blah fasfaa the fasfaa graduate professional committee welcomes you to the train the trainer webinar...

blah FASFAA

The FASFAA Graduate Professional Committee Welcomes You To The

Train The Trainer Webinar

Financial Literacy

blah What is today’s agenda?

• What are the barriers to implementation?

• How do I reach these students?

• How do I select what to teach and what not to teach?

• What is my lesson plan?

blah What does that

mean to me?

• Given these characteristics, what challenges do you face in getting them to focus on issues of debt management and financial literacy?

blah What are the barriers to

implementation?

blah What are the strategies

you can use?

• What strategies could be implemented that successfully overcome these barriers or challenges?

• Refer back to the list of characteristics and challenges developed earlier today.

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How do I reach these students?

blah How do I reach these students?

• The best way to pre-empt problems and challenges is to be well-prepared to teach.

• Preparation = prevention.• Preventative measures:

– Set up a positive, safe, and supportive learning environment.

– Learn and use students’ names.– Take a few minutes to personalize your instruction.– Reinforce students when they make positive

contributions.


• Determine how much time you have to teach the material.

• Prioritize what you decide to teach.

• Encourage active student involvement.


• Make it engaging and entertaining.– Ask questions. – Ask open-ended questions.– Once you’ve asked a question, wait. – Direct questions to particular students. – Ask “why” or “how” questions.– Probe for consequences or implications.– Ask students to share their feelings.– Ask students to indicate what they gained or lost from

their experiences.

blah How do I reach

these students?

• Speak with authority. Stay in control.

• Use oral footnotes.

• Admit when you don’t know.

• Respect and listen to your students.

• Make every effort to remain positive and show that you care about them.

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How do I select what to teach and what not to teach?

• Time constraints will differ among schools.

• Logistical constraints will differ by institution.

• Number of students will differ.

• Not all students have the same needs and concerns.

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• How much time do I have?

• How important is the information for this group?

• What do my students already know?

• How long will it take to teach what I want to teach?

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• How comfortable do I feel delivering this information?

• How easy/difficult is the information to learn independently?

• What environmental constraints exist?

blah What is my lesson plan?

blah Changing Role of the FAA:

Brenda M. BrownDirector of Financial Aid

University of Miami School of Law


• Evolution from a financial aid counselor• Financial aid application process• Financial aid programs • Grants/Scholarships• Loans• Work


• Evolution to a financial advisor• Borrower Rights and responsibilities• Loan Repayment options• Credit• Financial Literacy = Money/Debt

Management • Financial Planning

blah Top Five Money Mistakes College Students Make

• Credit Card Debt

• Ruining Their Credit Score

• Lack of Budgeting

• Using Student Loan Money Inappropriately

• Reaching for an Expensive College

http://financialplan.about.com/od/students/a/college-student-money-mistakes.htm

blah Budgeting

Travis BrownDirector of Student Financial ServicesAmerican InterContinental University

blah Budgeting

• Gather all records and statements

• Record Monthly Income vs. Monthly Expenses

• Make adjustments to Expenses

– Needs vs. wants

– Track expenses and then review

– Live like a student

• Borrowing wisely

blah Assisting students to adapt to finances

• From high school to undergraduate

– Understanding COA

• Direct costs

• Indirect costs

– Learning concepts of money and budgeting

• Needs vs. wants

• 24-hour rule

– Parents role vs. students role

blah Responsible borrowing

• Do you need loans as undergraduate?• From undergraduate to graduate/professional?• No more federal grants – only loan options!

– Loans are not a replacement for income.– Loans are for students’ educational

expenses only!• Limit borrowing to finance your education, not

your lifestyle!

blah Responsible borrowing

Resource for assisting students:

Smart about Money.org

(Under the Economic Survival Tips link.)http://www.smartaboutmoney.org/economicsurvivaltips/Spending/tabid/562/Default.aspx

Practical Money Skills (www.practicalmoneyskills.com)

http://www.practicalmoneyskills.com/wizards/credit/index.php

blah Teaching Your Students to Teaching Your Students to

Borrow StrategicallyBorrow Strategically

April Halaychik, Assistant DirectorApril Halaychik, Assistant DirectorLoan Operations and Debt ManagementLoan Operations and Debt Management

Nova Southeastern UniversityNova Southeastern University

blah Tracking Student DebtTracking Student Debt

• How much can the student afford to borrow How much can the student afford to borrow overall?overall?

