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College finances 101


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College finances 101

  1. 1. COLLEGE FINANCES 101 Ways to set yourself up for financial success Katheryn Gonzales
  2. 2. FINANCIAL AID Ways to pay for your education
  3. 3. Four main sources: • Federal government • State government • College you attend • Private companies. Four ways to fund your education: • Grants & Scholarships = money awarded that you don’t have to pay back • Work Study = paid, part- time work that’s generally on campus • Loans = money you need to pay back, usually after you graduate ■Any borrowed, given, or earned money that goes to your education. What is financial aid?
  4. 4. Free Application for Federal Student Aid • October 1st this year, fill out as close to that date as possible. • Must be renewed every year WHEN? • H.S students, college students, returning adults and graduate students. • Only available to citizens and eligible non- citizens. WHO? • Information is used to determine aid eligibility for federal and state grants and loans. • Universities will use it to award institutional awards WHY?
  5. 5. Dependency Status on FAFSA ■ Dependency status: – You are only considered an Independent student if you ■ Are over the age of 24 ■ Are under 24 and: – Are married – Have a dependent (a child) – Are a veteran – Are working on a graduate degree – Are experiencing homelessness (And can prove it) – Some exceptions for foster children or emancipated minors ■ Questions??
  6. 6. Federal Grants • This is free money you don’t have to pay back • Based on information you provide through your FAFSA Program Acronym Type of Aid 2015-2016 Award Federal Supplemental Education Opportunity Grant FSEOG Grant Exceptional Need $100-$4,000 Federal Work-Study FWS Need-based Employment no annual minimum or maximum amounts; at least minimum wage Perkins Loans Need-based Loan up to $5,500 for undergraduates and up to $8,000 for graduate students
  7. 7. Illinois Grants • In addition to Pell Grant from Federal level • Always best to have back up money when the funding for the grant is insecure (i.e. MAP Grant) • Pay attention to see if the award has to be renewed year to year or if you only receive it for one year! Program Acrony m Type of Aid 2015-2016 Benefit Monetary Award Program MAP Grant; Need-based; Appropriation Up to $4,720 (est.) Illinois Veteran Grant IVG Grant; Entitlement Tuition and Mandatory Fees (Public Only) Illinois National Guard Grant ING Grant; Entitlement Tuition and Mandatory Fees (Public Only) Grant Program for Dependents of Police, Fire, or Correctional Officers Grant; Appropriation Tuition and Mandatory Fees at Public Colleges or Equivalent (Any Approved College) Illinois State Scholars Program ISSP Certificate of Achievement, Scholarship, Appropriation $1,000 (Not funded)
  8. 8. Scholarships save you money! Make sure to: Start early Apply to as many as possible Keep track of deadlines Proofread!! (TRIO is there to help!) Submit all required documents No amount is too small – this is FREE money! Applications may include: ■ General information – Demographics – Financial Need – Letters of Recommendation ■ Academic record (ex: GPA, transcripts) ■ Essays/Personal statements ■ Additional elements (ex: interviews, auditions, portfolios)
  9. 9. Places to find scholarships ■ ■ ■ ■ DePaul’s website ■ ■ ■ ■ Check organizations you are involved in or national organizations for your major ■ essay/_/R-101-2473 ■ 101-3732?Endeca_user_segments=SaltSuggests-default ■ 10-college-scholarships-you-never-knew-existed/#68d6481359f6
  10. 10. Things to think about: Not all of the money next to “Financial Aid Award” is free money. Money received in grant aid your Freshmen year may decrease over time or be taken away after the first year. Make sure to check with each funding source! Find out if a scholarship or grant has strings attached. If you know what is expected of you-it makes it easier to plan ahead.
  11. 11. What if what I was awarded isn’t enough to pay for school? 1. Contact the Financial Aid Office – You can start by asking questions like the following: ■ What are my options for receiving more aid? ■ How can I find scholarships to help pay for college? ■ Can I talk to someone at the college about finding part-time work? ■ Do you have any advice about getting a private loan?
  12. 12. 2. File an appeal – You can file an appeal if you feel that you or your family has had a significant change in finances since you filled out your FAFSA. ■ Call your school’s financial aid office to find out how to start the process ■ Be prepared to prove how your circumstances changed ■ There is no guarantee that the college will reward you extra money 3. Don’t be afraid to ask for help – Financial aid officers are there to answer your questions so ask them the questions you need answers to ■ If you don’t feel confident talking to the financial aid office, talk with yourTRiO advisor for help with finding the right questions and topics to discuss- we’re here to help!
