Financial Wellness Curriculum

Transcription

1 Financial Wellness Curriculum The Financial Wellness Curriculum prvides students with infrmatin and financial tips fr reducing persnal debt and develping smart mney management skills. The gal is t help students avid defaulting n their student lan(s) and ther bligatins and, ultimately, plan fr a lifetime f financial well-being. The Financial Wellness Curriculum cnsists f several presentatins that can be used individually r cmbined t cver a larger selectin f tpics. Ultimately, these presentatins can be custmized t meet the needs f yur students, frm freshmen t senirs. Financial Wellness Curriculum Presentatin Tpics 1. Intrductin t Financial Management 2. Understanding Financial Aid 3. The Budgeting Prcess 4. Time Management 5. Gd Credit: Get It 6. Cnslidatin

2 Financial Wellness Curriculum: Cnslidatin Presenter s Guide This Financial Wellness Curriculum presentatin called Cnslidatin is designed fr sn-t-be graduates wh will be entering their 6-mnth grace perid. This presentatin educates students abut federal cnslidatin and clarifies cmmn miscnceptins students have abut cnslidating their student lans. Students are prvided infrmatin s they can decide if cnslidatin is right fr their financial situatin. Objectives Educate students n hw federal cnslidatin can be used as a debt management tl. Clarify cmmn cnslidatin miscnceptins s that students make a well-infrmed decisin as t whether r nt cnslidatin is the right decisin fr their particular financial situatin. Using the Presenter s Guide In this Presenter s Guide, yu ll find ntes t accmpany each tpic, sample questins, activities t engage the audience, and infrmatin abut nline resurces. Take advantage f the slide transitins as yu mve thrugh the PwerPint. This presentatin will take apprximately 30 minutes. Materials Needed Flip chart r white bard Internet access An LCD prjectr

3 Title Page (Slide 1) Read the fllwing alud: With the rising csts f educatin, students are cming ut f cllege with a substantial amunt f debt. Many students end up with student lan bills that they cannt affrd t pay. Lan cnslidatin is an ptin t be cnsidered. This presentatin will help shed light n the advantages and disadvantages f lan cnslidatin s students can determine if it is the right chice fr them. Objectives (Slide 2) Review the tpics that will be cvered in this presentatin. Slide Transitin: Let s begin by defining what cnslidatin is. What Is Student Lan Cnslidatin? (Slide 3) Explain: Generally, yu ll receive a repayment schedule with a 10-year repayment term. The repayment term fr a cnslidatin lan can be 15 r mre years. Extending the term f the lan will lwer the mnthly payment amunt, althugh yu will pay mre ver the life f the lan. Cnslidatin allws yu t lck-in all yur lans at a fixed interest rate. Slide Transitin: Student lan cnslidatin can help make repayment mre manageable. Qualifying Lan Types (Slide 4) Slide Transitin: As a student lan brrwer, it is imprtant that yu are aware f changes that can affect yur repayment. Stay Infrmed (Slide 5) Tell students that the William D. Frd Federal Direct Prgram allws brrwers t cnslidate federal lans directly thrugh the U.S. Department f Educatin. While all lans are riginated with the Department f Educatin as the lender, brrwers nw have the ptin t chse their lan servicer.

4 Slide Transitin: When cnsidering cnslidatin as an ptin, first make sure yur lans meet the criteria. Federal Lan Cnslidatin Eligibility (Slide 6) Explain: If yu have defaulted lans that yu wish t cnslidate please cntact yur lan hlder. If yu have a cnslidated lan, yu can re-cnslidate under certain circumstances. Cntact yur lan hlder t discuss the ptin. Slide Transitin: Nw that we ve lked at the eligibility requirements, let s lk at sme numbers. Mnthly Savings (Slide 7) Explain that cnslidating decreases the mnthly payment by extending the repayment term f the lan. Extending the repayment term means yu will pay mre ver the life f the lan. Slide Transitin: Althugh cnslidatin will lwer yur mnthly payment, it will increase the amunt f interest yu repay ver the life f the lan. By the Numbers (Slide 8) Explain: Yu will pay mre interest because yu will be extending the repayment term. Cnslidating t get a lwer installment amunt is a gd ptin if yu cannt affrd t send the mnthly payment. It s better t cnslidate and pay mre interest than t default n a student lan. Defaulting nt nly results in a 19% cllectin fee added t the balance f yur lan, it als affects yur creditwrthiness fr 7 years. Slide Transitin: The repayment term is based n yur ttal educatin debt. Extended Repayment Terms (Slide 9) Explain:

