy it.

Going Green

Though still a relatively new company, Book Renter has already gained enough notoriety to have been featured on several news programs, and to rent out to thousands of campuses. One student in a CNBC One Good Idea video reported saving $900 one year by renting her books instead of buying them–that’s a lot of green!

Many of Book Renter’s features allow for even more money-saving. Their extension policy means students can avoid late fees or forced purchase, and their SMS reminder option will even remind students that their due date is nearing.

And then there’s the other way Book Renter has gone green–their book recycling policy means students rent out returned books as well. This earth-friendly practice has helped make them a certified green business.

Discount Code!

BookRenter.com is offering a 5% discount for the first 200 people to enter the code “summer509” when renting textbooks this summer. This might be a good time to give it a try.

All the best,
Deborah Fox

It looks like Harvard is at it again. First the university began offering financial aid to families making up to $180,000–and full-rides for those with family incomes of less $60,000! Now a few very recent Harvard alums have teamed up to make no-interest loans a reality for Harvard attendees.

Paying it Forward

When the founders of UniThrive.org graduated (one last year, and the other two just this year) they immediately started putting their collegiate connections to work: they began building a network of alumni lenders who to loan college funds to students following in their footsteps.

They’ve started small. Since the website’s launch they have signed up only 73 alumnni lenders and only 8 students in need of funds, but the terms will undoubtedly make UniThrive’s loan process quite appealing to both students and lenders.

How it Works

Much like other peer-to-peer lending sites we’ve seen in the past, UniThrive allows students to post a profile detailing a bit of their personal history (to help plead their case) and the details of their loan needs. Alumni can then choose students they feel a kinship with–maybe because of a shared major, hometown, or story–and offer to lend them some much needed cash.

Lenders do not have to lend the full amount (and right now students cannot request over $2,000). Instead, the site allows alumni to offer what they can, combining money from multiple lenders to hopefully reach the student’s full request. Both student and lender(s) sign an agreement to make the loan legal and binding. Then the money is sent directly to the school–not to the student–so the money is applied directly to college costs.

All the loans offered through UniThrive are interest-free–a great deal for the student–and students have until 5 years after graduation to repay them. UniThrive also focuses on creating a relationship between lender and borrower, encouraging interaction and mentorship.

The Catches

As with any great deal, however, there are a few catches:

1. The borrower is required to interact with the lender, at the very least by updating him or her several times yearly about his or her progress,
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2. Since the loans are interest free, the lender does not make a profit from them (unlike other peer-to-peer lending sites we’ve discussed), and
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3. UniThrive is currently ONLY available to Harvard undergraduates (though they plan to expand to other schools).

All in all, a very clever idea.

All the best,
Deborah Fox

Photo: Harvard Red Tree by surekat

With financial strain hitting families from coast to coast, it is no wonder that more students are turning to student loans to help cover the cost of college, but does your child know all that a loan entails?

Here are a few things your student should understand about student loans before he or she starts borrowing.

1. It’s MUCH Better to Avoid Debt.

If you think the cost of college is daunting to a parent, imagine being eighteen years old, making minimum wage, heading for your first year of independence, and being faced with a private college bill of $30,000 per year. Many students panic and borrow the maximum amount of student loans, but that may not be the best course.

Remind your child that they can bring in money from other sources that won’t put them in debt, like jobs, scholarships, and grants. Take the “every little bit helps” philosophy–it may not seem like much now, but the $100 paycheck they can put towards college is $100  less they’ll be in debt when they graduate.

2. Start With Federal Loans.

There are a plethora of private student loan companies out there who are campaigning to get students’ business. They market any way they can, sometimes even making their private loans to appear to be federal loans by sending letters with official government-looking seals.

Private loans are simply not nearly as consumer-friendly as federal student loans such as the Perkins or Stafford loan. They also tend to have higher interest rates which are variable instead of fixed.  The cost of borrowing may end up being significantly more in the long run. So, the lesson is: Start with federal loans, and consider private loans ONLY as a last ditch option!

3. Traditional Student Loans are the Student’s Responsibility.

Though parents have the option of taking out a PLUS loan or other type of loan, traditional federal student loans are borrowed in the student’s name, not the parent’s. So even if a parent or grandparent offers to pay off the loans, should something happen that prevents that person from paying, the student is the person responsible for paying it off.

Going over this type of information could tend to make your student feel nervous or overwhelmed, so be sure to reassure him or her that you will work together to make important financial decisions. And you still have time to help your child start preparing for the real world. Try reviewing my article about 5 Ways to Raise More Financially Savvy Kids to get started.

All the best,
Deborah Fox

image by woodsy

Budget cuts are the name of the game for most states this year, but some of them are coping with their multi-billion dollar shortfalls by shifting funds away from student financial aid.

