Introduction Erin Wirth, Accredited Financial Counselor Peer Money Coaches Dr. Kathy Prochaska-Cue, Program Advisor Ph.D., Accredited Financial Counselor, Extension Family Economist Outstanding Planning Education & Financial Counseling Center Building a Financial Education Brand & Marketing Communications
Why Are We Here? Committed to encouraging students to take responsibility for their financial futures Students to build good relationships with money Students have confidence in their financial futures Are able to meet their financial goals Creating and upholding a culture of financial empowerment among the student body through financial education
Personalized Money Management Sessions One-on-One Money Management Coaching Sessions With an Accredited Financial Counselor or Peer Money Coach, a UNL Student Common Session Topics: * Spending Plans * Financial Goals * Organizing Finances * Establishing Credit * Saving Money * Debt Repayment * Investment Education * Understanding Financial Aid * Selecting Employee Benefits * Major Purchases
Introduction Purpose: To inform you how we answer your students financial questions. To give you some reminders about financial education so if your students come to you with financial questions, youll be prepared. The 6 $$$ Questions We Get Asked Most by UNL Freshmen
Stories from UNL Parents Remember: You are a great educational resource for your students By talking about your financial mistakes, you can help prevent your student from making the same mistakes Know financial mistakes dont mean you raked up huge debt or foolishly spent your money NOT getting basic financial education is a mistake!
#1 UNL Freshman FAQs Its always in the media that students are in lots of debt. How can I minimize my debt load?
Checklist for Minimizing Debt EVERY YEAR! Complete the Free Application for Federal Student Aid at: http://www.fafsa.ed.gov/ * Will need parents tax information * Can use IRS data retrieval process * Do this close to Jan. 1 st Some need is first-come, first-serve UNL Will Inform You What You Qualify For Will be listed at: https://myred.nebraska.edu Understand How Many Grants & Scholarships You Are Getting Financial aid you DO NOT pay back ONLY BORROW WHAT YOU NEED!
Checklist for Minimizing Debt Look At SUBSIDIZED Loans = 3.86% AND Perkins Loans = 5% Student DOES NOT pay interest while in school or during 6-month grace period Then Look At UNSUBSIDIZED Loans = 3.86% The loans that DO accrue interest while youre in school Consider Parent PLUS Loans 6.41% & Private Loans However, know the disadvantages of these loans
Checklist for Minimizing Debt Federal LoansPrivate Loans Low, fixed interest rates 6-month grace period during which no payments are due Income-based repayment options Ways to lower or postpone payments Loan forgiveness programs (teachers, public service workers) Deferment options, especially if you return to school Historically, higher interest rates Repayment period differs Not as much choice of repayment options Usually not way to lower or postpone payments No forgiveness programs Usually no deferment options
FAFSA FAQs How Child Assets are Assessed Assets listed under the students name are weighed at 20% of their value when calculating the expected family contribution (EFC) Parents Assets - weighed at 2.6%- 5.6% of their value (based on a sliding income scale and after certain allowances)
FAFSA FAQs Taking Retirement Funds Distributions Retirement funds are sheltered from the need analysis process If you withdraw funds before the financial aid application is filed, you will have converted those funds into an included asset
Common FAFSA Mistakes Incorrectly filing income taxes as head of household If there is an error in the head of household filing status, youll need an amended tax return Listing parent marital status incorrectly If the custodial parent has remarried, you'll need the stepparent's information as well Failing to count the student as a member of the household Including retirement assets on the FAFSA Inflating parents education If parents didn't graduate from college, select "high school" as the highest education attainment
Best Student Loan Tips: Student Loan Cancellation Programs Public Service Loan Forgiveness Program The borrower must be employed full-time in a public service job for 10 years Cancellation of the remaining balance due on eligible federal student loans after the borrower has made 120 monthly payments under the Income-Based Repayment Plan
Best Student Loan Tips: Student Loan Cancellation Programs Public Service Loan Forgiveness Program Emergency management Government Military service Public safety & law enforcement (police and fire) Public health Public education Early childhood education Social work in a family service agency Public services for individuals with disabilities or the elderly Public interest legal services Public librarians School librarians
Student Loan Fees Deducted proportionately from each loan disbursement you receive You're responsible for repaying the entire amount you borrowed and not just the amount you received Here are the current loan fees for federal student loans: 1.051% for Direct Subsidized Loans and Direct Unsubsidized Loans 4.204% for Direct PLUS Loans for parents and graduate and professional students There are no loan fees for Perkins Loans
#2 UNL Freshman FAQs So, if I dont want to be in debt forever, how much financial aid should I take out?
