FASFAA

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FASFAA

• The FASFAA Graduate Professional
• Committee Welcomes You To The
• Train The Trainer Webinar
• Financial Literacy

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What is todays agenda?

• What are the barriers to implementation?
• How do I reach these students?
• How do I select what to teach and what not to
  teach?
• What is my lesson plan?

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What does that mean to me?

• Given these characteristics, what challenges do
  you face in getting them to focus on issues of
  debt management and financial literacy?

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What are the barriers to implementation?
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What are the strategies you can use?

• What strategies could be implemented that
  successfully overcome these barriers or
  challenges?
• Refer back to the list of characteristics and
  challenges developed earlier today.

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How do I reach these students?
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How do I reach these students?

• The best way to pre-empt problems and challenges
  is to be well-prepared to teach.
• Preparation prevention.
• Preventative measures
• Set up a positive, safe, and supportive learning
  environment.
• Learn and use students names.
• Take a few minutes to personalize your
  instruction.
• Reinforce students when they make positive
  contributions.

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How do I reach these students?

• Determine how much time you have to teach the
  material.
• Prioritize what you decide to teach.
• Encourage active student involvement.

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How do I reach these students?

• Make it engaging and entertaining.
• Ask questions.
• Ask open-ended questions.
• Once youve asked a question, wait.
• Direct questions to particular students.
• Ask why or how questions.
• Probe for consequences or implications.
• Ask students to share their feelings.
• Ask students to indicate what they gained or lost
  from their experiences.

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How do I reach these students?

• Speak with authority. Stay in control.
• Use oral footnotes.
• Admit when you dont know.
• Respect and listen to your students.
• Make every effort to remain positive and show
  that you care about them.

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How do I select what to teach and what not to
teach?

• Time constraints will differ among schools.
• Logistical constraints will differ by
  institution.
• Number of students will differ.
• Not all students have the same needs and concerns.

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How do I select what to teach and what not to
teach?

• How much time do I have?
• How important is the information for this group?
• What do my students already know?
• How long will it take to teach what I want to
  teach?

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How do I select what to teach and what not to
teach?

• How comfortable do I feel delivering this
  information?
• How easy/difficult is the information to learn
  independently?
• What environmental constraints exist?

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What is my lesson plan?
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Changing Role of the FAA

• Brenda M. Brown
• Director of Financial Aid
• University of Miami School of Law

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Changing Role of the FAA

• Evolution from a financial aid counselor
• Financial aid application process
• Financial aid programs
• Grants/Scholarships
• Loans
• Work

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Changing Role of the FAA

• Evolution to a financial advisor
• Borrower Rights and responsibilities
• Loan Repayment options
• Credit
• Financial Literacy Money/Debt Management
• Financial Planning

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Top Five Money Mistakes College Students Make

• Credit Card Debt
• Ruining Their Credit Score
• Lack of Budgeting
• Using Student Loan Money Inappropriately
• Reaching for an Expensive College

http//financialplan.about.com/od/students/a/colle
ge-student-money-mistakes.htm
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Budgeting

• Travis Brown
• Director of Student Financial Services
• American InterContinental University

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Budgeting

• Gather all records and statements
• Record Monthly Income vs. Monthly Expenses
• Make adjustments to Expenses
• Needs vs. wants
• Track expenses and then review
• Live like a student
• Borrowing wisely

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Assisting students to adapt to finances

• From high school to undergraduate
• Understanding COA
• Direct costs
• Indirect costs
• Learning concepts of money and budgeting
• Needs vs. wants
• 24-hour rule
• Parents role vs. students role

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Responsible borrowing

• Do you need loans as undergraduate?
• From undergraduate to graduate/professional?
• No more federal grants only loan options!
• Loans are not a replacement for income.
• Loans are for students educational expenses
  only!
• Limit borrowing to finance your education, not
  your lifestyle!

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Responsible borrowing

• Resource for assisting students
• Smart about Money.org
• (Under the Economic Survival Tips link.)
• http//www.smartaboutmoney.org/economicsurvivaltip
  s/Spending/tabid/562/Default.aspx
• Practical Money Skills
• (www.practicalmoneyskills.com)
• http//www.practicalmoneyskills.com/wizards/credit
  /index.php

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Teaching Your Students to Borrow Strategically

• April Halaychik, Assistant Director
• Loan Operations and Debt Management
• Nova Southeastern University

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Tracking Student Debt

• How much can the student afford to borrow
  overall?
• 10 to 15 of their annual salary to cover
  student loans.
• How much do they expect to earn?
• http//swz.salary.com/

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SWZ.SALARY.COM
48,441
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Projected Salary Affordable Payments

• What monthly payment can your students afford to
  pay based on their projected salary?
• 48,441 annual Salary
• 48,441 x .10 4,844
• 4,844 / 12 months
• 404 monthly repayment (10).

