Financial Literacy 2014/2015 Office of Student Financial Assistance

Agenda 2014/ Participants will gain an understanding of how to manage:  Student Loan Repayment  A Budget  Credit

Why Financial Literacy? Because many students and young adults:  Take financial risks without realizing it  Lack basic financial skills to make good decisions when managing money  Affect others with their financial decisions (i.e. institutional cohort default rates) 2014/2015 3

Repayment of Your Student Loan Debt  Provides types of student loans available, rights and responsibilities associated with student loans, repayment options and where to seek guidance. 2014/2015 4

What are my rights?  Borrowers have the right to know the:  Amount borrowed  Interest rate  Date repayment begins  Servicer  Fees (if any) associated with loan 2014/2015 5

Know how much you owe  National Student Loan Data System (NSLDS)   FED-AID 2014/2015 6

7 Types of Federal Student Loans Subsidized Direct Federal Stafford Loans Loans based on financial need. Unsubsidized Direct Federal Stafford Loans Loans not based on financial need. Federal PLUS Loans: Parent PLUS Grad PLUS Loans borrowed by an undergraduate student’s parents or by a graduate or professional degree- seeking student. In order to qualify, the borrower must not have adverse credit or must obtain a credit-worthy endorser. Federal Consolidation Loans Multiple student loans consolidated or merged into one new loan. Federal Perkins Loans Loans for which you make repayment to the school.

Interest: Simple Daily Basis 2014/ Outstanding Principal Balance Interest Rate/365 # days in billing cycle Interest Example: a $10,000 Direct Loan balance at 6.8% interest would be calculated for the month of July as: $10,000 x (.068/365) x 31 = $57.75

Life cycle of a student loan 2014/2015 9

What are my responsibilities?  Borrowers have the responsibility to:  Repay the amount borrowed plus interest  Update personal contact information when it changes  Seek help when unable to pay 2014/

Repayment  Borrowers must repay EVEN IF you:  Are dissatisfied with school or services  Are not able to secure employment  Do not complete your program of study 2014/

Repayment Plans 2014/

Staying on Track  Use a Repayment Estimator to compare and select a plan that best fits your budget:     Make monthly payments ON TIME  Sign up for automatic withdrawal if option is offered 2014/

Delinquency 2014/  If you are ONE day late on your student loan payment, you are considered delinquent. Default  If you have not made payments for 270 days or 9 months, you will be considered in default status.

Consequences of Default  Owe entire balance immediately  Ineligible for interest rate reductions  Ineligible for deferments/forbearances  Ineligible for additional financial aid  Lose positive rating on credit report 2014/

Consequences of Default  Potentially assigned to a collection agency which will incur additional costs and fees  State/federal income tax refunds may be withheld (offset)  Part of wages may be withheld (garnished)  Florida Lottery winnings may be withheld (offset) 2014/

Where to find help  Contact the servicer IMMEDIATELY if unable to make a scheduled payment  Options include:  Repayment plan change  Deferment  Forbearance  Consolidation 2014/

Options Available 2014/

Communicating with the Servicer  Program servicer contact information into your cell phone for easy access  Notify of any changes to address, employment, address, cell number  Keep a folder of all loan records in a safe place  Document each communication with servicer for reference 2014/

Resolving Disputes  Self-Resolution Checklist   Common Issues and How to Resolve  loans/disputes loans/disputes  Ombudsman Office   loans/disputes/prepare loans/disputes/prepare 2014/

Cancellation of student loan debt  Death  Disability (total and permanent)  School Closure  Identity Theft  False Loan Certification  Failure of school to pay a refund if student withdraws  Bankruptcy (in rare cases) 2014/

Saving Money  Tax Deductions  American Opportunity Tax Credit  Lifetime Learning Credit   Loan Forgiveness Programs   /

Budgeting is the foundation of achieving your financial goals while maintaining your day-to-day living expenses. Managing Your Budget 2014/

Steps for Budgeting #1 Set Goals #2 Organize Expenses #3 Set a realistic budget #4 Write it down! #5 Keep records 2014/

Budget Template INCOME MONEY OUT Profit or (Loss) 2014/

Reducing Expenses  Evaluate your cell phone plan and select only services you need.  Cable is not a necessity. Watch TV on your laptop.  Use public transportation.  Eating out is expensive – if you have a meal plan on campus – use it! You’ve paid for it.  Shop at Goodwill or consignment shops. 2014/

Managing Your Credit Establishing and maintaining good credit can provide many benefits to your financial future 2014/

Establishing Credit Set up a realistic budget Open a checking or savings account Evaluate options for credit 2014/

Establishing Good Credit  Pay the minimum balance (or more) ON TIME each month  Avoid going over your credit limit  Protect yourself from fraud – SIGN YOUR CARD or write “Ask for ID”  Sign up for e-statements if available. 2014/

Your Credit Report  Check your credit report annually.   Three major national credit reporting agencies: or or or /

Your Credit Score  Based on information in your credit report  Affects future credit, interest rates, deposits, and possibly employment.  Small fee for obtaining a credit score  For more information on how to dispute credit report errors, please visit or /

Credit Scoring Table Credit ScoreDescription Excellent 700 – 729Great 670 – 699Good 585 – 699Average 350 – 584Bad The credit rating scale minimum and maximum ranges from While the highest score may be totally unattainable, anything in its vicinity is considered to be an excellent score. 2014/

Credit Scoring Table Determining Factor Weight % Description Payment History 35%How frequent and timely you pay your credit card bills, loan installments and any form of debt, does affect your credit score. Debt/Amount Owed 30%Next most important factor that affects your credit score are the amounts of money you owe on each of your financial accounts. Credit History Length 15%The length of time over which you have used credit lines and your banking accounts also influence the score. New Credit Lines Used 10%The number of new credit lines used or banking accounts, which you have recently opened, impacts your score. Credit Types Used 10%The range of different credit types used will also influence the credit rating. 2014/

Credit Report Verification Please review each section for accuracy:  Personal identifying information  Credit account information  Public record information  Negative information 2014/

Correcting Errors on Your Credit Report  File a “Consumer Dispute.”  If you pulled your credit report online (i.e. your “Consumer Disputes” can be filed electronically.  edit/cre21.shtm. edit/cre21.shtm 2014/

Protecting your Identity  Leave important documents at home (Social Security Card, etc.)  Keep important documents in a safe place.  Use a post office box if necessary for delivery of important documentation.  Use caution when disclosing your Social Security Number.  Protect PINs and passwords. 2014/

If your identity is stolen, immediately notify: Creditors & Financial InstitutionsLaw EnforcementFederal Trade CommissionDMV (for driver’s license)SSA (for Social Security Card) 2014/

FINAL REVIEW Are you better prepared to manage:  Student Loan Debt?  A Budget?  Your Credit? 2014/

Questions? 2014/

Navigating Your Financial Future OSFA offers a series of educational materials regarding debt management for students and borrowers. For more information, please visit: /

Thanks for attending this workshop. 2014/

Contact us   Telephone:  OSFA Outreach:  OR name  OR phone  OR 2014/