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Smart Tips For The Financially Savvy Student

PD 120

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Successful adults practice responsible money management:

– Live within your means – Pay bills on time – Save/invest money for future goals– Stay in contact with lenders/creditors– Negotiate with lenders/creditors if you

experience problems paying

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Why Money Management?

If you live within your

means…

You will usually have $ to pay bills on time

Save extra $ in case something

happens

Invest extra $ to make more $

If something happens & you can’t pay bills

Work with lenders/creditors to find a solution

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To Live Within Your Means….• Figure out what your income is• Figure out what your expenses are• Compare your income with your expenses• If your income is greater than your expenses

– Save or invest the extra money• If your expenses are greater than your income

– Find ways to cut your spending– Consider ways to increase your income– Borrow only what you actually NEED

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Some tips to stretch your money, from Cash Course:

Don’t let student loans and credit card debt weigh you down after graduation. The less you borrow during your college years, the less you have to pay back! Here are 25 quick tips to help you stretch your money and leave college with manageable debt.

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Saving on food

• Learn to cook• Buy food and supplies in bulk• Use your freezer• Avoid buying sodas and snacks out of

vending machines• Buy generic

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Kicking a habit• Quit or reduce your smoking. At about $7 a pack, smoking is

expensive—not to mention the toll it takes on your lungs. http://www.smokefree.gov/

• Drink less, especially alcohol. The average college student spends $900 a year on alcohol.

• Make your own coffee at home. At $4 or $5 for a latte, specialty coffee drinks are pricey. Try to cut back to once a week, then twice a month. You'll be surprised how fast it adds up: at $4 a latte, you're spending $28 a week. If you cut back to once a week, you're saving $24 a week or $1,248 a year!

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Saving on rent• Add another roommate• Negotiate rent increases If you've been a good tenant,

paying your rent on time, and taking care of the property, ask for a break when rent increases occur. Many property owners will consider dropping an increase in exchange for knowing they have a good tenant who will be back next year.

• Turn down the heat• Cancel cable TV subscription

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Saving on expenses

• Walk or bike when you can• Use public transportation• If you have a car, charge your friends for rides• Pick a cell phone or landline, not both• Use the Web for comparison shopping. If you're

buying something large or small, you can do quick price checks using Web sites such as Google Product Search

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Money-saving tips• Use the library• Shop around for clothes• Avoid clothes that require dry cleaning• Use your student discount• Consider cheaper entertainment• Sponsor a game night• Buy less-expensive gifts• Avoid credit card pushers

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People who take care of their finances wisely earn good credit ratings which make it easier to get:

– The kind of home you want– Credit cards/loans– Lower interest rates on credit cards/loans – A better, higher paying job– Continued eligibility for federal financial aid

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Credit Ratings are Based On:

1. Previous credit performance2. Current level of indebtedness3. Time credit has been in use4. Types of credit available5. Pursuit of new credit

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Graph of Credit Score Factors

Although all these factors are included in credit score calculations, they are not given equal weighting. The following graph shows how the weighting breaks down:

35% Previous Credit Performance30% Current Level of Indebtedness15% Time Credit has Been in Use15% Types of Credit Available5% Pursuit of New Credit

35%

30%

15%

15%

5%

This information comes from “The Importance Of Your Credit Rating” by Investopedia Staff, (Investopedia.com)

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Boost Your Credit Rating by:

• Paying off your debts on time• Borrowing/using credit cards only when you

absolutely need to so your balances are kept low• Having a long credit history• Refraining from frequently applying for

additional credit

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Student Loan Repayment:

• Plays a tremendous role in determining your credit rating

• Affects your ability to enjoy life - now and in the future.

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How Will You

Handle Your Loans?

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Handling Student Loan Repayment:Responsibly Irresponsibly• Enhances your credit

rating • Saves you money• Enhances your chances

of having an enjoyable life experience

• Destroys your credit rating

• Costs you more money• Causes negative

consequences for years to come

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To successfully navigate student loan repayment remember:

– Student loans must be paid back– Payments must be made on time– Make it easy for your lender to contact you

with reminders, updates, etc.– There are responsible options available when

you can’t make a payment!

