UNL Student Money Management Center Money Smart Introduction

UNL Student Money Management Center Money Smart

Introduction Erin Wirth, Accredited Financial Counselor Peer Money Coaches Dr. Kathy Prochaska-Cue, Program Advisor Ph. D. , Accredited Financial Counselor, Extension Family Economist Outstanding Planning Education & Financial Counseling Center Building a Financial Education Brand & Marketing Communications

Why Are We Here? • Committed to encouraging students to take responsibility for their financial futures • Students to build good relationships with money • Students have confidence in their financial futures • Are able to meet their financial goals • Creating and upholding a culture of financial empowerment among the student body through financial education

Personalized Money Management Sessions • One-on-One Money Management Coaching Sessions With an Accredited Financial Counselor or Peer Money Coach, a UNL Student Common Session Topics: * Spending Plans * Financial Goals * Organizing Finances * Establishing Credit * Saving Money * Debt Repayment * Investment Education * Understanding Financial Aid * Selecting Employee Benefits * Major Purchases

Introduction Purpose: • To inform you how we answer your students’ financial questions. • To give you some reminders about financial education so if your students come to you with financial questions, you’ll be prepared. The 6 $$$ Questions We Get Asked Most by UNL Freshmen

Stories from UNL Parents Remember: • You are a great educational resource for your students • By talking about your financial mistakes, you can help prevent your student from making the same mistakes • Know financial mistakes don’t mean you raked up huge debt or foolishly spent your money • NOT getting basic financial education is a mistake!

#1 UNL Freshman FAQs It’s always in the media that students are in lots of debt. How can I minimize my debt load?

Checklist for Minimizing Debt • EVERY YEAR! Complete the Free Application for Federal Student Aid at: http: //www. fafsa. ed. gov/ * Will need parents tax information * Can use IRS data retrieval process * Do this close to Jan. 1 st Some need is first-come, first-serve • UNL Will Inform You What You Qualify For Will be listed at: https: //myred. nebraska. edu • Understand How Many Grants & Scholarships You Are Getting Financial aid you DO NOT pay back • ONLY BORROW WHAT YOU NEED!

UNL Costs Resident Non-Resident Credit Hour $216 $660. 25 Business $268 $817. 25 Engineering $309. 50 $860 Architecture $292 $844 Fees Per Class $11. 35 Programs & Facilities Fees (per semester) $557

Checklist for Minimizing Debt • Look At SUBSIDIZED Loans = 3. 86% AND Perkins Loans = 5% Student DOES NOT pay interest while in school or during 6 -month grace period • Then Look At UNSUBSIDIZED Loans = 3. 86% The loans that DO accrue interest while you’re in school • Consider Parent PLUS Loans 6. 41% & Private Loans However, know the disadvantages of these loans

Checklist for Minimizing Debt Federal Loans Private Loans • Low, fixed interest rates • 6 -month grace period during which no payments are due • Income-based repayment options • Ways to lower or postpone payments • Loan forgiveness programs (teachers, public service workers) • Deferment options, especially if you return to school • Historically, higher interest rates • Repayment period differs • Not as much choice of repayment options • Usually not way to lower or postpone payments • No forgiveness programs • Usually no deferment options

FAFSA FAQs How Child Assets are Assessed • Assets listed under the student’s name are weighed at 20% of their value when calculating the expected family contribution (EFC) • Parent’s Assets - weighed at 2. 6%- 5. 6% of their value (based on a sliding income scale and after certain allowances)

FAFSA FAQs Taking Retirement Funds Distributions • Retirement funds are sheltered from the need analysis process • If you withdraw funds before the financial aid application is filed, you will have converted those funds into an included asset

Common FAFSA Mistakes • Incorrectly filing income taxes as head of household If there is an error in the head of household filing status, you’ll need an amended tax return • Listing parent marital status incorrectly If the custodial parent has remarried, you'll need the stepparent's information as well • Failing to count the student as a member of the household • Including retirement assets on the FAFSA • Inflating parents’ education If parents didn't graduate from college, select "high school" as the highest education attainment

Best Student Loan Tips: Student Loan Cancellation Programs Public Service Loan Forgiveness Program • The borrower must be employed full-time in a public service job for 10 years • Cancellation of the remaining balance due on eligible federal student loans after the borrower has made 120 monthly payments under the Income-Based Repayment Plan