5 These are the maximum repayment terms. Yu d nt have t extend yur repayment t the maximum term available. If yu cannt affrd the mnthly payment, cnsider extending the term f the lan nly t reach the payment amunt yu can affrd; dn t extend it t the maximum term. This will help reduce the amunt f interest yu will pay ver the life f the lan. Slide Transitin: We have just seen hw cnslidatin gives yu mre time and decreases yur mnthly payments. Nw let s lk at sme f the ther incentives. Cnslidatin Features (Slide 10) Repayment Optins Explain that when calculating the fixed interest rate f the cnslidatin, the lans with a higher principal balance will carry mre weight than the smaller balance lans. Talk abut repayment ptins: With level repayment, yur installment amunts will be set high enugh t satisfy the mnthly interest accrual in additin t paying dwn the principal balance. This ptin will ensure that yu pay the least amunt f interest ver the life f the lan. Graduated repayment ffers a lwer mnthly payment but will result in mre interest being paid ver the life f the lan. Fr example, in ne ptin yu wuld make interest-nly payments fr the first 24 mnths. Then the installment increases t level repayment fr the remaining repayment term. Yur lender/servicer may als have a graduated repayment ptin with several different installment levels. Once the installment increases t a level amunt, the installment amunt will be higher than if the lan had been n level repayment frm the beginning. With incme-sensitive repayment, eligibility is based n cmparing the mnthly installment t a brrwer s grss mnthly incme (fr FFELP lans nly.) Incme-based repayment may be available t brrwers wh demnstrate partial financial hardship. The repayment amunt is determined by husehld incme, family size, and applicable lan debt and may be adjusted annually. Tell students t cntact their lender/servicer t discuss which repayment ptins that may be available t them. Cnslidatin Features (Slide 11)

6 Repayment Optins Talk abut the tw types f lan frgiveness n cnslidatin lans: With incme-cntingent repayment, yur mnthly payment amunt is based n yur adjusted grss incme (and that f yur spuse if yu are married), yur family size, and the ttal amunt f yur lans (fr federal Direct Lans nly). Until yu prvide the infrmatin needed t calculate yur mnthly payment amunt, yur payment will equal the amunt f interest that has accrued n yur lan unless yu request a frbearance. As yur incme changes, yur payments may change. If yu d nt repay yur lan after 25 years under this plan, the unpaid prtin will be frgiven. Yu may have t pay incme tax n any amunt frgiven. Pay As Yu Earn is an incme-driven repayment ptin that cnsiders incme and family size and ffers lwer mnthly payments t thse wh are eligible (fr federal Direct Lans nly). Under this plan, yur reduced mnthly payments are calculated by using yur adjusted grss incme and family size. This plan differs frm ther incme-driven repayment plans in that lan frgiveness is granted after 20 years f qualifying payments instead f 25 and is calculated based n 10% f yur incme. Cnslidatin Features (Slide 12) Lan Frgiveness Talk abut the tw types f lan frgiveness n cnslidatin lans: 25 year---if yu repay using an incme-cntingent repayment r incme-based repayment plan fr 25 years and meet ther requirements, yu may have any remaining balance f yur lan(s) cancelled. 10 year---if yu wrk in public service and have a remaining lan balance, the balance may be cancelled after 10 years in a public service jb. T achieve this bjective, yu may want t select the incme-based r incme-cntingent repayment plan. Slide Transitin: Cnslidatin ffers deferment and frbearance ptins if yu have repayment difficulties. Deferment Optins (Slide 13) Explain that the U.S. Department f Educatin may prvide deferments t brrwers wh are: Enrlled at least half-time at an eligible schl In a full-time curse f study in a graduate fellwship prgram In an apprved full-time rehabilitatin prgram fr individuals with disabilities