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Sometimes people get into circumstances that make it difficult or even impossible to keep up with bill payments:• Unemployment or Underemployment• Health Problems• Family Issues• Natural Disasters

– Flood– Tornado– Fire– Hurricane

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If you are ever unable to make loan payment, remember:• Your student loan lender understands this and is willing to work with

you during such situations • You have the right to request the following solutions that allow you

to make lower payments or even stop making payments temporarily, or in some cases, permanently:– Deferment– Alternative Payment Plan– Forbearance– Consolidation– Loan Forgiveness– Loan Discharge

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DefermentDeferment means “postponing” or “deferring” your loan payments until a later date. There are many types of deferments corresponding to various situations that might make it hard for a person to make loan payments:• In School Deferment• Economic Hardship Deferment• Unemployment Deferment• Active Military Deferment• Peace Corps Deferment• Rehabilitation Training Deferment

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Alternative Payment Plans• Standard Repayment

– Higher monthly payment– Shorter repayment period – up to 10 years– Least amount of accrued interest

• Extended Repayment– Over 30,000 in Direct Loan debt– Longer repayment period – 25 years– Fixed or Graduated payment options– Higher amount of accrued interest– Lower monthly payments

• Graduated Repayment– Payments start out low & increase every 2 years– Shorter repayment period - up to 10 years

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ForbearanceForbearance is another way of temporarily postponing or

reducing your loan payments. During a forbearance period:

• Interest will continue to be charged as usual• You are allowed to stop making payments or make

smaller payments • Your loan status will be “current”, so there will be no

negative credit reporting • You will not be getting “collection calls” about the loan

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Consolidation

• If you have many student loans with different servicers, payment dates and amounts, it can be hard to keep track of. Consolidation is a process in which you take out one larger loan to pay off all of your smaller loans.

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Consolidation Pros & ConsAdvantages Disadvantages• Just one monthly

payment• Lower monthly

payments• Various repayment

options• Locking-in current

interest rates

• Longer repayment period

• Increased total interest• Potential loss of

deferment or cancellation eligibility for some loans (especially Perkins)

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In some situations you may qualify to have all or part of your loan eliminatedLoan Forgiveness Loan Discharge• Employed full time by a public

service organization – Federal, State, Local or Tribal

government agencies– Public Schools/Childcare– Law Enforcement– Military Service– Public Library Services– And Many Others

• Serving in a full-time AmeriCorps or Peace Corps position

• Suffering from total and permanent disability

• School closed before you completed your program

• Your loan was falsely certified because of identity theft

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Student Loans are

sometimes transferred to new servicers and it can be easy to lose track of

them.

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Pay attention to mail from the following servicers:

• Great Lakes• Nelnet• Fedloan• Sallie Mae

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Go to http://www.nslds.ed.gov/nslds_SA/and monitor your loans on the National Student Loan Database System (NSLDS) for current info:

• Loan Location• Servicer Contact Info• Loan Status• Loan Amounts

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Default

If you fail to: • Make payments - and - • Request the appropriate solution in a timely

fashion Then:• You will default on your student loan

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Consequences of Default• Wage garnishment• Withholding of income tax refunds• Loss of federal financial aid eligibility• Difficulty getting a good job• Problems renting an apartment• Trouble getting credit cards/loans • Higher interest rates when you do get credit cards/loans• Numerous collection phone calls and letters• Loss of state occupational license

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Default Hurts You & Yours

Your school has already been paid from your original

loan amount

Your lender will get its money from the federal government

The government gets money from American Taxpayers-your friends and family members who pay taxes on

their hard earned dollars

Defaulting hurts your community and you will likely suffer the most with many negative consequences

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Thankfully….

It doesn’t have to happen!

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Borrower Support Services Presents: “The Default Destroyers”!Toll Free Phone Number: 1-866-508-0748 x353

The Default Destroyers put a high powered Borrower SupportSpecialist on the job. Armed with one of the many DazzlingDeferment options, she will work with the borrower to destroythe chances of suffering the negative consequences of default.

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Default Destroyer Jennifer HoepnerStudent Loan Repayment Manager

Phone: (866) 508-0748 x346Email: jhoepner@herzing.eduDuties: • Lead and Support the Default

Destroyers as we help Herzing student loan borrowers successfully navigate repayment

• Come up with creative ways to lower the likelihood of default across Herzing University Campuses

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Default Destroyer Chue VangBorrower Support Specialist

Phone: (866) 508-0748 x224Email: cvang@herzing.eduDuties: • Assist Herzing student loan

borrowers successfully navigate repayment

• Contact and support borrowers as they experience difficulties with respect to repayment

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Default Destroyer Marshall J DraperBorrower Support SpecialistPhone: (866) 508-0748 x363Email: mdraper@herzing.eduDuties:• Assist Herzing student loan

borrowers successfully navigate repayment

• Contact and support borrowers as they experience difficulties with respect to repayment

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Default Destroyer Erin DoweBorrower Support Specialist

Phone: (866) 508-0748 x362Email: edowe@herzing.eduDuties:• Assist Herzing student loan

borrowers successfully navigate repayment

• Contact and support borrowers as they experience difficulties with respect to repayment