2014/2015
Financial
Literacy
Office of Student Financial Assistance
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Agenda
Participants will gain an understanding of how to manage:

Student Loan Repayment

A Budget

Credit
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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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2014/2015
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
(NSLDS)


Student Loan Data System
www.NSLDS.ed.gov
1-800-4-FED-AID
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Types of Federal Student Loans
Subsidized
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 degreeseeking 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.
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Interest: Simple Daily Basis
Outstanding
Principal
Balance
Interest
Rate/365
# days in
billing
cycle
Interest
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
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Life cycle of a student loan
In School
Grace
Repayment
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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
Standard
Graduated
Extended
Incomebased: IBR,
ICR, PAYE
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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
 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.
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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
Deferment
• Special circumstances
Forbearance
• Determined by the lender
Consolidation
• Merging all loans into one new loan
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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

www.StudentAid.ed.gov
 Common

Issues and How to Resolve
www.StudentAid.ed.gov/repayloans/disputes
 Ombudsman


Checklist
Office
1-877-557-2575
www.StudentAid.ed.gov/repayloans/disputes/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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Managing Your Budget
Budgeting is the
foundation of
achieving your
financial goals while
maintaining your
day-to-day living
expenses.
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Steps for Budgeting
#1 Set
Goals
#5 Keep
records
#4 Write
it down!
#2
Organize
Expenses
#3 Set a
realistic
budget
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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 and
maintaining 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 1-800-685-1111
www.Experian.com or 1-888-397-3742
www.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 Table
Credit 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 350850. 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 Table
Determining
Factor
Weight
%
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 Verification
Please 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/cr
edit/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 REVIEW
Are you better prepared to manage:
 Student
A
Loan Debt?
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
2014/2015