  13. 13. Resources for Financial Aid help: ■ – ■ ■ ■
  14. 14. LOANS Filling in the gaps
  15. 15. Loan Basics Loans will automatically be offered to you after you complete your FAFSA. You can borrow less than your school offers you. You should only borrow what you need. Federal student loans are an investment in your future.You should not be afraid to take out federal student loans, but you should be smart about it. Loans are aid money that has to be paid back-usually 6 months after you drop below part time status as a student.
  16. 16. DifferentTypes of Loans Loan Name Financial Criteria Accrues Interest while in school Amount you can borrow as undergraduate Amount you can borrow as graduate student Direct Subsidized Loans Based on financial need No $5,500 to $12,500 per year *depending on year in school Not available Direct Unsubsidized Loans Not based on financial need. Yes $5,500 to $12,500 per year *depending on year in school Up to $20,500 each year Direct PLUS Loans *Requires credit check Not based on financial need. Yes Whatever is not covered by the rest Remainder of need Federal Perkins Loans Exceptional financial need Yes Up to $5,500 per year Up to $8,000 each year Private Loans *Requires credit check Not based on financial need Yes Whatever is not covered by the rest Remainder of need
  17. 17. Reasons to take out Federal Loans Federal Loans The interest rate is much lower You don’t need a credit check You don’t have to begin repaying your federal student until 6 mo. after grad Offer flexible repayment options If you work in certain jobs, you may be eligible for loan forgiveness Private Loans Require good credit or a cosigner Charge much higher interest rates Not as many repayment options Repayment begins almost immediately after graduation Always talk to the financial aid office or your advisor for recommendations and advice!
  18. 18. Borrowing Responsibly ■ Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. – Keep track of how much you’re borrowing. – Understand the terms of your loan and keep copies of your loan documents. – Make payments on time. – Keep in touch with your loan servicer. Notify your loan servicer when you graduate; withdraw from school; drop below half-time status; transfer to another school; or change your name, address, or Social Security number. ■
  19. 19. Repayment • Start with your loan servicer:  obile/repayment/repaymentEstimator.acti on  loans/understand/plans • Consolidation:  Combines all loans into one monthly payment  Can pay longer (up to 30 yrs) and pay more interest over time  Irreversible  May lose original loan benefits, including grace period  Always free, if you are contacted and asked to pay then it’s a scam 
  20. 20. Other options in Repayment ■ You can postpone your student loan payment if you meet any of the following: – You can’t find a full time job – If you go to graduate school – You experience economic hardship – Contact your loan servicer ■ Loan forgiveness: – Teacher Loan Forgiveness – Public Service Loan Forgiveness – Perkins LoanCancellation and Discharge – Contact your loan servicer
  21. 21. Resources for Student Loans: ■ ■ ■ ■ ■ Think outside the box! – zerobound – SponsorChange
  22. 22. BUDGETING An important step to financial success
  23. 23. Reasons to budget your money ■ Budgeting helps you answer these important questions: – Where does all my money go? – Is there a way to spend less? – How will I handle unexpected expenses like replacing a broken cell phone or repairing my car? – How can putting money into savings help me with some of my bigger financial goals? • help you achieve academic and financial goals. • make it easier to plan, to save, and to control your expenses. • can help you avoid debt and improve your credit. Budgeting can:
  24. 24. How do I create a budget? 1. Set a goal – Save for a car – Pay off student loans 2. Collect all your important financial papers like: – paycheck stubs – bank statements – credit card statements – any documentation you have on how you spend or make money and get it all in one place. – You should keep all important documents for at least a year and shred those that are no longer important – Tax documents should be kept for at least 7 years 3. Find an app or tool that works best for you- it doesn’t have to be fancy 4. Figure out what you are bringing in (income) and where your money is going (expenses) – Use a spreadsheet or app you like to do the heavy lifting if you don’t feel like breaking out a calculator 5. Subtract those expenses from your income and see what you’ve got 6. Make any needed adjustments. ■ for-college/budgeting/budgeting-tips
  25. 25. Money Apps & Tools • Can help you stick with it • Are easy to use • Most are available right on your smart phone • Takes out the confusion and actually teaches you how to do it on your own