• 10% to 15% of their annual salary to cover student 10% to 15% of their annual salary to cover student loans.loans.

• How much do they expect to earn?How much do they expect to earn?– http://swz.salary.com/ http://swz.salary.com/

blah SWZ.SALARY.COMSWZ.SALARY.COM

$48,441

blah Projected Salary &Projected Salary &

Affordable Payments Affordable Payments

• What monthly payment can your students afford to pay based on their projected salary?

• $48,441 annual Salary

– $48,441 x .10 = $4,844– $4,844 / 12 months

• $404 monthly repayment (10%).

blah Affordable Payments & Affordable Payments &

Overall DebtOverall Debt

• How much overall debt will result in the students’ How much overall debt will result in the students’ affordable monthly payment?affordable monthly payment?

• Student loan repayment calculator:Student loan repayment calculator:• http://

www.finaid.org/calculators/loanpayments.phtml

–Estimate an approximate loan balance (i.e. Estimate an approximate loan balance (i.e. 50,000)50,000)

–Enter this amount into the loan calculatorEnter this amount into the loan calculator



• How much overall debt will result in the students’ How much overall debt will result in the students’ affordable monthly payment ? affordable monthly payment ? (cont) (cont)

• Compare Payment result to target paymentCompare Payment result to target payment–Target payment $404 vs. Resulting Target payment $404 vs. Resulting

payment $575payment $575–Adjust estimated balance upward or Adjust estimated balance upward or

downward as neededdownward as needed



• How much overall debt will result in the students’ How much overall debt will result in the students’ affordable monthly payment ? affordable monthly payment ? (cont) (cont)

• $35,000 = $402.98 per month payment$35,000 = $402.98 per month payment–Target payment = $404Target payment = $404–$35.000 in overall debt is manageable $35.000 in overall debt is manageable

based on the projected salarybased on the projected salary

blah Sticker Shock ScenariosSticker Shock Scenarios

• Scenario #1: Matilda Scenario #1: Matilda – Evening MBA program: 4 SemestersEvening MBA program: 4 Semesters– Subsidized Stafford: $17,000Subsidized Stafford: $17,000– Unsubsidized Stafford: $24,000Unsubsidized Stafford: $24,000– TOTAL $41,000TOTAL $41,000

blah Sticker Shock ScenariosSticker Shock Scenarios

• Loan Repayment Schedule for $41,000Loan Repayment Schedule for $41,000

– Loan Interest Rate: 6.80% (fixed Stafford rate)Loan Interest Rate: 6.80% (fixed Stafford rate)

– Loan Term: 10 yearsLoan Term: 10 years

– Monthly Loan Payment: Monthly Loan Payment: $472$472

– $56,619 annual salary (at least)$56,619 annual salary (at least)

blah Alternative Alternative

Repayment OptionsRepayment Options

• Some students are unable to achieve their target debt levelSome students are unable to achieve their target debt level– Prior student loansPrior student loans– Tuition ratesTuition rates– etcetc

• Introduce loan repayment alternatives Introduce loan repayment alternatives – Extending repaymentExtending repayment

• Lower monthly paymentsLower monthly payments• Higher overall interest costs.Higher overall interest costs.

– Repayment Comparison Calculator:Repayment Comparison Calculator:– http://www.usafunds.org/borrowers/resources/calculators.htm

blah Tracking Prior Tracking Prior Student DebtStudent Debt

• Students should be aware of their existing Students should be aware of their existing student loan debtstudent loan debt– Introduce NSLDS (www.nslds.ed.gov) Introduce NSLDS (www.nslds.ed.gov)

• Contains all federal loans Contains all federal loans » All schools attendedAll schools attended» Undergraduate through Graduate.Undergraduate through Graduate.

• Contains federal grantsContains federal grants

blah Accessing NSLDS

blah Tracking Student DebtTracking Student Debt

– Provide students the tools to determine whether they are on the right track

• What would their monthly payment be if they stopped borrowing today?