Expert Guidelines for Debt Load No more than 10%-15% of the expected monthly income from your first job going for repayment of all loans Over 15% means you probably wont be able to afford car payments 20% is the start of the "danger zone" when loan debt is out of control
Guidelines Using Your Monthly Gross Salary When You Graduate We Recommend - Debt Payments = 10% Accounting Salary = $39,062 Max to Borrow = $28,314 Nutritionist Salary = $29,347 Max to Borrow = $21,217 Elementary Teacher Salary = $33,765 Max to Borrow = $24,476
Financial Picture of Typical UNL Graduate Average Amount of Student Loan Debt $ 21,000 Interest3.86% PlanLengthMonthlyInterest Standard10 years$211$4,346 Extended25 yearsOnly available for over $30,000 Graduated10 years$118$5,419 Income-ContingentPayments are calculated each year and are based on adjusted gross income, family size, and the total amount of loans – Your payments change as your income changes Income-BasedMaximum monthly payments will be 15 percent of discretionary income, the difference between adjusted gross income and 150 percent of the poverty guideline for family size and state Pay as You EarnMaximum monthly payments will be 10 percent of discretionary income, the difference between adjusted gross income and 150 percent of the poverty guideline for family size and state
Tips for Reducing Amount Borrowed Avoid Student Bill Late Fees Due the 12 th of every month Bill emailed on 25 th of every month Use electronic check option Credit costs you! NOTE: Your student DOES have to give you permission to access their MyRed Account. Use Campus Services UNL student fees pay for them Examples: Lied Center discounts, UPC Programming
Tips for Reducing Amount Borrowed Never Stop Applying for Scholarships UNL General Scholarship Form On MyRED - Due February Individual Colleges - CBA, Arts & Sciences Private – Fastweb.com Get a Part-Time Job with Education Benefits Some employers, Americorps, ROTC Lower Interest Payments If you have the money, make interest payments on unsubsidized loans while youre still in school
Mistakes Students Make VERY COMMON: Not Knowing How Much Theyve Borrowed Ex. One student had $60,000, thought had $25,000 TRACK AT: unl.edu/smmc Know Some Scholarships are Taxable Tax Free = Tuition & fees Taxable = Room & board, travel, research Reduce Expenses Creating a spending plan is a great way to discover ways to free up money that can be put towards education expenses
Mistakes Students Make If student receives more in student loans, grants, and scholarships than they have to pay in to UNL Extra is deposited in the bank account you set up in MyRed They should know its important to: SAVE IT! - In a savings account - Only transfer over when they need it
#3 UNL Freshman FAQs Do I need to have my taxes done?
Tips for Students & Taxes Discuss if You are Claiming the Student Person is under 19 years old or is under 24 and a full-time student AND the taxpayer provided over half of their support – You get deductions & credits If They Are a Dependent, Still File If you earned more than $5,950, you must file a tax return If you had income tax withheld from your pay, file Know the Current Education Credits Ex. The American Opportunity Credit is a tax credit of up to $2,500 of the cost of tuition, fees and course materials paid during the taxable year
Tips for Students & Taxes Find on MyRed Form 1098-T - Tuition Payments Statement Includes Proof of Scholarships & Grants and Amounts Billed Know Textbook Amounts Textbook purchases can be applied to taxes for educational tax credits Note: Students can get free tax help every year through UNL VITA
#4 UNL Freshman FAQs But how do I know how much money Ill need each year?