7 Unemplyed (fr a maximum f 3 years; yu must be cnscientiusly seeking, but unable t find, full-time emplyment) OR experiencing an ecnmic hardship (including Peace Crps service), as determined under the Act (fr a maximum f 3 years) Serving n active duty during a war r ther military peratin r natinal emergency, r perfrming qualifying Natinal Guard duty during a war r ther military peratin r natinal emergency, and if yu are serving n r after Octber 1, 2007, fr the 180-day perid fllwing the dembilizatin date fr yur qualifying service. Effective Octber 1, 2007, if yu are a member f the Natinal Guard r ther reserve cmpnent f the U.S. Armed Frces (current r retired) and yu are called r rdered t active duty while enrlled at an eligible schl, r within 6 mnths f having been enrlled, yu are eligible fr a deferment during the 13 mnths fllwing the cnclusin f the active duty service, r until the date yu return t enrlled student status, whichever is earlier. Yu may be eligible t receive additinal deferments if, at the time yu received yur first Direct Lan, yu had an utstanding balance n a lan made under the Federal Family Educatin Lan Prgram (FFELP) befre July 1, Slide Transitin: Deferments and frbearances help keep yur accunt in gd standing during times f financial difficulty. Frbearance Optins (Slide 14) Explain that the U.S. Department f Educatin may prvide frbearances t brrwers wh are serving in a medical r dental internship r residency prgram and meet specific requirements: Yu are serving in a natinal service psitin fr which yu receive a natinal service educatin award under the Natinal and Cmmunity Service Act f 1990 (AmeriCrps). Yu qualify fr partial repayment f yur lans under the Student Lan Repayment Prgram, as administered by the Department f Defense. Yu are perfrming service that wuld qualify yu fr lan frgiveness under the Teacher Lan Frgiveness Prgram that is available t certain federal lan brrwers. OR The ttal amunt yu we each mnth fr all f yur federal student lans is 20% r mre f yur ttal mnthly grss incme (fr a maximum f 3 years). In additin, yu may get a frbearance if yu are temprarily unable t make yur scheduled lan payments fr reasns including, but nt limited t, financial hardship r illness. Slide Transitin: We have discussed hw cnslidatin can wrk fr yu. Nw we will shw yu hw t access the tls t determine if it is the best ptin fr yu.

8 Cnslidatin Calculatr (Slide 15) If yu have internet access, walk the student thrugh the nline Repayment Estimatr at studentlans.gv (select the Repayments and Calculatrs link n the Hme page r g t actin This tl allws yu t see an estimated repayment schedules based n yur husehld incme, family size, and principal balance, amng ther factrs. See hw the figures change by adding/subtracting lans. Slide Transitin: Chsing t cnslidate can help ease many f the financial difficulties that may arise. Let s review the advantages f cnslidating. Advantages f Cnslidatin (Slide 16) Explain that the interest rate is calculated by the weighted average f all the lans included in the cnslidatin, runded up t the nearest 1/8 f 1%, nt t exceed 8.25%. Slide Transitin: Depending n yur circumstances, cnslidatin may nt be right fr yu. Make sure yu cnsider the fllwing. Disadvantages f Cnslidatin (Slide 17) Instruct students t: Research any lan frgiveness prgrams fr which yu may be eligible (particularly if yu have Perkins lans) t determine if cnslidating will affect yur eligibility. Oftentimes, if yu have made 24 f the required 36 payments tward receiving a reduced interest rate, thse 24 payments d nt apply t any reduced interest rate prgram ffered n the cnslidatin lan. Tls and Resurces (Slide 18) Slide Transitin: Recap

9 Objectives (Slide 19) Ask fr questins.