Taking from the Poor

Budget plans from New Jersey to California are focusing on funneling financial aid reserves back into the general budget–reducing and sometimes eliminating funding to some of the neediest students.

In New Jersey the governor has proposed reducing funds offered to the neediest for-profit school attendees by 40% or $4,300. These students, often adults with no parental help in paying for school, also already face a reported 30% more debt than students who attend non-profit schools.

In Ohio a new budget proposal suggests shifting funds from students at community colleges and increasing money offered to students of universities. Ohio is also considering restructuring the Ohio College Opportunity Grant (OCOG) by making it more difficult for Pell Grant recipients (typically the neediest students) to access funds as well.

Fin Aid Disappearing Act

News for Californian students may be the worst of all: their funds may disappear altogether. Governor Schwarzenneger has suggested some drastic changes to the Cal Grant, California’s state student aid, including:

• Eliminating the Cal Grant for future generations of students (which has been in place since the 1950s!),
• Rescinding the award from the 118,000 incoming freshmen who were promised Cal Grants, and
• Refusing to increase current Cal Grant awardees’ funds to help with college cost increases.

This could end up hurting students who never had a Cal Grant, as well, as University of California schools are considering taking some funds from students who had been awarded university grants to help fill the gap of those losing Cal Grants.

Not only are their aid funds shrinking, but the cost of attendance is being hiked yet again. California public colleges and universities are planning an approximate 10% tuition increase.

More Waiting for Students

As if admissions wait lists weren’t bad enough, it looks like there will be more waiting for students this summer as state legislatures deliberate these proposals. Keep watching the Pay for College Blog for more news about how budget cuts could affect your family’s college funding plan.

All the best,
Deborah Fox

photo by sailingpUSA

Students may find it tougher to get a job on campus this Fall. According to the New York Times, the employment crunch has finally spread to student positions on college campuses–and that means bigger competition for work-study jobs.

What is Work-Study?

If you have a child attending or preparing to attend college, you have no doubt checked and rechecked his or her “Award Letter”–the page or two that details your student’s financial aid offerings for any given year.

On it you may find from one to three types of aid; grants or scholarships (which are “free money” that don’t need to be paid back), federal student loans and work-study. Work-study is a federally subsidized form of student aid in which a student works an on-campus job. Students are guaranteed pay at or above minimum wage, and can work until they earn the maximum amount listed on the Award Letter. The federal government pays 75% of the student’s wages, while the college foots 25 percent. Once students get their paychecks, they can use the earnings to pay for college.

Before and After

While the economy was robust, work-study jobs were typically easy for students to get. They had to apply just like they would to a regular job, but if they had received a work-study award, they were extremely likely to end up with a position. The NY Times article reported that one school offered 4 times more work-study awards than the number of positions they had available, because even at that high volume they had a hard time filling the spots!

Now, however, more and more students are in a financial pinch, and colleges do not have the federal funding to create all the jobs they need to support these students. The competition for work-study jobs is becoming fierce.

Work-Study Alternatives

Most students prefer a work-study job because they tend to require 20 hours or less each week–leaving students with plenty of time to study. However, even in a tough job market, work-study employment is not the only realistic option.

If your child needs to work to help pay the bills, he or she should look outside the work-study listings, as well. Many on-campus jobs are not work-study specific, so your child can still apply to work in a mail room, at the cafeteria, or as a research assistant or admin assistant for a professor.

Your student can also look for off-campus jobs using the campus career services listings. Off-campus jobs listed through the school want college students for the position, so they will usually work with your student to make sure the hours are conducive to studying, class schedule, and completing homework.  Whether students work a regular or work-study job, the part-time earnings can certainly add up to help make college more affordable.

All the best,
Deborah Fox

photo by lusi

Once upon a time a straight-A, former ASB president who needed a high amount of scholarship money might have been admitted over a B-average student with a plentiful college fund; but the current recession has, for some colleges, meant choosing money over student-desirability.

Fair Weather Friends

Before the economy began to slump, many colleges tried to admit students on a “need-blind” basis, meaning, that a student’s financial aid needs would not hurt his or her chances of being admitted. Sadly, some colleges are currently feeling “needy” themselves–and that has forced schools like Oregon’s Reed College to start taking a hard look at potential students’ ability to pay.  After months of analyzing who would make the cut, the amount of financial aid Reed had available for this fall’s freshman class fell short of covering the need.

Dropping the Neediest

For the first time ever, Reed College in Oregon has had to seriously reorganize it’s admit list. Regardless of test scores, grades, and extracurriculars, they simply did not have the funds to offer enough aid to their first-choice incoming class. In fact, the New York Times reported that Reed, which boasts alumni like Apple CEO Steve Jobs, literally cut 100 needy students off their acceptance list and replaced them with students whose families could pay full “sticker price.”