From Survey of Students: Per Academic Year ItemAmount Parking permit$ 400 Textbooks1,000 Sport tickets300 Laundry320 Cellphone630 School supplies (printer ink) 250 Gas300 Student organization/ Greek fees 300 TOTAL$ 3,500 Eating Out $400 - $3,000+ Entertainment $300 - $2,000+ Clothing/Personal Items $300 - $1,000+
Figuring Out How Much to Work Example Real-Life Budget: Living in a 2 Bedroom with a Roommate Total Cost Per Month = $965 Most students would need to work around 25 hours per week to cover this cost – with taxes taken out. Rent = $325Electricity = $50 Cable = $20Internet = $20 Groceries = $165Eating Out = $60 Clothing = $40Laundry = $10 Toiletries = $40Gas = $65 Entertainment = $50Medical needs = $15 Renters insurance = $15 Car insurance = $45 Cell phone = $45
Personalized Spending Plans DayItemAmount MondayGas Groceries (Choice: took the bus to East Campus) $34 $ 21 TuesdayCoffee (Choice: skipped a concert with friends) $ 4.50 WednesdayPop and candy bar (Choice: took the bus to East Campus) $ 2.50 ThursdayMovie (Choice: Didnt get popcorn and pop) $ 9 FridayDinner for friends birthday (Choice: Didnt order dessert) $ 12 SaturdayFast food lunch Party $ 6 $ 15 SundayShopping – New Shirt (Choice: Decided to pass on the $50 trendy shirt) $ 30 TOTAL$ 134 UNL Student: Leah Lives: On-Campus Weekly budget after major expenses: $ 140
Personalized Spending Plans DayItemAmount MondayBreakfast at gas station$ 4.50 TuesdayParking ticket Ate out for lunch Bought present for Mom $ 30.00 $ 8.42 $ 23.00 WednesdayGas Ate out for lunch Rented movies at Blockbuster Groceries $ 28.23 $ 6.32 $ 8.96 $ 35.69 ThursdayCoffee Yoga class $ 5.50 $ 14.00 FridayTakeout for dinner Trip to Target for toiletries – Got clothing & candles also $ 12.62 $ 62.00 SaturdayMovie & snack$ 15.69 SundayBrunch with my parents Laundry $ 0.00 $ 5.00 TOTAL$ 259.93 UNL Student: Sarah Lives: On-Campus Budget after major expenses: No idea
Personalized Spending Plans By having a plan and making good choices, this week Leah spent: $ 125.93 less than Sarah. That adds up to: $ 6,044.64 per year
Personalized Spending Plans Mint.com Get organized Track expenses – Reduce expenses Track income – Figure out reduce/increase income Get help saving for financial goals
Good Habit: Creating Financial Goals Why develop financial goals? Dont Miss Out on Opportunities, such as studying abroad Help Them Achieve Larger Life Goals Buying a house, Buying a car, Going to graduate school Control Spending Without goals, daily spending on unimportant things can keep students from achieving the really important things in life
Impulse Spending Tricks Think about your financial goals – Instead of spending, put money into savings Take $20 out each week and only spend that Plan for little purchases Get 2 lattes a week instead of 5 and save: $2,080 per year Get 1 well-made new shirt once a month instead of 3 cheap shirts and save: $1,300 per year
Emergency Fund Dave Ramsey recommends even college students save for: Emergency Fund (3 months living expenses, $500) Financial Goals By Paying Yourself First Including savings in your budget Automatically having funds deposited in your savings Building good habits Dave Ramseys Foundations in Personal Finance Program for College Students Available for FREE at UNL SMMC
#5 UNL Freshman FAQs What are some other things that see UNL students do to waste money?