Best Student Loan Tips: Student Loan Cancellation Programs Public Service Loan Forgiveness Program • Emergency management • Government • Military service • Public safety & law enforcement (police and fire) • Public health • Public education • Early childhood education • Social work in a family service agency • Public services for individuals with disabilities or the elderly • Public interest legal services • Public librarians • School librarians

Student Loan Fees • Deducted proportionately from each loan disbursement you receive • You're responsible for repaying the entire amount you borrowed and not just the amount you received Here are the current loan fees for federal student loans: • 1. 051% for Direct Subsidized Loans and Direct Unsubsidized Loans • 4. 204% for Direct PLUS Loans for parents and graduate and professional students • There are no loan fees for Perkins Loans

#2 UNL Freshman FAQs So, if I don’t want to be in debt forever, how much financial aid should I take out?

Expert Guidelines for Debt Load • No more than 10%-15% of the expected monthly income from your first job going for repayment of all loans • Over 15% means you probably won’t be able to afford car payments • 20% is the start of the "danger zone" when loan debt is out of control

Guidelines Using Your Monthly Gross Salary When You Graduate We Recommend - Debt Payments = 10% Accounting Nutritionist Elementary Teacher Salary = $39, 062 Salary = $29, 347 Salary = $33, 765 Max to Borrow = $28, 314 Max to Borrow = $21, 217 Max to Borrow = $24, 476

Financial Picture of Typical UNL Graduate Average Amount of Student Loan Debt $ 21, 000 Interest 3. 86% Plan Length Monthly Interest Standard 10 years $211 $4, 346 Extended 25 years Only available for over $30, 000 Graduated 10 years $118 Income-Contingent Payments are calculated each year and are based on adjusted gross income, family size, and the total amount of loans – Your payments change as your income changes Income-Based Maximum monthly payments will be 15 percent of discretionary income, the difference between adjusted gross income and 150 percent of the poverty guideline for family size and state Pay as You Earn Maximum monthly payments will be 10 percent of discretionary income, the difference between adjusted gross income and 150 percent of the poverty guideline for family size and state $5, 419

Tips for Reducing Amount Borrowed Avoid Student Bill Late Fees • Due the 12 th of every month • Bill emailed on 25 th of every month • Use electronic check option Credit costs you! • NOTE: Your student DOES have to give you permission to access their My. Red Account. • Use Campus Services UNL student fees pay for them Examples: Lied Center discounts, UPC Programming

Tips for Reducing Amount Borrowed Never Stop Applying for Scholarships • UNL General Scholarship Form On My. RED - Due February • Individual Colleges - CBA, Arts & Sciences • Private – Fastweb. com Get a Part-Time Job with Education Benefits Some employers, Americorps, ROTC Lower Interest Payments If you have the money, make interest payments on unsubsidized loans while you’re still in school

Mistakes Students Make VERY COMMON: Not Knowing How Much They’ve Borrowed Ex. One student had $60, 000, thought had $25, 000 TRACK AT: unl. edu/smmc Know Some Scholarships are Taxable • Tax Free = Tuition & fees • Taxable = Room & board, travel, research Reduce Expenses Creating a spending plan is a great way to discover ways to free up money that can be put towards education expenses

Mistakes Students Make • If student receives more in student loans, grants, and scholarships than they have to pay in to UNL • Extra is deposited in the bank account you set up in My. Red • They should know it’s important to: SAVE IT! - In a savings account - Only transfer over when they need it

#3 UNL Freshman FAQs Do I need to have my taxes done?

Tips for Students & Taxes • Discuss if You are Claiming the Student Person is under 19 years old or is under 24 and a full-time student AND the taxpayer provided over half of their support – You get deductions & credits • If They Are a Dependent, Still File If you earned more than $5, 950, you must file a tax return If you had income tax withheld from your pay, file • Know the Current Education Credits Ex. The American Opportunity Credit is a tax credit of up to $2, 500 of the cost of tuition, fees and course materials paid during the taxable year

Tips for Students & Taxes • Find on My. Red Form 1098 -T - Tuition Payments Statement Includes Proof of Scholarships & Grants and Amounts Billed • Know Textbook Amounts Textbook purchases can be applied to taxes for educational tax credits • Note: Students can get free tax help every year through UNL VITA

#4 UNL Freshman FAQs But how do I know how much money I’ll need each year?