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Affordable Payments Overall Debt

• How much overall debt will result in the
  students affordable monthly payment?
• Student loan repayment calculator
• http//www.finaid.org/calculators/loanpayments.pht
  ml
• Estimate an approximate loan balance (i.e.
  50,000)
• Enter this amount into the loan calculator

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Affordable Payments Overall Debt

• How much overall debt will result in the
  students affordable monthly payment ? (cont)
• Compare Payment result to target payment
• Target payment 404 vs. Resulting payment 575
• Adjust estimated balance upward or downward as
  needed

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Affordable Payments Overall Debt

• How much overall debt will result in the
  students affordable monthly payment ? (cont)
• 35,000 402.98 per month payment
• Target payment 404
• 35.000 in overall debt is manageable based on
  the projected salary

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Sticker Shock Scenarios

• Scenario 1 Matilda
• Evening MBA program 4 Semesters
• Subsidized Stafford 17,000
• Unsubsidized Stafford 24,000
• TOTAL 41,000

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Sticker Shock Scenarios

• Loan Repayment Schedule for 41,000
• Loan Interest Rate 6.80 (fixed Stafford rate)
• Loan Term 10 years
• Monthly Loan Payment 472
• 56,619 annual salary (at least)

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Alternative Repayment Options

• Some students are unable to achieve their target
  debt level
• Prior student loans
• Tuition rates
• etc
• Introduce loan repayment alternatives
• Extending repayment
• Lower monthly payments
• Higher overall interest costs.
• Repayment Comparison Calculator
• http//www.usafunds.org/borrowers/resources/calcul
  ators.htm

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Tracking Prior Student Debt

• Students should be aware of their existing
  student loan debt
• Introduce NSLDS (www.nslds.ed.gov)
• Contains all federal loans
• All schools attended
• Undergraduate through Graduate.
• Contains federal grants

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Accessing NSLDS
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Accessing NSLDS
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Tracking Student Debt

• Provide students the tools to determine whether
  they are on the right track
• What would their monthly payment be if they
  stopped borrowing today?
• How much more can they afford to borrow from this
  point forward?

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Aggregate Limits

• Introduce Aggregate Limits (Stafford Loans)
• 65,500 Subsidized
• 73,000 Unsubsidized
• 138,500 Combined

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Recap

• Recap the steps to strategic borrowing?
• Identify their projected salary
• Identify target monthly payment based on salary
• Identify debt amount that equals target payment
• Identify current loan balances
• Monitor aggregate limits

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Questions
?
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Credit . . . What, Why, When How

• Christopher Miller
• Debt Management Consultant
• USA Funds

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What is credit?

• Credit is the arrangement for the purchase and
  ownership of something of value or the use of
  goods and services for which payment is deferred
  to a later date, which also includes the
  borrowing of money and the use of money through
  the ownership of credit cards and lines of credit.

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Did You Know

• Graduate Students and Credit Cards
• In 2006, 92 of graduate students have at least
  one credit card. This is a 4 decrease from the
  96 who had credit cards in 2003.
• The average outstanding balance on graduate
  student credit cards is 8,612, an increase of
  10 from the 2003 average of 7,831.
• On average, older graduate students (age 3059)
  carry 12,593 in credit card debt, almost twice
  as much as their younger counterparts (age 2229)
  who carry an average debt of 6,479.
• Ninety-four percent of graduate student survey
  respondents used credit cards to pay for some
  portion of their direct education expenses,
  primarily textbooks. Twenty-eight percent
  admitted paying for some portion of their tuition
  with credit cards.

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Did You Know

• Graduate Students and Credit Cards
• As has been true in previous studies, students
  attending school in the Midwest region of the
  country tend to carry the highest credit card
  debt.
• The majority of graduate students, 67, said they
  took out their first credit card as an
  undergraduate student.
• Although 93 of graduate student survey
  respondents try to keep their credit card debt
  under control by making at least the required
  minimum monthly payments, only 20 said they pay
  off their cards in full each month.
• Of the graduate student survey respondents, 93
  would have liked more information on financial
  management topics before they started school and
  would like financial management education made
  available to them now.

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Undergraduates and Credit Cards
Did You Know

• May 2005 Nellie Mae Study.
• 56 percent of freshmen have credit cards.
• 76 percent of undergraduates began school with
  credit cards.
• Average outstanding balance on undergraduate
  credit cards was 2,169.
• 21 percent of undergrads pay off cards each
  month.
• 86 percent of students with credit cards have an
  outstanding balance.

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Credit-Card Facts
Did You Know

• Customers at fast-food restaurants spend 20
  percent to 30 percent more with cards than they
  would with cash.
• 1.5 million personal bankruptcies filed in 2004.

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Typical Uses of Credit Cards and Benefits

• Uses of credit
• Internet and phone purchases.
• Airline reservations.
• Hotel and car reservations.
• Event ticket purchases.
• Establishing a credit history.
• Credit card benefits
• Organize and manage expenses.
• Safety.
• Emergency funds.
• Establish credit history

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Example of Paying off Credit Card Debt

• Balance of 15,000, Interest rate of 20 and
  making minimum payment amount of 2.5
• How much do I have to pay and for how long?
• - 375 per month
• - 42 years
• - Total cost of borrowing 44,500

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Time and amount to pay off a credit-card balance
Example of Paying off Credit Card Debt
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Successful Tips for Managing your Credit

• Your debt, excluding your home mortgage, should
  not exceed 15 of your net income.
• Student Loans.
• Credit Cards.
• Car Payment.

