Financial Literacy

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Office of Student Financial Assistance

Agenda

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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)

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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.

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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

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Know how much you owe National Student Loan Data System

(NSLDS) www.NSLDS.ed.gov 1-800-4-FED-AID

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Types of Federal Student LoansSubsidized 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

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Outstanding Principal Balance

Interest Rate/365

# days in billing

cycleInterest

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

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In School Grace Repayment

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

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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

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Repayment Plans

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Standard Graduated

Extended

Income-based:

IBR, ICR, PAYE

Staying on Track Use a Repayment Estimator to

compare and select a plan that best fits your budget: www.StudentAid.ed.gov www.MappingYourFuture.org www.FinAid.org

Make monthly payments ON TIME Sign up for automatic withdrawal if

option is offered

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Delinquency

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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

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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)

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Where to find help Contact the servicer IMMEDIATELY if

unable to make a scheduled payment Options include:

Repayment plan change Deferment Forbearance Consolidation

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Options Available

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• Special circumstances

Deferment

• Determined by the lender

Forbearance

• Merging all loans into one new loan

Consolidation

Communicating with the Servicer Program servicer contact information

into your cell phone for easy access Notify of any changes to address,

employment, e-mail address, cell number

Keep a folder of all loan records in a safe place

Document each communication with servicer for reference

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Resolving Disputes Self-Resolution Checklist

www.StudentAid.ed.gov Common Issues and How to Resolve

www.StudentAid.ed.gov/repay-loans/disputes

Ombudsman Office 1-877-557-2575 www.StudentAid.ed.gov/repay-loans/dis

putes/prepare

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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)

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Saving Money Tax Deductions

American Opportunity Tax Credit Lifetime Learning Credit www.IRS.gov/publications/p970

Loan Forgiveness Programs www.StudentAid.ed.gov www.FinAid.org

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Budgeting is the foundation of achieving your financial goals while maintaining your day-to-day living expenses.

Managing Your Budget

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Steps for Budgeting

#1 Set Goals

#2 Organize Expense

s

#3 Set a realistic budget

#4 Write it down!

#5 Keep records

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Budget Template

INCOME MONEY OUT

Profit or

(Loss)

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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.

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Managing Your Credit

Establishing andmaintaining good

credit can provide many benefits to your financial future

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Establishing Credit

Set up a realistic budget

Open a checking

or savings account

Evaluate options

for credit

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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.

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Your Credit Report Check your credit report annually.

www.AnnualCreditReport.com

Three major national credit reporting agencies: www.Equifax.com or 1-800-685-1111www.Experian.com or 1-888-397-3742www.Transunion.com or 1-800-888-4213

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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 www.AnnualCreditReport.com or www.MyFICO.com

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Credit Scoring TableCredit Score Description

730 -850 Excellent

700 – 729 Great

670 – 699 Good

585 – 699 Average

350 – 584 Bad

The credit rating scale minimum and maximum ranges from 350-850. While the highest score may be totally unattainable, anything in its vicinity is considered to be an excellent score.

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Credit Scoring TableDetermining

FactorWeight

%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.

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Credit Report VerificationPlease review each section for accuracy:

Personal identifying information Credit account information Public record information Negative information

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Correcting Errors on Your Credit Report File a “Consumer Dispute.” If you pulled your credit report online (i.e.

www.AnnualCreditReport.com), your “Consumer Disputes” can be filed electronically.

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm.

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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.

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If your identity is stolen, immediately notify:

Creditors & Financial Institutions

Law Enforcement

Federal Trade Commission

DMV (for driver’s license)

SSA (for Social Security Card)

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FINAL REVIEWAre you better prepared to manage:

Student Loan Debt?

A Budget?

Your Credit?

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Questions?

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Navigating Your Financial Future

OSFA offers a series of educational materials regarding debt management for students and borrowers. For more information, please visit: www.NavigatingYourFuture.org.

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Thanks for attending this workshop.

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Contact us E-mail: osfa@fldoe.org Telephone: 1-888-827-2004 OSFA Outreach:

OR name OR phone OR email

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