• How much more can they afford to borrow from this point forward?

blah Aggregate LimitsAggregate Limits

– Introduce Aggregate Limits (Stafford Loans) Introduce Aggregate Limits (Stafford Loans)

• $65,500 Subsidized$65,500 Subsidized

• $73,000 Unsubsidized$73,000 Unsubsidized

• $138,500 Combined$138,500 Combined

blah RecapRecap

– Recap the steps to strategic borrowing? Recap the steps to strategic borrowing?

• Identify their projected salaryIdentify their projected salary• Identify target monthly payment based on salaryIdentify target monthly payment based on salary• Identify debt amount that equals target paymentIdentify debt amount that equals target payment• Identify current loan balancesIdentify current loan balances• Monitor aggregate limitsMonitor aggregate limits

blah QuestionsQuestions

blah Credit . . . What, Why,

When & How

Christopher MillerDebt Management Consultant

USA Funds

blah What is credit?

Credit is the arrangement for the purchase and ownership of something of value or the use of goods and services for which payment is deferred to a later date, which also includes the borrowing of money and the use of money through the ownership of credit cards and lines of credit.

blah Did You Know

Graduate Students and Credit Cards• In 2006, 92% of graduate students have at least one credit card.

This is a 4% decrease from the 96% who had credit cards in 2003.

• The average outstanding balance on graduate student credit cards is $8,612, an increase of 10% from the 2003 average of $7,831.

• On average, older graduate students (age 30–59) carry $12,593 in credit card debt, almost twice as much as their younger counterparts (age 22–29) who carry an average debt of $6,479.

• Ninety-four percent of graduate student survey respondents used credit cards to pay for some portion of their direct education expenses, primarily textbooks. Twenty-eight percent admitted paying for some portion of their tuition with credit cards.

blah Did You Know

Graduate Students and Credit Cards

• As has been true in previous studies, students attending school in the Midwest region of the country tend to carry the highest credit card debt.

• The majority of graduate students, 67%, said they took out their first credit card as an undergraduate student.

• Although 93% of graduate student survey respondents try to keep their credit card debt under control by making at least the required minimum monthly payments, only 20% said they pay off their cards in full each month.

• Of the graduate student survey respondents, 93% would have liked more information on financial management topics before they started school and would like financial management education made available to them now.

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Undergraduates and Credit Cards

• May 2005 Nellie Mae Study.– 56 percent of freshmen have credit cards.

– 76 percent of undergraduates began school with credit cards.

– Average outstanding balance on undergraduate credit cards was $2,169.

– 21 percent of undergrads pay off cards each month.

– 86 percent of students with credit cards have an outstanding balance.

Did You Know

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Credit-Card Facts• Customers at fast-food restaurants spend 20 percent to 30 percent more

with cards than they would with cash.

• 1.5 million personal bankruptcies filed in 2004.

Did You Know

blah Typical Uses of

Credit Cards and Benefits

Uses of credit :• Internet and phone purchases. • Airline reservations. • Hotel and car reservations. • Event ticket purchases. • Establishing a credit history.

Credit card benefits: • Organize and manage expenses. • Safety. • Emergency funds. • Establish credit history

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Example of Paying off Credit Card Debt

Balance of $15,000, Interest rate of 20% and making minimum payment amount of 2.5%

• How much do I have to pay and for how long?

- $375 per month

- 42 years

- Total cost of borrowing = $44,500

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Time and amount to pay off a credit-card balance

Credit Balance Total Time to Repay Total Cost Total Interest$1,000 17 years, 3 months $2,590.35 $1,590.35$2,500 30 years, 3 months $7,733.49 $5,233.49$5,000 40 years, 2 months $16,305.34 $11,305.34

Example of Paying off Credit Card Debt

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Successful Tips for Managing your Credit

• Your debt, excluding your home mortgage, should not exceed 15% of your net income. – Student Loans.– Credit Cards.– Car Payment.

blah Fico Score

• FICO scores are calculated to range between 300 and 850. The average FICO score in the United States is 692. Anything below 620 is considered subprime, which means that if you get a loan, you will probably pay a higher than those with a score of 700 and above.

