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: Understanding Financial Aid Presenter s Guide This Financial Wellness Curriculum presentatin n Understanding Financial Aid is designed fr students in any year f cllege. The presentatin can be used independently r cmbined t create a mre in-depth seminar. This presentatin utlines the relevant infrmatin students need t understand abut their financial aid package and the student lan repayment prcess. It is intended t stimulate audience participatin and interactin. Objectives Teach students the basics abut financial aid. Imprve students understanding f their lan repayment bligatin. 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. The presentatin will take apprximately 45 minutes. Materials Needed Flip chart r white bard Internet access An LCD prjectr

3 Title Page (Slide 1) Read the fllwing alud: This presentatin will help shed light n the smetimes cnfusing terms and rules regarding financial aid. A cllege educatin is an investment in yur future. Always take advantage f grants and schlarships befre cnsidering a lan. Slide Transitin: Fr mst students, a cllege educatin is nt pssible withut financial aid. Let s review the bjectives that we will cver tday. Objectives (Slide 2) Review the tpics that will be cvered in this presentatin. Slide Transitin: It s imprtant that yu knw and understand all f the available surces f funding fr cllege. Understanding Financial Aid (Slide 3) Explain t students that by the end f the presentatin, they shuld be able t answer the questins listed. Activity Ask students hw they plan t pay fr cllege. Have a vlunteer recrd all respnses. Keep the list t be used later in the presentatin. Examples--- Grants Schlarships Savings Parental supprt Wrk-study Student lans Slide Transitin: Nw let s take a lk at specific types f financial aid, beginning with grants. Types f Financial Aid: Grants (Slide 4) Read the fllwing alud:

4 The amunt f yur PELL grant depends n yur family s expected family cntributin (EFC) and the cst f attendance at the cllege yu plan t attend. Yur family must have an EFC f zer t receive the maximum PELL award. Tell students they must apply fr federal and state grants by cmpleting the Free Applicatin fr Federal Student Aid (FAFSA). Once the U.S. Department f Educatin prcesses a student s FAFSA, they will send a reprt that utlines the types f financial aid fr which the student qualifies. Types f Financial Aid: Grants (Slide 5) Explain that state grant deadlines and qualificatins vary by state. Encurage students t check their state deadlines and requirements. Slide Transitin: Grants are nt the nly surce f financial aid. Schlarships are anther resurce available fr all types f students. Types f Financial Aid: Schlarships (Slide 6) Remind students t always cnsider grants and schlarships befre brrwing student lans. Read the fllwing alud: Even if yu did nt receive any grants r schlarships this semester, yu can still apply and receive these types f awards in future semesters. A lt f students think that they can nly apply fr schlarships fr their freshman year. This is nt true; there are many schlarships available t upperclassman and returning students. Remind students t apply fr all eligible grants and schlarships each year. The mre they receive, the less student lan mney they may need t pay back after graduatin. Slide Transitin: Schlarships can be great surces f mney fr educatin, but dn t get scammed! Types f Financial Aid: Schlarships (Slide 7) Schlarship Scams Explain that schlarships shuld nt require payment t apply.

5 Slide Transitin: Anther great way t pay fr schl is t earn mney while in schl thrugh a wrk-study prgram. Types f Financial Aid: Wrk-Study (Slide 8) Read the fllwing alud: Wrk is dne n an hurly basis n r ff campus, and wrkers must be paid at least minimum wage. Yu are nrmally paid directly, but sme clleges have set up prgrams where yu can earn credit tward yur tuitin. Yu can nly earn up t the amunt f wrk-study awarded in yur student aid package. Slide Transitin: If grants, schlarships, and wrk-study d nt cver yur educatin csts, student lans are an excellent investment in yur future. Types f Financial Aid: Federal Student Lans (Slide 9) Tell students t cnsider lans nly after all ther funding surces, including cntributins frm family members, have been exhausted. Explain that federal student lans are ne f the mst cmmn student lans because they generally have lwer interest rates and ffer flexibility in repayment. Slide Transitin: Yur student lan bligatin fficially begins when yu sign the Master Prmissry Nte. Types f Financial Aid: Federal Student Lans (Slide 10) Master Prmissry Nte Explain that the MPN is a legally binding cntract bligating the student t repay the entire lan cmplete with the interest accrued. It is the student s respnsibility t read and understand any cntract befre he r she signs it. Explain that t take ut a federal direct lan fr the first time, the student must cmplete a Master Prmissry Nte (MPN). Either the schl r the U. S. Department f Educatin will prvide the MPN. If the schl ffers the ptin, the student can cmplete the MPN nline at the Direct Lans Master Prmissry Nte website at Activity Have a vlunteer recrd the respnses t the fllwing questins: Hw many f yu have a student lan?