Crowding the Halls

This year we’ve seen a shift in the way colleges handle the business of admissions–and let’s be clear, college is very much a business - the bottom line it is a top priority.

Many colleges have been striving to boost their income by accepting larger freshman classes. University of California San Diego, for example, has been accepting more and more freshman over the past few years. With not enough room to house them, their double-occupancy rooms have become triples, and rooms that once held only three students now house four. Quarters are cramped, yet students are definitely not getting a discount.

The Changing Face of Admissions

Admissions practices are changing, and that means this coming fall’s college application process could be much different than those in years past. It may be more difficult to gain acceptance, and to pay for college simply by handling the admissions process in the traditional ways. Keep an eye on the Pay for College Blog this summer and as school begins for more information about how you and your student should tackle the issues of college admissions and funding in the current economic downturn. Times may be changing, but with pre-planning you can still make it happen!

All the best,
Deborah Fox

photo: Ivy League too by hortongrou

As of 2005, nearly 80% of college students entered school with an “undecided” major, according to the founder of MyMajors.com, and the problem hasn’t gone unnoticed. Colleges across the country have published web articles about choosing a major, and if you type “undecided college major” into Google, you’ll come up 654,000 responses. Yikes!

So, is it a good idea to go in with an “undecided” major? And what do students (and their parents) need to think about when it comes to this “major” decision?

Fear Factor

To a college student, choosing a college major is almost akin to making a marriage commitment: they feel like this one big decision will decide the rest of their lives. What a huge responsibility for an eighteen- or nineteen-year-old to take on!

The fear-factor has a lot of impact on how and when students make their major choice, but it is better–if possible–to go into school with a major and a general idea of career preferences. Swapping majors midstream can mean extra years of school to get the requirements finished, and that means higher college costs. But how should students make the decision?

Choose for Love

Our sister site, Surviving College Life, has an article about choosing a college major entitled “For Love or Money: How to Choose a College Major.” This article may be a helpful tool for your college-aged students.

My personal experience has made me a great believer in choosing a major–and career path–based on passion. Too many students try to take on a career because they think it will be a money-maker, only to end up going back to school later because they are miserable on the job. Students need to remember that true success means finding a career that marries their passion and the skills they are naturally good at doing (and that will pay the bills!)  Without those two things, one will end up spending the majority of their time working a job instead of building a career.

To discover more about potential career fields, I recommend that your student try to volunteer, find a part time job or participate in an internship in the career he or she is considering. This hands-on approach helps students explore what the day-to-day activities are like which can help them make a truly informed decision.

My son just finished his freshman year.  He was declared a microbiology major - which he is very interested in.  He was chosen to participate in a special national microbiology research project that his college is a part of.  He absolutely loved the project but realized he would not want to be doing this type of work eight hours a day.  He has since changed his major.  He still intends to stay current on the world of microbiology - but as a hobby, not as an intended career.  That’s the type of exploration every student should embark upon during undergraduate studies!

…And for Money

With the economy still on shaky legs, however, it is equally important for students to be practical about their career choices. Student debt is on the rise, and they will need to be sure they can pay the bills with the job they choose to pursue. Your eighteen-year-old son may feel passionate about testing video games as a career but that is, unsurprisingly, a competitive and limited market!

To get an idea of what he or she might make in any given field, you and your student can check out Salary.com, a great source of estimated salaries for a wide range of career options.

The federal government also offers an online 2008-09 Occupational Outlook Handbook, which can explain the outlook for future hiring, salary points, job duties, and more. This is a great resource for discovering more about a prospective career.  Ideally your student should have an assessment done to determine what careers would be appropriate based on his or her personality, skills, interests and values.  In the end, doing some pre-planning on majors and careers may end up saving you thousands on college costs.

All the best,
Deborah Fox

With summer upon us–and those last months of preparing college-bound students ticking away–many parents are thinking long and hard about how to begin teaching their children how to cover their own expenses.

Last month I shared my thoughts about whether or not parents should be footing the bills for their college-graduate children, but what about students who are still in high school?

Credit Card Envy

It seems that the consumer culture in our country is infecting younger and younger children, and that craving to buy has shown up in the statistics about rising debt among college students. But those of you with younger children know–it isn’t only college-aged children who want to use a credit card. Whether it is an iphone or a minibike, high school (and younger!) students have plenty of wishes they hope will be granted by your credit card.

Bill My Parents?

A new website called Bill My Parents (http://www.billmyparents.com) is offering a new option for parents who don’t want to turn their credit card over into the young and eager hands of their children.

Here’s how it works: The parent signs up for a membership and adds an authorized credit card to the account. Then the student can sign up for an account linked to his or her parent’s. Instead of granting carte blanche on credit spending, the site then allows its young members to shop their Amazon-powered store for everything from prom dresses to Blackberry phones.

Then what?

