Tag Archives: financial aid

Sign up for a one on one session today!

The purpose of the UMF Financial Literacy Outreach Program is to provide you with the tools to help strengthen your knowledge of your student loans and the financial world we live in. Whether you are a first-year student or a senior graduating in the spring, we have the tools to aid your specific situation. If you are interested in a one-on-one informational meeting, here is what we will cover!

In exchange for ONE HOUR (or less!) of your time we provide a personalized, holistic money management strategy:

  • Determine what amount of debt you will be looking at when you graduate
  • Discuss your options for repaying and lowering this debt
  • A rundown of all the available tools to help reduce your financial burden
  • We can tell you if you qualify to have loans forgiven! (Free money!)
  • Set you up to take control of your financial situation NOW
  • Help you develop a comprehensive budget and savings plan to help direct your financial decisions, and reach your financial goals!
  • Help you ‘find money’ that is being wasted frivolously
  • Provide tools for your financial future
  • This includes online banking, Mint.com, NSLDS.ed.gov, and more!

Email a peer financial assistant or visit us on Facebook to sign up for your own one on one session today!

Introduction

Welcome!

Let’s face it, times are tough. They have been for a few years now; in an economic climate such as ours, everyone is feeling a bit of a pinch. When investment bankers and futures traders need to curb their spending, you KNOW college students and their parents are going to feel the crunch. In light of the current economic climate, we have come up with a series of communications to help keep you, and your parents, informed when it comes to the sometimes-convoluted-world of college finances. The communications will cover a range of subjects, from financial literacy made easy, to eating well on a very tight budget to handling finances in a period of scholastic transition (i.e. – graduation, between semesters, etc.). The hope is that with this additional tool in your tool belt, you and your family will be able to make increasingly informed decisions that will ultimately ease the strain on your wallet.

Build Responsible Habits

A college education can be a comprehensive and valuable tool for developing critical thinking skills and functional abilities which you will no-doubt employ in your life after schooling, but it is an eye-opening experience to be, at long last, let loose in the ‘real world’. It is likely you will find that some aspects of your college education, as comprehensive as it may be, are somewhat…lacking…in the degree to which they prepare you for wholly independent financial responsibility. When you live in a residence hall and eat on a meal plan, you don’t have to develop a budget for those basic living expenses. If you don’t understand how debt (student or credit card) affects your financial life after college, you’re likely in for a bit of a nasty surprise. Steven Bahls, President of Augustana College, writes, “I remind our students that if they live like college graduates with good jobs while they are students, their debt levels will cause them to live like students when they graduate. Going out to a mid-priced restaurant twice a week for four years could easily cost $8,000. Putting those charges on a credit card and carrying the balance over four years tips the cost to well over $10,000.”[1] With that in mind, this communication installment is designed to give you the quick-and-dirty look at financial responsibility.

Financial Templates

Financial Templates are a great way to easily track your income and expenses, and to maintain a clear idea of your current financial situation. Financial templates can be easily found and downloaded with a simple search (Microsoft Office has a number of them, and there are websites dedicated entirely to providing templates) and essentially ‘fit’ over an excel spreadsheet to help make tracking your finances quick and easy.

Create a budget

Once you’ve developed a clear idea of your income and your spending habits you can begin to develop a budget. Obviously the priorities on your budget, next to rent and food, should be allocating funds for student loan payments or any other type of debt repayment you may have. After that the balance should go towards savings with a small bit set aside for some personal spending mon

Start on a financial path for the future

Now that you have your template and budget developed, you should begin to formulate several personal financial goals. When do you want to pay your student loans off by? How much money do you need to set aside for emergency funds (health, car, etc.)? Where would you like to be, financially, in ten years? While keeping a firm grasp on the reality of your situation, begin to lay the foundation for your financial path in life through, and beyond, college.

Educate yourself!!