-Why is it important for me to maintain my credit while in school?

blah Top Things to know

1. Americans are loaded with credit-card debt.

2. Some debt is good and some debt is bad.

3. Check you credit report and score at least once a year.

4. Get a handle on your spending.

5. Pay off your highest-rate debts first.

6. Don't fall into the minimum trap.

7. Watch where you borrow.

8. Expect the unexpected.

9. Don't be so quick to pay down your mortgage.

10. Get help as soon as you need it.

blah Did we learn anything?

Are we on fire with knowledge?

blah QUIZ!

1. When you’re desperate for cash, you should take an advance on your credit card.

ANSWER: False. Cash advances generally have much higher interest rates. You’re better off revising your budget or looking for other ways to save money.

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2. It doesn’t really matter if you let the balance on your credit card roll over each month, as long as you make the minimum payment.

ANSWER: False. The longer you take to pay off your balance, the more you will pay in interest charges.

QUIZ!

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3. If you have trouble paying cash for your rent or groceries, a credit card is an alternative.

ANSWER: False. Something is wrong with your budget if you have to use a credit card to subsidize basic living expenses. Take another look at that budget and prioritize items.

QUIZ!

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4. It’s a good idea to limit the number of credit cards you have.

ANSWER: True and false. Creditors look at the total amount of credit available to you when calculating your eligibility for additional credit, like a car loan or a mortgage. But they also look at credit used compared to credit available.

QUIZ!

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5. Take advantage of all credit card offers that come to you in the mail.

ANSWER: False. Read everything carefully before you decide to open any type of credit account. You might consider making a chart to compare the features important to you. Beware of low “teaser” interest rates which can jump dramatically after the intro period.

QUIZ!

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6. It’s a good idea to limit the number of credit cards you carry.

ANSWER: True. And always use the same credit card for any online purchases.

QUIZ!

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7. It is always a good sign when your bank increases your credit limit.

ANSWER: False. It’s good that a creditor thinks you are capable of handling additional credit, but a higher credit line might tempt you to charge more. It can hurt your chances, too, when you are requesting additional credit from other creditors.

QUIZ!

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8. Gold and platinum credit cards typically have higher annual fees.

ANSWER: True. They typically offer little additional benefits. Read the fine print.

QUIZ!

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9. Whenever possible, substitute a debit card for a credit card.

ANSWER: True. Debit cards give you access to money you have already earned or saved but be sure to check with your bank to make sure you understand fees involved in using their debit card.

QUIZ!

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10. Credit cards should be used as a last resort.

ANSWER: True. Excessive credit card debt can become a real problem that gets in the way of your future plans—like buying a car or a home.

QUIZ!

blah Conclusion

• Use credit cards wisely

– Look for cards with low or no fees and low interest

– Pay on time

– Know what is in the fine print, i.e. late-payment fees and interest rate changes. Penalty rates are up by 25%!

– Limit number of cards

– Never use for cash advances

– Don’t permit increases in credit limits

• Pay off balances monthly.

blah Resources

• National Foundation for Credit Counseling, www.nfcc.org, 1-800-388-2227

• Association of Independent Consumer Credit Counseling Agencies, www.aiccca.org, 1-866-703-8787

• Association of Independent Consumer Credit Counseling Agencies, www.aiccca.org

• www.annualcreditreport.com• http://www.nelliemae.com/library/research_8.html• http://money.cnn.com/pf/101/lessons/9/page5.html• http://www.consumerfed.org• www.ftc.gov/credit

blah Future planning

• Further education• Buying home/car• Employment earnings• Potential earnings• Evaluate salaries• Evaluate income (gross vs. net)

blah Debt Evaluation

• Student loans• Credit Card• Other loans (i.e. auto, etc.)• Best way to meet debt obligations • Loan Repayment options• Credit cards (best way to pay it back!)

blah Financial Planning

• Benefits• Retirement Planning

blah Resources

• National Endowment for Financial Education– www.nefe.org– www.cashcourse.org – www.spendster.org– www.smartaboutmoney.org– 40 Money Management Tips Every College

Student Should Know

blah Resources

• http://financialplan.about.com

• www.mymoney.gov

• www.360financialliteracy.org

• www.jumpstartcoalition.org

• www.practicalmoneyskills.com

• www.financialliteracymonth.com

• www.financiallit.org

blah Other resources

• Guarantors

• Lenders

blah fasfaa the fasfaa graduate professional committee welcomes you to the train the trainer webinar...

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