Financial Literacy for Vets

Transcription

1 Financial Literacy for Vets 1 Office of Student Financial Assistance

2 2 Agenda Participants will gain an understanding of how to manage: Student Loan Repayment A Budget Credit

3 3 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)

4 4 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.

5 5 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

6 6 Know how much you owe National Student Loan Data System (NSLDS) FED-AID

7 7 Types of Federal Student Loans Subsidized Direct Federal Stafford Loans Unsubsidized Direct Federal Stafford Loans Federal PLUS Loans: Parent PLUS Grad PLUS Federal Consolidation Loans Loans based on financial need. Loans not based on financial need. 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. Multiple student loans consolidated or merged into one new loan. Federal Perkins Loans Loans for which you make repayment to the school.

8 8 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

9 9 Life cycle of a student loan In School Grace Repayment

10 10 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

11 11 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

12 12 Repayment Plans Standard Graduated Extended Incomebased: IBR, ICR, PAYE

13 13 Sample Comparison: Single/Household size=1/agi $20,000 $28,000 Total Student Loan 6.8%* *unsubsidized loans for undergrad student Plan Payment Projected Loan Forgiveness Standard (120 months = 10 yrs) Graduated (120 months = 10 yrs) Pay As You Earn** (240 months = 20 yrs) Income Based Repayment** (300 months = 25 yrs) $322/month $38,667 total $186 to $558/month $41,608 total $21 to $151 month $17,633 total $31 to $322/month $43,502 total $0 $0 $48,447 $32,461 Income Contingent Repayment ** (272 months = 22 yrs) $139 to $282/month $60,612 $0

14 14 Staying on Track Use a Repayment Estimator to compare and select a plan that best fits your budget: Make monthly payments ON TIME Sign up for automatic withdrawal if option is offered

15 15 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.

16 16 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

17 17 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)

18 18 Where to find help Contact the servicer IMMEDIATELY if unable to make a scheduled payment Options include: Repayment plan change Deferment Forbearance Consolidation

19 19 Options Available Deferment Special circumstances Forbearance Determined by the lender Consolidation Merging all loans into one new loan

20 20 Communicating with the Servicer Program servicer contact information into your cell phone for easy access Notify of any changes to address, employment, address, cell number Keep a folder of all loan records in a safe place Document each communication with servicer for reference

21 21 Resolving Disputes Self-Resolution Checklist Common Issues and How to Resolve Ombudsman Office

22 22 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)

23 23 More on cancellation due to Disability If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a serviceconnected disability. If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination. You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that Can be expected to result in death, Has lasted for a continuous period of not less than 60 months, or Can be expected to last for a continuous period of not less than 60 months. For more information, go to Total and Permanent Disability Discharge

24 24 Perkin Loan Cancellation/Discharge For each complete year of service, a percentage of the loan may be canceled. The total percentage of the loan that can be canceled depends on the type of service performed. Depending on the type of loan you have, and when that loan was taken out, you may be eligible to cancel part of or your entire loan if you have served as one of the following: Volunteer in the Peace Corps or ACTION program (including VISTA) Teacher Member of the U.S. armed forces (serving in area of hostilities) Nurse or medical technician Law enforcement or corrections officer Head Start worker Child or family services worker Professional provider of early intervention services For more information, contact the school that you were attending when you received the loan.

25 25 Saving Money Tax Deductions American Opportunity Tax Credit Lifetime Learning Credit Loan Forgiveness Programs

26 26 Managing Your Budget Budgeting is the foundation of achieving your financial goals while maintaining your day-to-day living expenses.

27 27 Steps for Budgeting #1 Set Goals #5 Keep records #2 Organize Expenses #4 Write it down! #3 Set a realistic budget

28 28 Budget Template INCOME MONEY OUT Profit or (Loss)

29 29 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.

30 30 Managing Your Credit Establishing and maintaining good credit can provide many benefits to your financial future

31 31 Establishing Credit Set up a realistic budget Open a checking or savings account Evaluate options for credit

32 32 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.

33 33 Your Credit Report Check your credit report annually. Three major national credit reporting agencies: or or or

34 34 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 or

35 35 Credit Scoring Table Credit Score Description Excellent Great Good Average Bad The credit rating scale maximum and minimum stretches from While the highest score may be totally unattainable, anything in its vicinity is considered to be an excellent score.

36 36 Credit Scoring Table Determining Factor Payment History Debt/Amount Owed Credit History Length New Credit Lines Used Credit Types Used Weight % Description 35% How frequent and timely you pay your credit card bills, loan installments and any form of debt, does affect your credit score. 30% Next most important factor that affects your credit score are the amounts of money you owe on each of your financial accounts. 15% The length of time over which you have used credit lines and your banking accounts also influence the score. 10% The number of new credit lines used or banking accounts, which you have recently opened, impacts your score. 10% The range of different credit types used will also influence the credit rating.

37 37 Credit Report Verification Please review each section for accuracy: Personal identifying information Credit account information Public record information Negative information

38 38 Correcting Errors on Your Credit Report File a Consumer Dispute. If you pulled your credit report online (i.e. your Consumer Disputes can be filed electronically. dit/cre21.shtm.

39 39 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.

40 40 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)

41 41 FINAL REVIEW Are you better prepared to manage: Student Loan Debt? A Budget? Your Credit?

42 42 Questions?

43 43 Navigating Your Financial Future OSFA offers a series of educational materials regarding debt management for students and borrowers. For more information, please visit:

44 44 Thanks for attending this workshop.

45 45 Contact us Telephone: OSFA Outreach: Reyonna Parrish (850)