Structural Engineering:

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Structural Engineering
Helping Students Build a Solid Foundation for
College and Beyond
Angela Caddell, OKMM Director, OGSLP
Penny Gandy, Client Solutions Manager, OGSLP
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What is OGSLP?

• a division of the Oklahoma State Regents for
  Higher Education
• primary federal student loan guarantor for
  Oklahoma students and post-secondary schools

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What is ?

• financial education initiative of OGSLP and the
  State Regents
• clearinghouse of personal finance information and
  resources
• supports personal economics education through
  targeted outreach and strategic partnerships

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Can we talk about money?
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The Millionaire Game
Excerpted from Financial Fitness for Life 9-12,
National Council on Economic Education
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Most millionaires are college graduates.
True. Four out of five millionaires are college
graduates.
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Most millionaires work less than 40 hours per
week.
False. About 2/3 of millionaires work 45-55
hours a week.
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More than half of all millionaires never received
money from a trust fund or estate.
True. Only 19 percent of millionaires received
any income or wealth of any kind from a trust
fund or estate.
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More millionaires have American Express Gold
cards than Sears cards.
False. Only 28.6 percent of millionaires have
American Express Gold cards while 43 percent have
Sears credit cards.
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More millionaires drive Fords than Cadillacs.
True. Ford is preferred by 9.4 percent, Cadillac
by 8.8 percent.
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Day traders usually beat the stock market and
many of them become millionaires.
False. Recent studies show that 80 percent of day
traders lose money.
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Federal Statistics
The overall personal savings rate fell from 8.7
of disposable income in 1992 to zero in 2003 and
to -.5 in 2005 (U.S. Commerce Department)
Over 40 of American households spend 110 of
their income (Jumptart Coalition)
45 of Americans make minimum or no monthly
payments on their credit card debt (Cambridge
Consumer Credit Index)
Mortgage delinquencies are at the highest level
since 1992 (Jumptart Coalition)
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More students drop out of college due to credit
card debt than academic failure (Chronicle for
Higher Education)
Over one-third of identity theft victims are
under the age of 30, and most are college
students (Chronicle for Higher Education)
58 of parents spent more on restaurants and
takeout last year than they saved for college
(Alliance Bernstein)
92 of financial aid administrators say that
parents overestimate the amount of scholarship
and grant money their children will receive
(Alliance Bernstein)
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Oklahoma Statistics
Oklahomans have set record bankruptcy rates for 9
of the last 10 years (State Policy Reports)
Oklahoma ranks in the top 10 in credit card debt
per capita (State Policy Reports)
Oklahoma college students have an average of 2
credit cards and carry an average debt load of
nearly 3,800 (OU Center for Student Affairs
survey)
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High School to College

• transition to financial freedom
• the economic way of thinking
• the campus credit blitz

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Paying for College

• free money first
• family savings
• grants and scholarships
• Oklahomas Promise (a.k.a. OHLAP)
• apply in 8th, 9th, or 10th grade
• 2.5 GPA in specified curriculum
• OTAG
• need-based aid
• apply through FAFSA

Resource Are You Looking for Grants
Scholarships?
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Paying for College

• bridging the gap
• exhaust federal loan options before considering
  private or alternative loans
• face it income vs. debt level
• borrow wisely

Resources Are You Looking for
Money?www.OKcollegestart.org
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Managing Student Loans
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Three Main Points

• The Borrowing Process
• Loan Types and How They Differ
• Understanding the Life of the Loan Process

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What do you know?

• What do you know about student loans?
• What do you hear from your students about student
  loans or the process?

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The Borrowing Process

• Dont wait to begin the process of applying for
  aid!
• FAFSA (Free Application for Federal Student Aid)
  completion can begin January 1

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Loan Types

• Stafford Loans
• Subsidized and Unsubsidized Loans
• SubsidizedInterest is paid by the Dept. of
• Ed. (USDE) while student is in school
• UnsubsidizedInterest is paid by the student
• borrower quarterly, or capitalized by the
• lender
• Loans are originated and funded by private banks,
  credit unions, and other lending agencies

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Loan Types

• PLUS Loans
• PLUS for undergraduate students (parent of the
  dependent student is responsible for repayment of
  the loan)
• PLUS for graduate students (graduate student is
  responsible for repayment of the loan)
• Note PLUS borrowers are responsible for all
  interest that accrues on these types of loansbut
  the interest and payments are deferrable while in
  school