  26. 26. Things to know: ■ Figure out where your money is going by breaking your expenses into two categories – Fixed expenses ■ items such as your rent, cell phone bill, health insurance, loan payments, and utility bills. ■ These are costs that you have every month and have little control over. – Discretionary expenses ■ include things like food, gas, clothing, cleaning supplies, and entertainment. ■ These are items that you either don't have to spend money on each month or you have the option to spend less on them in any given month. ■ Once you see where your money is going each month it will become easier to find places to cut back. ■ Emergency Fund – Look to save 2-3 months worth of expenses
  27. 27. Ways to Save ■Borrow, Scan, or Rent textbooks Live at home, with roommates or work as an RA Car pool Make priority list if you find yourself spending too much on going out Take advantage of campus discounts & DEMON discounts
  28. 28. Time to Practice!! ■
  29. 29. Resources for Budgeting: ■ ■ ■ ■ ■
  30. 30. CREDIT How to build good credit, avoid bad credit, and find the right card for you
  31. 31. What is credit and why does it matter? ■ It’s a 3 digit number that shows your creditworthiness to people like: – credit card companies – Landlords – cell-phone companies – even potential employers ■ Companies use that score to determine whether to give you credit and what your interest rate will be ■ Your score comes from your credit report which is a history of all of the credit you’ve ever been given and your financial choices with that credit ■ Where can I see my report and find out what my credit is? – –
  32. 32.  You have 3 different credit reports- one created and maintained by each of the three credit bureaus:  Equifax  Experian  TransUnion  Make sure to check all 3 reports once a year. You get a credit card. You pay your payments on time and don’t use too much of your total balance. Your credit card company reports your good credit behavior to Equifax monthly. Equifax in turn boosts your credit score after several months of good credit behavior. Your higher credit score and good credit behavior now allows you to open up another account in the future.
  33. 33. Reasons to check your report: ■ It’s free ■ It’s an important step in rebuilding and maintaining good credit. ■ It’s an important part of managing your personal finances. ■ It’s often the first indicator that you are an identity theft victim. ■ It’s the first step in correcting any information you feel is inaccurate. –
  34. 34. How to improve your score ■ Pay your bills on time and pay more than the minimum every month if you can. ■ Keep balances low.You don’t want to use more than 30% of your total credit. ■ Pay off debt rather then moving it around. ■ Don't open new accounts one after the other if you're new to credit. ■ Apply for and open only necessary accounts. ■ Have credit cards — but manage them responsibly. ■ Remember that closing an account doesn't make it go away. Things that hurt your credit score: • Unpaid medical bills and parking tickets • Heavy credit use in a short time • Trying to get credit multiple times in a short period, called a “hard inquiry”
  35. 35. Some things to think about while looking for a credit card: ■What do you plan on using the card for? If the card will be used regularly then interest rates are the biggest concern If the card will be used regularly but the balance paid in full every month, then the biggest concern would be yearly fees Annual Percentage Rating (APR) This will determine how much interest you will accrue when you don’t pay your full balance every month.You should avoid this as much as possible. Fees and penalties Starting off, you should avoid cards with a yearly or monthly fee just for having the card. Incentives Maybe you plan on flying home a lot during the school year and the card you choose gives you miles for flying Cash back for something you already do
  36. 36. How to find the right credit for you: This site can help you find the credit card that matches your needs. If you already use the site to track your credit then it works even better!! Can help you find any financial tool you are looking for, from credit cards to auto insurance.
  37. 37. Things to think about: ■ 1. Good (or bad) credit counts. – Having a credit card isn’t a good or bad thing, it all depends on how you use it. – Having good or bad credit effects your life. Employers, landlords, and banks will use your credit score to determine if they should give you money or not and what interest you get. ■ 2. Some cards charge an annual fee. – Some cards charge you just for having the card. Avoid ones that have an annual fee. ■ 3. Shop around. – By shopping around, you can compare credit cards online to make sure you get the best credit card deal for you. ■ 4. Don’t charge more than you can pay (or more than your limit). – You must pay your bill each month and you can’t spend more than the card’s credit limit. – If you don’t pay your bill (or you exceed the limit), you’ll have to pay interest and possibly additional fees.
  38. 38. Resources for Credit help & advice: ■ ■ cards ■ ■ ■ ■ content/brochures/AllAboutCredit[1].pdf
  39. 39. QUESTIONS?? You can always talk with yourTRiO advisor for further information on any of the topics covered!