Banking/Credit Union Fees Read the Account Contract! Some things many people dont realize: -Overdraft fees (Ex. $35 per day for up to 4 items) -Transfer fees Fees if you transfer from savings to checking too often -ATM fees Fees for using another banks ATM -International transactions (usually around 3%)
Not Having Adequate Insurance Renters Insurance Ask your insurance agent if your familys current homeowners or renters insurance policy also protects belongings in the dorm Most policies limit a students coverage to 10% of the familys coverage For example, if your familys policy has a personal property limit of $300,000, student belongings will be covered up to $30,000, after the deductible In most cases, buying separate renters insurance is less expensive than increasing the coverage limits on your familys homeowners insurance Average = $150 per year
Car Expenses Locksmiths = $200 Towing = $200 Solution = Triple AAA Primary - $60 Family - $14 Think About Cost of Car on Campus Parking $396 Oil changes$120 Gas$720 Insurance$600 Registration$150 TOTAL = $1,986 Bus = FREE Rent Zip Cars = $75 membership fee $7 per hour
Becoming a Victim to Identity Theft Basic Tips: Copy the front & back of all credit and debit cards and keep the copies in a safe location This enables you to cancel the card ASAP Keep credit/debit card receipts in a safe place - If any transactions are in question, call the card issuer Call it in ASAP Credit Card - $50 Debit Card - $500
Moving Off Campus Without Research Real Life ExamplePer Month On Campus Double room 7 day meal plan $1,059 Off Campus – 1 Bedroom 2 miles from campus – Does Cook $1,089 Off Campus – 1 Bedroom 2 miles from campus – Doesnt Cook $1,339 Off Campus – 2 Bedroom 2 miles from campus – Does Cook $754 Off Campus – 2 Bedroom 2 miles from campus – Doesnt Cook $1,004 These are estimates. Actual figures will vary from student to student. Initial costs = $840 (with roommate, no furniture costs)
Should Students Have Credit Cards? Not Necessarily! If they want to have it in case of emergencies (However, a cash emergency fund can work) If they understand the importance of credit scores If they want to start building a credit score Ex: If they want a mortgage or car loan when theyre a Junior or Senior Experts say: Better to have no credit than to come away from college with a ruined credit score!
Should Students Have Credit Cards? Do you need a credit card? If You Want a Credit Score Predicts the risk that you will not pay your credit obligations - Loans, credit cards, rent, etc. Note: Many students wait till they are Sophomores To borrow money from banks or credit unions for auto loans, business loans To rent an apartment without having a cosigner To get your dream job Many employers check credit scores to determine if youre responsible 740
Should Students Have Credit Cards? Most Important: Understand their credit management habits will affect their credit score & their financial future People with low credit scores will pay more for: Health/Dental/Vision Insurance Car loans Car insurance Mortgages Rent Low credit scores can prevent you from: Getting an apartment In some cases, getting a job
Should Students Have Credit Cards? Credit Checks for SMMC Representative: Bank Teller Leasing Consultant for Apartment Company Marketing Assistant for Retail Management Company University Position
Characteristics of Good Credit Users Have the self discipline to live within their means Are not impulse buyers Pay their bills in full each month to avoid wasting money on interest Pay their bills on time – #1 thing to do to build a credit score Only use 30% or less of credit available Dont open too many accounts too quick – Only have 1 or 2 and work on building a good account history
How You Can Help Help Them Understand the Characteristics of a Good Credit Card Look for low APR If there are low teaser interest rates, know what the rate will jump to after the period Know the grace period Read contact and know about fees
How You Can Help An optional tool to start teaching students consequences, accountability, and responsibility is an Ncard Campus Account Charges made to your NCard appear on the Student Accounts Consolidated Bill $300 monthly limit (does not include textbooks) Used at retailers around campus Can link to Wells Fargo account Turns into a debit card DOES NOT BUILD CREDIT SCORES
Common Ncard Questions Pay bill on MyRed Can be used in dining halls, but if they are on a meal plan, it does not charge by meal Fast food restaurants ARE NOT part of the meal plans Used for identification and to get into buildings, including the Rec If lost, student must notify the NCard office immediately Replacement card = $20
#6 UNL Freshman FAQs What do I need to discuss with my parents?
Good Discussion Topics Mention: If you want your student to work & how much (Experts recommend 10-20 hours per week) How UNL bills will be paid Send student a check, put in students account, pay directly Details of health, renters, and auto insurance Saving student loan refund check Wise credit use – Only buy what you can afford Identity theft – Call in lost cards ASAP Be careful with overusing NCard
Talking to Your Children About Money Keep Advice to a Minimum Rely on the example youve set for the past 18 years But let your student know they can come to you with a problem
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