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Loan Types

• Direct Loans
• Federally-backed student loans
• Same loan limits and deferment options as the
  FFELP loans
• Loan is originated and funded by the USDE

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Loan Types

• Consolidation Loans
• Benefits of Consolidation
• Can include many different loan types
• in the consolidation loan
• Can combine multiple payments into
• one monthly payment to one loan holder
• Can reduce the monthly payment
• amount by extending the repayment terms

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Loan Types

• Consolidation Loans
• Things to consider about consolidation loans
• May lose some deferment and discharge options
  that were available under original loan terms
• Interest rate on consolidation loan may be higher
  since its determined by the weighted average of
  the loans being consolidated
• Will pay more interest over the repayment term
  since it can be extended up to 30 years

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Loan Types

• Private/Alternative Loans
• Not federally-backed
• Interest rates may be higher
• May not qualify for certain types of deferments
  and discharge options
• ALWAYS exhaust all federal loan options BEFORE
  turning to private/alternative loans

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Good to Know!

• The financial aid office is a great resource for
  all financial aid information, as well as
  information about lender benefits, services, and
  Web sites

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Good to Know!

• Shop around for a lender with the best benefits
  and options
• Interest rate benefits and discounts for
  on-time payments during repayment
• Fees
• Benefits for auto-debit payments
• Are loans sold? If so, do the benefits travel
  with the loan to new loan holder?
• Student borrowers should feel entitled to ASK
  QUESTIONS!

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My Student Loan File

• Know the players in the student loan process
• Financial Aid Counselor
• Lender
• Guarantor
• Servicer
• Secondary Market
• Department of Education

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My Student Loan File

• Keep important papers together for future
  reference
• Some examples
• Student Aid Reports (SARs)
• Borrower rights and responsibilities
• Copies of Master Promissory Notes
• Deferment or forbearance forms
• Privacy notices

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The Life of the Loan

• While in school
• Borrow wisely EVERY TIME
• Make payments (if possible) to reduce the
  principal loan amount or pay quarterly interest
  that accrues
• Keep the lender updated (e.g. demographic
  information, transferring to another school)

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The Life of the Loan

• After school
• Entering repayment
• Repayment schedules
• Standard
• Graduated
• Extended repayment
• Sample monthly payments at various debt levels
• Flexible options during times of unusual
  circumstances
• Evaluating consolidation

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The Life of the Loan

• After school
• Important Note
• If a student doesnt complete their program of
  study or drops out (or is dissatisfied with their
  educational program), their loans must still be
  repaid

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The Life of the Loan

• Successful repayment - the ultimate GOAL!
• Establishes credit history for future borrowing
  power
• Terms can be changed to accommodate unexpected
  life situations during repayment years
• Oklahoma has an impressive repayment rate of
  94.2, which reflects outreach and borrower
  education efforts

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The Life of the Loan

• Consequences of non-repayment (default)
• Non-repayment can result in
• Loss of future financial aid eligibility
• Adverse credit ratings that impact purchasing
  ability
• Employer wage garnishment
• Interception of income tax refunds

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The Life of the Loan

• Consequences of non-repayment (default)
• Defaulted loans CAN be rehabilitated
• With satisfactory repayment a borrower can
  regain Title IV eligibility
• 6 consecutive, on-time monthly payments
• With rehabilitation a borrowers default status
  can be removed to restore credit standing
• 9 consecutive, on-time monthly payments

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One more time

• Topics Covered
• The Borrowing Process
• Loan Types and How They Differ
• Understanding the Life of the Loan Process

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College to Career

• transition to financial independence
• balanced budget
• preventing ID theft

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Building a Balanced Budget

• Meet Susie Smith
• 25K starting salary
• rents a studio apartment
• has renters insurance
• makes saving a priority
• makes monthly student loan payments

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Preventing Identity Theft

• Keep important documents safe
• Shred unnecessary documents
• Dont share personal information
• Use complicated passwords
• Monitor credit reports

Resources Federal Trade Commission
www.ftc.orgwww.annualcreditreport.com
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OGSLP Resources

• Are You Looking for Money?
• Are You Looking for Grants Scholarships?
• Preparing for College
• Oklahomas Promise flyer
• OKMM flyer
• Teacher Loan Forgiveness flyer
• www.OKcollegestart.org stickers

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Questions?
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Angela Caddell, OKMM Director 405-234-4495,
acaddell_at_ogslp.org
Penny Gandy, Client Solutions Manager 405-234-4364
, pgandy_at_ogslp.org
www.ogslp.org
www.oklahomamoneymatters.org