Ultimately, nothing can replace the value of truly educating yourself when it comes to the world of financial literacy. Try to find a class or local seminar that can help make the education process a bit easier than doing it alone. You are bound to experience some financial ups and downs in life, and nothing sets you up for frustration like getting into the ‘real’ world without having first spent a bit of time learning about the implications of your financial decisions.

Student Loan Education (communications)

Student Loan Education

On subsidized Stafford Loans, the federal government pays the interest while the student is still in school. On unsubsidized Stafford Loans, the student is responsible for interest while he/she is still in school.

Students may choose to defer paying interest on unsubsidized loans by capitalizing that interest. However students should be very familiar with the process of capitalizing interest and what the implications of their decision to capitalize may be.

What does it mean to capitalize interest?

Capitalizing interest is the process of skipping your interest charges and adding them to your existing principle, or loan amount. As the lender adds the interest charges to your principle, your principle grows. As your principle increases, so does the amount of interest you must pay in the future. While your interest rate remains the same, the amount you pay interest on increases. Just because it gives you a chance to defer payment for a while doesn’t make it a good idea…it is not a free extension on your loans. DON’T CAPITALIZE YOUR INTEREST.

When Does Capitalization Occur?

Capitalization occurs when repayment of the principle loan amount begins. Because any capitalized interest is added to the principle loan amount, your interest payments will remain fixed until repayment of the principle begins, at which time your interest payments will be recalculated to reflect the larger principle amount (principle+capitalized interest)

Example of two students:

Jim and Kim both have $4,000 in unsubsidized Stafford loans at 6.8% interest and have opted for a standard (10 year, fixed monthly payments of at least $50) repayment plan. Both attended school for four years and had a six-month grace period on their loans (54 month deferment period). Jim paid the interest – totaling $1,300 – while he was still in school. Kim made no payments, so the total accrued interest of $1,225 was capitalized at the time repayment began. By avoiding capitalization, Jim saved $690.40 on the total amount of his repayment—enough money to cover a month’s rent or a car payment and a month of auto insurance- that additional $690.40 translates into an extra $0.17 for every dollar borrowed.

How can I calculate the difference in what I owe with and without capitalizing my interest?

There is an easy to use online calculator at finaid.org which can help you to establish the financial implications of capitalizing your particular loans.

Interest Capitalization Calculator- http://www.finaid.org/calculators/interestcap.phtml

Budgeting Prezi

We’ve created a presentation on budgeting:

The dialogue to accompany the slides is as follows:

Intro

The basic premise…the most important aspect of budgeting… is understanding the in-and-out aspect of your personal finances. The ‘in’ being what you earn and the ‘out’ being what you spend. If you can justify the two against each other and have your earnings remain greater than your spending then you’ve successfully budgeted your finances.

(Slide 2 + 3) Finding Balance-Title slide/What are we here to learn

College is expensive but you can take a great deal of pressure off of your family and yourself if you can keep your own personal spending organized while you’re in school…plus learning these skills now just gives you another effective tool when working towards a successful life beyond college. To start, you must find a balance between your income and your expenses.

What can I spend?(Fix Title) (Slide 6 + 7)

Remembering that your loans are debt, and should be budgeted into your monthly allowances as such, is key. If you’re spending loan money on food and the money you earn working on non-necessities then you’ve got your financial priorities mixed up and are due for a reassessment of your goals.

The Importance of Budgeting (Slide 8)

Now I understand that nobody here is planning their finances for ten years down the road and I’m not suggesting that you do…it would be a waste of time as you just can’t anticipate life in that way…BUT helping to keep your finances in perspective while you’re in school will provide a foundation for life after school (and hopefully minimize the amount of debt you graduate with). A budget answers three basic questions: (slide 9)

Where does my money come from? (Slide 10)

Where is my money going? (Slide 11)

What choices should i make financially? (Slide 12)

Budget Definition

Expenses

Essentials and nonessentials

 

Essential Expenses:

Essentials: food, water, electricity, heat, a roof over your head…

 

Non Essential Expenses

a 50 dollar bar tab at the dugout or eating lunch out daily.