6 Hw many f yu read yur Master Prmissry Nte (MPN)? Hw many f yu remember what yur MPN said? Ask the grup t name three rights that are listed n their MPN. Answers include: I will receive a 6-mnth grace perid n Staffrd lans. I have the right t defer r pstpne repayment if I meet certain eligibility requirements. I have the right t chse a repayment plan. I have the right t prepay withut penalty. I have the right t cnslidate. Ask the grup t name three respnsibilities that are listed n their MPN. Answers include: I must ntify my schl and/r lender if I withdraw, reduce my enrllment status t less than half-time, fail t re-enrll, and/r change my name r address. I must participate in exit cunseling. I must use the lan mney fr authrized educatin expenses. All lans MUST be repaid. Infrmatin cncerning the amunt f the lan and repayment status (current r delinquent) WILL be reprted t natinwide cnsumer reprting agencies n a regular basis. Slide Transitin: Alng with yur bligatin t repay yur student lan in full, yu als have specific brrwer rights and respnsibilities that yu need t remember. Types f Financial Aid: Federal Student Lans (Slide 11) Brrwer Rights Types f Financial Aid: Federal Student Lans (Slide 12) Brrwer Respnsibilities Slide Transitin: In rder t receive a federal student lan, yu must meet the eligibility requirements. Types f Financial Aid: Federal Student Lans (Slide 13) Eligibility Requirements Slide Transitin: There are tw types f federal student lans. Let s lk at the difference between subsidized and unsubsidized lans.

7 Types f Financial Aid: Federal Student Lans (Slide 14) Discuss the fllwing: The schl determines yur eligibility fr subsidized vs. unsubsidized lans, which are calculated based n cst f attendance, expected family cntributin, and ther financial assistance. If yu have an unsubsidized lan, yu may receive a quarterly interest statement. Yu can chse t pay the interest while in schl r defer payment until yur lan enters repayment. Activity Encurage students t use the Interest Savings Calculatr n YuCanDealWithIt.cm t see hw much mney they will save if they pay the interest while in schl. Optin A---Access the Interest Savings Calculatr n YuCanDealWithIt.cm. Have a vlunteer enter the fllwing amunts int the calculatr t shw hw much a student culd save by paying the quarterly interest. Semester 1... $1,313 Semester 2... $1,312 Semester 3... $1,500 Semester 4... $1,500 Semester 5... $1,000 Semester 6... $2,500 Semester 7... $1,500 Semester 8... $1,000 Interest rate 6.5% The student will save $ in interest charges. Optin B---If yu d nt have access t the internet, ask fr tw vlunteers t be Gerge and Mary fr the textbk-like math prblem belw. Have each student write n the bard the amunt brrwed, the mnthly payment, and the interest paid. This will demnstrate hw much mney can be saved by paying their interest while in schl. Bth Gerge and Mary brrw $11,625 in unsubsidized lans ver 4 years, at 6.5% interest and with a standard 10-year repayment schedule. Gerge pays the interest while in schl. His mnthly student lan payment after graduatin is $134.20, and the ttal interest paid during repayment is $6, Mary chses nt t pay the interest while in schl, and after graduatin her mnthly student lan payment is $158.22, and the ttal interest paid during repayment is $7, In this case, making interest payments while in schl saves Gerge $ ttal in interest payments. Visit YuCanDealWithIt.cm and use the Interest Savings Calculatr t determine hw much yu can save if yu make interest payments n yur unsubsidized lan.

8 Slide Transitin: Althugh the schl determines yur prtin f subsidized and unsubsidized mney, annual lan limits are cntrlled by the federal gvernment. Types f Financial Aid: Federal Student Lans (Slide 15) Annual Lan Limits Explain that students shuld brrw nly what is abslutely necessary fr schl after all ther resurces are exhausted. Make sure t distinguish the maximum lan limit is split between subsidized and unsubsidized. Example---If the maximum lan limit is $5,500 and in yur first year yu receive $3,500 in subsidized lans, yu will receive nly $2,000 in unsubsidized lans. Explain the exceptinal circumstances fr nt being able t btain a PLUS lan : Adverse credit histry Incarceratin Parental whereabuts unknwn Family incme limited t public assistance r disability benefits Explain that grad PLUS lans d nt have lan limits. They are limited by the cst f attendance minus estimated financial assistance. Encurage students t use EducatinPlanner.rg t verify yearly limits. Slide Transitin: Yur schl may als ffer student lans. Types f Financial Aid: Perkins Lans (Slide 16) Read the fllwing alud: Yu must qualify fr Perkins lans based n yur exceptinal financial need, as defined by the schl. Perkins lans are lng-term lans awarded t bth undergraduate and graduate students. The lan prgram is campus-based, and therefre, the schl is the lender. Repayment f the Perkins lan is made t the schl r a billing service that the schl uses t administer and cllect the funds. Slide Transitin: If yu still need mney after yu ve exhausted grants, schlarships, wrk-study, and federal lans, yu may need t cnsider alternative lans.