Simple: They click a button that says “Bill My Parents” and the item is sent to the parent for approval. If Mom or Dad approves it, the transaction goes through. If not, there is no charge to the parent’s credit card, and the child has to keep saving up his or her allowance.

The Bottom Line

While the idea may seem sound in theory, BillMyParents.com is really little more than a glorified wish-list (possibly even worse because it allows the child to put more buying pressure on his or her parent by sending request after request!). Its store is also limited, so it doesn’t really eliminate the problem of your student asking for a credit card to shop the mall.

Perhaps worst of all, this method of ask-and-recieve (or deny) still fails to teach children anything about fiscal responsibility. A better solution would be to follow the traditional allowance strategy: Let your child work (or do chores for you), save, and buy their new Nintendo DS out of their own pocket. He or she may not like it now, but it is a valuable lesson in how money works in the adult world.

Remember, the better prepared our children are when they’re out on their own, the less likely they will become “boomerang kids” and the better they’ll feel about themselves.

All the best,
Deborah Fox

photo by woodsy

It seems students will go to great lengths for a free lunch (the article about how to get free food in college over on our sister blog, Surviving College Life, has been particularly popular).  What too many don’t understand is that when it comes to credit card marketing, there is no such thing as a free lunch.

The $1500 (+ interest!) Meal

I’ve written before about the ways credit cards lure students in, and was saddened to read a recent article from Bloomberg about a student who signed up for a card to get a free meal .

She was reported as thinking it was a great deal–she just had to sign up for the card, she would get approved, have access to a line of credit and as a bonus, she would get a presumably non-Ramen noodle lunch for free.

Fast forward eight months: she now has a debt of $1,500 that she is struggling to pay off PLUS an 18% interest rate. With her financial situation already on edge, that debt may just keep climbing. Even if it doesn’t, the Bloomberg article calculated that if she makes a regular $50/month payment on that debt, it will still take her all of four years to pay it down. (And by then she’ll probably be paying on student loans as well!)

Congressional Credit Considerations

Stories like the one above are all too common among college students today. Though legally adults at 18, many continue to be naive or uninformed consumers–willing to sign up for a card for a free frisbee or T-shirt, unaware of the strings attached.

Happily, the American government has acted to do something about that. The Senate has recently passed a new bill last week that places restrictions on college students getting credit cards. The bill would:

• Require parental consent for borrowers under age 21, or
• Require proof of financial independence from the student, or
• Require proof that the student had taken a financial literacy course.

The bill also limits the fees and interest rates that can be charged to students.  The downside of the bill is the legislation doesn’t go into effect until February of 2010 so watch out for what credit card companies do to terms in the meantime!

This bill could end up being good protection for our students, many of whom are already struggling with the day to day financial decisions they are faced with.  I’ll keep you posted as new developments arise.

All the best,
Deborah Fox

photo by woodsy

The higher education law passed by Congress in 2008 had several requirements aimed at helping with college affordability. One of those requirements was the creation of individual online calculators to be provided by schools to help figure the “net cost” (or what we call the “out-of-pocket cost”) of attendance.

Early Birds…

Though the law doesn’t require colleges to have these calculators in place until 2011, many of the elite schools have already jumped on the bandwagon. In fact, Princeton has been offering a calculator since 1998!

Other schools that are already offering a net-cost calculator include Princeton, Yale, Williams College, Amherst College, and, most recently, M.I.T.

Get the Worm?

Though the calculators are helpful for parents, they might be good advertising for the colleges as well. Since they are specific to each college, they are a more accurate judge of cost than the Department of Education’s EFC calculator or other generalized college cost calculators you might find on the web.

Some students have been pleasantly surprised by the numbers these calculators are giving them, finding the elite schools to be more affordable than they initially thought. A New York Times article on the subject quoted FinAid.org’s Mark Kantrowitz as suggesting that the calculators may be working out as a recruiting tool for these schools.

Still Too General

The addition of these calculators will be very helpful to parents and students alike by providing a much more accurate picture of the initial out-of-pocket-cost .  Most of the highly selective private colleges and universities take into account much more than asked for on the FAFSA (the federal financial aid form) including things like home equity, medical expenses and information from the non-custodial parent.

However, the calculators are still much too general to give you a real estimate of what your out-of-pocket cost could be. Many of the calculators will not work for divorced parents or international students, and they cannot take into account things like potential private scholarships, tax strategies or cash-flow changes (good or bad) your family may have during the school year.

Nevertheless, I encourage you to give these calculators a try.  You might find the numbers a little more encouraging than you first believed. For some of you, the percieved cost of college is so daunting that you never started saving or planning.  In the end, even a rough estimate of the actual cost may be quite a relief and a motivator to begin planning ahead so you can determine how to pay for college most efficiently.

All the best,
Deborah Fox

photo by hisks