From Survey of Students: Per Academic Year Item Amount Parking permit $ 400 Textbooks 1, 000 Sport tickets 300 Laundry 320 Cellphone 630 School supplies (printer ink) 250 Gas 300 Student organization/ Greek fees 300 TOTAL $ 3, 500 Eating Out $400 - $3, 000+ Entertainment $300 - $2, 000+ Clothing/Personal Items $300 - $1, 000+

Figuring Out How Much to Work Example Real-Life Budget: Living in a 2 Bedroom with a Roommate Rent = $325 Electricity = $50 Cable = $20 Internet = $20 Groceries = $165 Eating Out = $60 Clothing = $40 Laundry = $10 Toiletries = $40 Gas = $65 Entertainment = $50 Medical needs = $15 Renter’s insurance = $15 Car insurance = $45 Cell phone = $45 Total Cost Per Month = $965 Most students would need to work around 25 hours per week to cover this cost – with taxes taken out.

Personalized Spending Plans UNL Student: Leah Lives: On-Campus Weekly budget after major expenses: $ 140 Day Item Monday Gas Groceries (Choice: took the bus to East Campus) Tuesday Coffee (Choice: skipped a concert with friends) $ 4. 50 Wednesday Pop and candy bar (Choice: took the bus to East Campus) $ 2. 50 Thursday Movie (Choice: Didn’t get popcorn and pop) Friday Dinner for friend’s birthday (Choice: Didn’t order dessert) $ 12 Saturday Fast food lunch Party $6 $ 15 Sunday Shopping – New Shirt (Choice: Decided to pass on the $50 trendy shirt) $ 30 TOTAL Amount $34 $ 21 $9 $ 134

Personalized Spending Plans UNL Student: Sarah Lives: On-Campus Budget after major expenses: No idea Day Item Monday Breakfast at gas station $ 4. 50 Tuesday Parking ticket Ate out for lunch Bought present for Mom $ 30. 00 $ 8. 42 $ 23. 00 Wednesday Gas Ate out for lunch Rented movies at Blockbuster Groceries $ 28. 23 $ 6. 32 $ 8. 96 $ 35. 69 Thursday Coffee Yoga class $ 5. 50 $ 14. 00 Friday Takeout for dinner Trip to Target for toiletries – Got clothing & candles also $ 12. 62 $ 62. 00 Saturday Movie & snack $ 15. 69 Sunday Brunch with my parents Laundry TOTAL Amount $ 0. 00 $ 5. 00 $ 259. 93

Personalized Spending Plans By having a plan and making good choices, this week Leah spent: $ 125. 93 less than Sarah. That adds up to: $ 6, 044. 64 per year

Personalized Spending Plans Mint. com • • Get organized Track expenses – Reduce expenses Track income – Figure out reduce/increase income Get help saving for financial goals

Good Habit: Creating Financial Goals Why develop financial goals? • Don’t Miss Out on Opportunities, such as studying abroad • Help Them Achieve Larger Life Goals Buying a house, Buying a car, Going to graduate school • Control Spending Without goals, daily spending on unimportant things can keep students from achieving the really important things in life

Impulse Spending Tricks Think about your financial goals – Instead of spending, put money into savings Take $20 out each week and only spend that Plan for little purchases Get 2 lattes a week instead of 5 and save: $2, 080 per year Get 1 well-made new shirt once a month instead of 3 cheap shirts and save: $1, 300 per year

Emergency Fund Dave Ramsey recommends even college students save for: • Emergency Fund (3 months living expenses, $500) • Financial Goals By Paying Yourself First • Including savings in your budget • Automatically having funds deposited in your savings • Building good habits Dave Ramsey’s “Foundations in Personal Finance” Program for College Students Available for FREE at UNL SMMC

#5 UNL Freshman FAQs What are some other things that see UNL students do to waste money?

Banking/Credit Union Fees • Read the Account Contract! • Some things many people don’t realize: - Overdraft fees (Ex. $35 per day for up to 4 items) - Transfer fees Fees if you transfer from savings to checking too often - ATM fees Fees for using another bank’s ATM - International transactions (usually around 3%)

Not Having Adequate Insurance Renter’s Insurance • Ask your insurance agent if your family’s current homeowners or renters insurance policy also protects belongings in the dorm • Most policies limit a student’s coverage to 10% of the family’s coverage • For example, if your family’s policy has a personal property limit of $300, 000, student belongings will be covered up to $30, 000, after the deductible • In most cases, buying separate renters insurance is less expensive than increasing the coverage limits on your family’s homeowners insurance Average = $150 per year