9 Types f Financial Aid: Alternative (Private) Lans (Slide 17) Read the fllwing alud: Alternative lans are nt federally guaranteed and, in general, are mre expensive. Because these lans are nt federally guaranteed, they are nt required t prvide deferment r frbearance ptins, althugh sme d. Every lender will ffer different interest rates, repayment ptins, and deferment/frbearance ptins. Instruct students t exhaust all ther types f financial aid befre cnsidering an alternative lan. Advise students t d their hmewrk befre they take ut an alternative lan. Slide Transitin: Nw that we ve reviewed the types f student lans, we can talk abut hw t use yur student lan mney wisely. Use Yur Student Lan Mney Wisely (Slide 18) Emphasize that student lans are indeed lans and will eventually have t be paid back. Advise students t make a budget t determine hw much f the lan mney, if any, shuld be refunded t the lender/servicer. Slide Transitin: We will nw discuss what happens when yu graduate, withdraw, r drp t less than half-time status. Grace Perid (Slide 19) Tell students: Yu are nt required t make payments during yur 6-mnth grace perid, but if yu have a subsidized lan, any payments made will be applied directly t the principal balance f the lan. Making just ne payment during this time can save yu mney in the lng run. Interest cntinues t accrue n unsubsidized lans during the grace perid. It is financially smart t pay this interest befre it is capitalized (added t the principal balance), thus increasing the ttal amunt f the lans. The first payment due date fr a lan must be n later than 60 days after the beginning f the repayment perid.

10 Activity Optin A---Access the Grace Perid Calculatr n YuCanDealWithIt.cm. Have students suggest hw much they think they culd pay during their grace perid. Have a vlunteer enter the amunts int the calculatr t see hw much mney they culd save. The earlier yu start, the mre yu save! Optin B---If yu dn t have access t the internet, use the fllwing example t demnstrate the savings. If Susan brrws $10,000 in subsidized lans at a 6.8% interest rate and pays the lender $50 a mnth (using the mney she received as graduatin gifts) during her 6-mnth grace perid, she culd save herself $ in interest and pay ff her student lan debt 5 mnths early. Slide Transitin: During yur grace perid, yu will be sent yur repayment disclsure. It is imprtant fr yu t review yur repayment ptins s yu can chse the plan that is best suited t yur financial situatin. Student Lan Repayment (Slide 20) Cnslidatin Explain that students wh have multiple lans culd cnsider cnslidatin. Suggest that students visit lancnslidatin.ed.gv t take advantage f the Cnslidatin Calculatr and see what their apprximate mnthly payment wuld be. Tell students that lan cnslidatin culd extend their repayment term up t 30 years based n their utstanding lan balance. Student Lan Repayment (Slide 21) Level Repayment Read the fllwing alud: A level repayment schedule is standard, unless yu request anther ptin. The mnthly installment amunt remains the same thrughut repayment. Small changes in the mnthly installment amunt may ccur fr lans with a variable interest rate if the annual interest rate increases r decreases. (The federal gvernment ended variable rate lans in All federal lans nw have a fixed interest rate.) Repayment term is nrmally 10 years. The minimum payment is $50 per mnth.

11 Student Lan Repayment (Slide 22) Graduated Repayment Read the fllwing alud: This repayment schedule is designed with the understanding that yu shuld make mre mney as yu prgress in yur career. Payments are initially lwer then increase later in the repayment schedule. The ttal repayment schedule is 10 years. Althugh mnthly payments are reduced in the first few years f repayment, yu will pay mre ver the life the lan than with a level repayment because yu are paying mstly interest during the initial years f reduced payments. Remind students t cntact their lender/servicer during the grace perid t select the ptin that is best fr them. Student Lan Repayment (Slide 23) Extended Repayment Suggest visiting YuCanDealWithIt.cm fr mre details abut these repayment ptins. Student Lan Repayment (Slide 24) Incme-Based Repayment, Incme-Sensitive Repayment, Incme-Cntingent Repayment, and Pay As Yu Earn Encurage students t cntact their lender/servicer t learn abut autmated payment prgrams and t sign up. Slide Transitin: An autmated payment service is nly ne way t reduce yur student lan payments. Yu may als be eligible fr a lan frgiveness prgram. Student Lan Repayment (Slide 25) Lan Frgiveness Explain that lan frgiveness prgrams prmte emplyment in certain fields by frgiving part r all f yur lan debts, prvided yu fulfill certain wrk-related requirements.

