WASFAA 2013 – Discovery in the Desert
HELPING STUDENTS PLAN FOR
FINANCIAL SUCCESS
Presented by:
Jack Edwards
Stanford University, Graduate School of Business
Colleen MacDonald
SimpleTuition
GSB
Enrollment
MBA Students
820 Full-time
MSM Students
PhD Students
81 Full-time
04 Full -time
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MBA PROGRAM
COA = $87,081 ($55,200 tuition)
75% – 80% apply for Financial Aid
55% – 60% receive Fellowship
Fellowships awarded based on
demonstrated financial need.
Loans available for both domestic and
international students.
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MS IN MANAGEMENT
Program is geared for middle
management who are sponsored by
their employer.
1 year program
Tuition = $108,000
Self sponsored only receive loans
4
PHD PROGRAM
Receive full fellowship that covers
tuition, health insurance and
provides a living allowance
stipend
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FINANCIAL LITERACY PROGRAMS
GEARED TO FINANCIAL SUCCESS
Financial Aid At the GSB
 Understanding Your Credit Score
 Budgeting
 Mandatory Exit Counseling for Graduating
students
 Strategies for Loan Repayment

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Example of What Workshop Could Be:
STRATEGIES FOR LOAN REPAYMENT
GETTING ON THE SAME PAGE
Balancing Wealth and Debt
 Understanding Your Indebtedness
 Assess your qualification for payment by
someone else
 Creating Your Plan
 Reviewing Your Options

 Repayment
Plans
 Consolidation
MANAGING YOUR DEBT

You can view your debt as a portfolio that you can
leverage to achieve your financial goals

You may choose to pay off your debt …
 As
fast as you can, OR
 More
slowly based solely on what you can afford
due to your living expenses, OR
 More
slowly to maximize your ability to save and/or
invest for the future
BALANCING WEALTH AND DEBT
Build a rainy day fund
 Prioritize your debts
 Compare the annual return on investments to
interest rates on debt
 Consider tax implications

Mortgage interest payment typically tax deductible
 Ordinary investments generally subject to income
taxes
 Tax deferred investments


Think about future financial obligations
http://www.wikihow.com/Decide-Whether-to-Invest-or-Pay-off-Debt
HOW MUCH SHOULD I BE PAYING TO STUDENT LOANS?

Federal guidelines – payments should equal
8% of before-tax income

Rule of thumb - Maximum payment 20% of
before-tax income
BUDGET PLANNING










Housing – 23-33%
Life and Car Insurance – 4-6%
Food - 12-20%
Transportation – 7-10%
Student Loan Repayment – 1- 20%
Personal Debt Repayment – 1-8%
Entertainment and Recreation – 4-6%
Clothing – 4-7%
Savings – 5-10%
Medical – 3-5%
Favorite Budget Calculator:

http://www.oprah.com/money/Suze-Ormans-Monthly-ExpenseBudget-Calculator
WHERE AM I?
What do I owe?





Federal Perkins – 5% fixed rate
Federal Subsidized Stafford - 6.8% fixed rate*
Federal Unsubsidized Stafford - 6.8% fixed rate
Federal GradPLUS – 7.9% fixed rate
Federal Consolidation - up to 8.25%
Private Loans - ranging from under 3.0% to 11%

*Rate may vary for undergraduate loans
Uncertain?



Contact the Financial Aid Office for assistance
Find your federal loans on www.nslds.ed.gov
Review credit report for Private Loans
REPAYMENT ASSISTANCE


Public Service Loan Forgiveness
Loan Repayment Assistance Programs




Stanford GSB Programs http://www.gsb.stanford.edu/finaid/forgiveness/
Federal and State Jobs and Community Organizations
http://www.finaid.org/loans/forgiveness.phtml

List of programs for legal professionals
http://www.americanbar.org/groups/legal_aid_indigent_defendants/initiatives/l
oan_repayment_assistance_programs.html

List of programs for medical or health professionals
https://services.aamc.org/fed_loan_pub/

Searchable list by state of teacher programs
http://www.aft.org/yourwork/tools4teachers/fundingdatabase/
Perkins Loan Cancellation Options
Rewards Programs


SmarterBucks
www.smarterbucks.com
Upromise
www.upromise.com
CHOOSING YOUR REPAYMENT PLAN
Define your financial goals
 Develop an affordable budget plan
 View your debt as a portfolio
 Assess your qualification for loan forgiveness
 Finally, select the repayment plan that best
meets your needs

DIRECT LOAN REPAYMENT PLANS
If you want to pay the least amount of total interest over the life of repayment

Standard Repayment Plan with a 10-year repayment schedule will
result in the least amount of interest paid
If you want the lowest possible monthly loan payment

Income Driven Repayments may calculate the lowest monthly payment

Graduated Repayment Plan monthly payments steadily increase every

Extended Repayment Plan over 25 years will result in a lower monthly

Loan Consolidation may be used in combination with income driven
for those who qualify, but it could result in negative amortization and that will add to
the total debt being repaid
2 years
payment than Standard Repayment over 10 years without the possibility of negative
amortization
PAYBACKSMARTER.COM DEMONSTRATION
See side-by-side
calculations of the variety
of repayment options
Free, all-in-one repayment calculator
LOAN PREPAYMENT
You have the right to make prepayments on your federal
student loan(s) without penalty

Pay more than the minimum amount required or
an extra payment at any time


make
Reduces interest paid over the life of repayment
When prepaying on a loan:

Verify where your prepayment should be mailed and include written explanation
as to how the prepayment is to be applied

Request that your prepayment be applied to principal, if permitted

Prepayments typically should be targeted at your loans having the highest
interest rate
PRIVATE LOAN CONSOLIDATION OR REFINANCING




Combines one or more education loans into single, new
loan with new loan terms and conditions.
May lowers payments based on new interest rate of
through extended repayment periods (up to 30 years).
Credit-based and generally require strong credit to be
obtained
Rates vary depending on





Credit history
Credit score
Debt to income ratio
Fixed vs.. variable
Other factors
DEBT SNOWBALL CALCULATOR

Accelerate debt payoff using the rollover method
Make extra payments on your first debt
 Once first debt is paid off, use the freed-up payment
amount to pay down the next debt even faster.
 Continue the process (building like a snowball) until all
debts are paid off.


Method works for all forms of debt.
Favorite Debt Snowball Calculator:
http://financialmentor.com/calculator/debt-snowballcalculator
SUCCESSFUL REPAYMENT MEANS...

Knowing how much you have to repay and to whom

Understanding the terms and conditions of your loans, your
options in repayment, and your rights and responsibilities as
a borrower

Keeping good financial records

Defining your goals

Developing an affordable budget plan

Selecting the repayment plan that best achieves your goals
given your budget plan