Car Expenses Locksmiths = $200 Towing = $200 Solution = Triple AAA Primary - $60 Family - $14 Think About Cost of Car on Campus Parking $396 Oil changes $120 Gas $720 Insurance $600 Registration $150 TOTAL = $1, 986 Bus = FREE Rent Zip Cars = $75 membership fee $7 per hour

Becoming a Victim to Identity Theft Basic Tips: • Copy the front & back of all credit and debit cards and keep the copies in a safe location This enables you to cancel the card ASAP • Keep credit/debit card receipts in a safe place - If any transactions are in question, call the card issuer • Call it in ASAP Credit Card - $50 Debit Card - $500

Moving Off Campus Without Research Real Life Example Per Month On Campus Double room 7 day meal plan $1, 059 Off Campus – 1 Bedroom 2 miles from campus – Does Cook $1, 089 Off Campus – 1 Bedroom 2 miles from campus – Doesn’t Cook $1, 339 Off Campus – 2 Bedroom 2 miles from campus – Does Cook Off Campus – 2 Bedroom 2 miles from campus – Doesn’t Cook $754 $1, 004 • These are estimates. Actual figures will vary from student to student. • Initial costs = $840 (with roommate, no furniture costs)

Rentping. com

Affordable, Quality Housing Goal = $ 350 • Will need a roommate • Stay within 5 miles from campus

#5 UNL Freshman FAQs Do I need a credit card?

Should Students Have Credit Cards? Not Necessarily! • If they want to have it in case of emergencies (However, a cash emergency fund can work) • If they understand the importance of credit scores • If they want to start building a credit score Ex: If they want a mortgage or car loan when they’re a Junior or Senior Experts say: Better to have no credit than to come away from college with a ruined credit score!

Should Students Have Credit Cards? Do you need a credit card? 740 If You Want a Credit Score Predicts the risk that you will not pay your credit obligations - Loans, credit cards, rent, etc. Note: Many students wait till they are Sophomores To borrow money To rent an apartment from banks or credit without having a unions for auto loans, cosigner business loans To get your dream job Many employers check credit scores to determine if you’re responsible

Should Students Have Credit Cards? Most Important: Understand their credit management habits will affect their credit score & their financial future People with low credit scores will pay more for: • Health/Dental/Vision Insurance • Car loans • Car insurance • Mortgages • Rent Low credit scores can prevent you from: • Getting an apartment • In some cases, getting a job

Should Students Have Credit Cards? Credit Checks for SMMC Representative: • Bank Teller • Leasing Consultant for Apartment Company • Marketing Assistant for Retail Management Company • University Position

Characteristics of Good Credit Users • Have the self discipline to live within their means • Are not impulse buyers • Pay their bills in full each month to avoid wasting money on interest • Pay their bills on time – #1 thing to do to build a credit score • Only use 30% or less of credit available • Don’t open too many accounts too quick – Only have 1 or 2 and work on building a good account history

How You Can Help Them Understand the Characteristics of a Good Credit Card • Look for low APR • If there are low “teaser” interest rates, know what the rate will jump to after the period • Know the grace period • Read contact and know about fees

How You Can Help • An optional tool to start teaching students consequences, accountability, and responsibility is an Ncard Campus Account • Charges made to your NCard appear on the Student Accounts Consolidated Bill • $300 monthly limit (does not include textbooks) • Used at retailers around campus • Can link to Wells Fargo account Turns into a debit card • DOES NOT BUILD CREDIT SCORES

Common Ncard Questions • Pay bill on My. Red • Can be used in dining halls, but if they are on a meal plan, it does not charge by meal • Fast food restaurants ARE NOT part of the meal plans • Used for identification and to get into buildings, including the Rec • If lost, student must notify the NCard office immediately • Replacement card = $20

#6 UNL Freshman FAQs What do I need to discuss with my parents?

Good Discussion Topics Mention: • If you want your student to work & how much (Experts recommend 10 -20 hours per week) • How UNL bills will be paid Send student a check, put in student’s account, pay directly • Details of health, renters, and auto insurance • Saving student loan refund check • Wise credit use – Only buy what you can afford • Identity theft – Call in lost cards ASAP • Be careful with overusing NCard

Talking to Your Children About Money Keep Advice to a Minimum • Rely on the example you’ve set for the past 18 years • But let your student know they can come to you with a problem