12 Explain that students wh have federal student lans thrugh the William D. Frd Federal Direct Prgram may be eligible fr public service frgiveness after wrking in a public service field and making a certain number f eligible payments. Encurage students t check with their lender/servicer n whether r nt they are eligible fr a lan frgiveness prgram. Encurage students t research lan frgiveness prgrams prir t cnslidatin t verify if there are any eligibility differences. Slide Transitin: We have cvered a lt f infrmatin regarding student lans, including ways t ptentially lwer yur mnthly payment by making interest payments and even ways t have them frgiven. Hwever, sme f yu may find yurself in a situatin where yu are unable t make timely payments. There are ptins available. Student Lan Repayment (Slide 26) Deferments and Frbearance Read the fllwing alud: Deferment is an entitlement f a student lan that allws yu t suspend yur mnthly payments; hwever, yu must meet the qualificatins specified. The federal gvernment pays the interest n the student lan during perids f apprved deferment n subsidized lans. Frbearance is a temprary suspensin f mnthly payments that is granted under certain circumstances by the lender/servicer. Yu must meet the qualificatins specified. Yu will always be respnsible fr paying the interest that s accrued, s it s smarter t try t get a deferment first. Review cmmn types f deferment: In-Schl---A student returns t schl at least half-time after they have used their grace perid. Unemplyment---A brrwer is unable t get a full-time jb r has been laid ff frm a jb. Ecnmic Hardship---A brrwer is unable t make the mnthly payment due t financial hardship. Encurage student brrwers t call their lender/servicer immediately s they can help determine the best ptin available fr their circumstances. Slide Transitin: Yu have the pwer t fix the prblem. Student Lan Repayment (Slide 27) Delinquency

13 Explain: Yur accunt is cnsidered delinquent when it is 1 day past due. Delinquency will be reprted t the majr credit bureaus at days f delinquency (depending n the lender/servicer) and will affect yur credit rating fr up t 7 years. Slide Transitin: Let s lk at a few ptential slutins. Student Lan Repayment (Slide 28) Repayment Tips Slide Transitin: If yu fail t make payments r btain an apprved deferment/ frbearance, yur student lan will default. A student lan may g int default after 120 days f nnpayment fr alternative (private) lans and will g int default after 270 days f nnpayment fr federal lans. The cnsequences are severe and can be lng-lasting. Student Lan Repayment (Slide 29) Default Discuss the fllwing: Default will be reprted t the natinal credit bureau and will result in an I9 credit rating, which may prevent yu frm btaining a mrtgage r car lan. If yu are ffered credit at all, yu will receive the highest interest rates allwed by law. Yur student lan will be due in full. Yu will receive cllectin calls and letters frm the servicer, lender, guarantr, and schl. Slide Transitin: Remember that there is always help available. Lk t yur financial aid administratr if yu have any questins; they will be happy t help. Resurces and Reminders (Slide 30) Remind yur audience that student lans are legally binding cntracts and need t be kept in a safe place. Organizatin is the key t keeping track f very imprtant papers. Resurces and Reminders (Slide 31)

14 Activity Refer back t the list the students created earlier in the presentatin, utlining ways they planned t pay fr cllege. Ask students t identify the types f paperwrk r dcumentatin they feel they shuld keep n file. Examples--- Grants The amunt f grant mney received and frm what surce Any limitatins r cntinued qualificatins/requirements, such as a specified GPA r a cmmitment t wrk in an area f study fr specified perid f time, etc. Schlarships The amunt f schlarship mney received and frm what surce Is it inclusive r des it require a yearly applicatin? Savings Accunt statements Parental supprt Des this mney need t be repaid, and what terms were agreed n? Wrk-study Track mney earned and hurs wrked. Student lans Encurage students t keep all financial materials in ne place, including cpies f all recrds relating t the lan. These wuld include: Master Prmissry Nte Ntices shwing lan disbursement dates Repayment schedule prvided by lender Recrds f all lan payments (including cancelled checks and mney rder receipts) Cpies f requests fr deferment r frbearance Any ther cpies f crrespndence received frm the lender r servicer. Resurces and Reminders (Slide 32) Explain the surces fr free mney t pay fr educatin expenses, including federal Pell and state grants, schlarships, wrk-study prgrams, and family cntributins. Students shuld exhaust all these surces befre taking ut a lan. Help students t avid schlarship scams by telling them t apply with reliable rganizatins like educatinplanner.rg. It shuldn t cst anything t apply fr a schlarship!

15 Slide Transitin: Recap. Objectives (Slide 33) Ask questins.