 

Setting Financial Goals

The first step to taking control of your finances is to set yourself a series of financial goals based around three primary categories. those categories are your saving, spending and your income.

(insert snapshot of the three goals)

Income Goals

Goals related to income are really relevant only to students with jobs or sources of monthly income…that being said a goal for a student without monthly income could be to find part time work for a certain number of hours each month or week.

Spending Goals

Spending goals should be as concrete as possible. You want to try to stay consistent with your spending goals so every month you can gauge what you can and cannot afford.

Saving Goals

Once again, how much you spend is more important than how much you earn. The percentage you save will depend on the amount you earn. For example: If you make $250 per month, and put 10% of that monthly income into a savings, you will be saving $25 per month. The important part sticking to that percentage.

Financial Zen

How much you earn, save, and spend are all dependent on each other. If you stay consistent and keep a monthly tab on all three of these aspects, you have a solid budgeting foundation.

Young Money Slide

It is important to know about your income and how much you can safely spend. If you are aware of these things, you’ll be on the right track.

So how do we balance Income VS Expense?

So now we’re going to show how to track and balance your income and expenses so that, at the end of the month, you’ll be left with a little extra money to put in your savings.  To start off, you should use the two-month cashflow worksheet that we’ve provided for you. You can find it on the FinAid website or have one of us e-mail it to you.

Cashflow sheet overview

It looks like this.  One section for monthly income and another for monthly expenses.  The spreadsheet has been populated with all of the calculations so all you have to do is customize the expense categories to reflect your personal spending habits and enter your income and expenses….the computer will do all the calculations for you.

Monthly Income

Any type of income inserted in rows 3 through 7 will automatically be added together and placed in row 8, entitled ‘Total.’

Monthly Expenses

Now, down to monthly expenses. Let’s say you’re beginning your cashflow sheet and you input your cell phone bill as your first expense: $200.  The sheet will automatically calculate itself, placing the $200 at the bottom in ‘Total Expenses’ and subtracting it from the income total above, leaving you with $800.  Budgeting your cash is as easy as copying down your expenses.

Proper Budgeting Worksheet

After you have gotten an idea of your expenses versus your income, you can create a more proper budgeting sheet.  In Monthly Income, place the maximum amount of money that you are able to receive in the budgeting column, and in Monthly Expenses, place the maximum amount of money that you are able or willing to spend.  After the month is over, input what you actually spent and received into the Actual column. Although this individual received 50 dollars less in actuality than they expected to in their Budget column and spent 50 dollars more in Groceries, they made up for it in spending less on gas, receiving 50 dollars in Other Income, and spent no money on Dating; leaving them with $50 as their Difference.  That’s fifty dollars more to put into savings.

 

Tips for Managing Money

Expect the unexpected. Expenses pop up when you least expect them and you don’t want them to affect whether or not you can travel or, worse, eat. Peer pressure is also a drain on funds… if you can’t really afford to drink beers then DON’T! Just because a debit card isn’t cash and doesn’t feel as immediate doesn’t mean it isn’t. think of it as cash. Because it is.

Big Expenses

These things seem intangible and way down the road, but trust us: four years in college flies by and all of a sudden you’re in the real world staring down the barrel of significant financial obligations. Be prepared for them by practicing good habits now. if you don’t…

 

Loan Repayment Schedule

One tool for helping you to budget is an interest rate table which, based on the amount of your loan debt, can help you to figure your monthly payments (if you haven’t already)

Helpful Budgeting Tools

Your smartphone is a great tool in preventing added financial burden… if you feel your debit account is in the red zone (near overdraft) then quickly hop on your phone and check your finances before you go down to the dugout for wings… it could save you 35 bucks in overdraft fees! This leads us to an important thing to consider as a student: Some banks will offer online banking, no atm fee’s, etc. As a student, especially if you are a freshman or sophomore, it is recommended to open a student checking/savings and use direct deposit. It is only beneficial to choose a bank with online banking and no atm fees (maybe one or the other), but most of all, do your research on the banks before you apply to open a new account.