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Fico Score

• FICO scores are calculated to range between 300
  and 850. The average FICO score in the United
  States is 692. Anything below 620 is considered
  subprime, which means that if you get a loan, you
  will probably pay a higher than those with a
  score of 700 and above.
• -Why is it important for me to maintain my
  credit while in school?

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Top Things to know

• 1. Americans are loaded with credit-card debt.
• 2. Some debt is good and some debt is bad.
• 3. Check you credit report and score at least
  once a year.
• 4. Get a handle on your spending.
• 5. Pay off your highest-rate debts first.
• 6. Don't fall into the minimum trap.
• 7. Watch where you borrow.
• 8. Expect the unexpected.
• 9. Don't be so quick to pay down your mortgage.
• 10. Get help as soon as you need it.

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Did we learn anything?

• Are we on fire with knowledge?

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QUIZ!

• When youre desperate for cash, you should take
  an advance on your credit card.
• ANSWER False. Cash advances generally have much
  higher interest rates. Youre better off revising
  your budget or looking for other ways to save
  money.

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QUIZ!

• 2. It doesnt really matter if you let the
  balance on your credit card roll over each month,
  as long as you make the minimum payment.
• ANSWER False. The longer you take to pay off
  your balance, the more you will pay in interest
  charges.

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QUIZ!

• 3. If you have trouble paying cash for your rent
  or groceries, a credit card is an alternative.
• ANSWER False. Something is wrong with your
  budget if you have to use a credit card to
  subsidize basic living expenses. Take another
  look at that budget and prioritize items.

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QUIZ!

• 4. Its a good idea to limit the number of credit
  cards you have.
• ANSWER True and false. Creditors look at the
  total amount of credit available to you when
  calculating your eligibility for additional
  credit, like a car loan or a mortgage. But they
  also look at credit used compared to credit
  available.

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QUIZ!

• 5. Take advantage of all credit card offers that
  come to you in the mail.
• ANSWER False. Read everything carefully before
  you decide to open any type of credit account.
  You might consider making a chart to compare the
  features important to you. Beware of low teaser
  interest rates which can jump dramatically after
  the intro period.

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QUIZ!

• 6. Its a good idea to limit the number of credit
  cards you carry.
• ANSWER True. And always use the same credit card
  for any online purchases.

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QUIZ!

• 7. It is always a good sign when your bank
  increases your credit limit.
• ANSWER False. Its good that a creditor thinks
  you are capable of handling additional credit,
  but a higher credit line might tempt you to
  charge more. It can hurt your chances, too, when
  you are requesting additional credit from other
  creditors.

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QUIZ!

• 8. Gold and platinum credit cards typically have
  higher annual fees.
• ANSWER True. They typically offer little
  additional benefits. Read the fine print.

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QUIZ!

• 9. Whenever possible, substitute a debit card for
  a credit card.
• ANSWER True. Debit cards give you access to
  money you have already earned or saved but be
  sure to check with your bank to make sure you
  understand fees involved in using their debit
  card.

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QUIZ!

• 10. Credit cards should be used as a last resort.
• ANSWER True. Excessive credit card debt can
  become a real problem that gets in the way of
  your future planslike buying a car or a home.

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Conclusion

• Use credit cards wisely
• Look for cards with low or no fees and low
  interest
• Pay on time
• Know what is in the fine print, i.e. late-payment
  fees and interest rate changes. Penalty rates are
  up by 25!
• Limit number of cards
• Never use for cash advances
• Dont permit increases in credit limits
• Pay off balances monthly.

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Resources

• National Foundation for Credit Counseling,
  www.nfcc.org, 1-800-388-2227
• Association of Independent Consumer Credit
  Counseling Agencies, www.aiccca.org,
  1-866-703-8787
• Association of Independent Consumer Credit
  Counseling Agencies, www.aiccca.org
• www.annualcreditreport.com
• http//www.nelliemae.com/library/research_8.html
• http//money.cnn.com/pf/101/lessons/9/page5.html
• http//www.consumerfed.org
• www.ftc.gov/credit

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Future planning

• Further education
• Buying home/car
• Employment earnings
• Potential earnings
• Evaluate salaries
• Evaluate income (gross vs. net)

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Debt Evaluation

• Student loans
• Credit Card
• Other loans (i.e. auto, etc.)
• Best way to meet debt obligations
• Loan Repayment options
• Credit cards (best way to pay it back!)

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Financial Planning

• Benefits
• Retirement Planning

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Resources

• National Endowment for Financial Education
• www.nefe.org
• www.cashcourse.org
• www.spendster.org
• www.smartaboutmoney.org
• 40 Money Management Tips Every College Student
  Should Know

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Resources

• http//financialplan.about.com
• www.mymoney.gov
• www.360financialliteracy.org
• www.jumpstartcoalition.org
• www.practicalmoneyskills.com
• www.financialliteracymonth.com
• www.financiallit.org

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Other resources

• Guarantors
• Lenders