Welcome! Glenn Rust, President and CEO. John Acchione, Director of Education (FCLA)

Welcome!

Welcome! Glenn Rust, President and CEO John Acchione, Director of Education (FCLA)

CHALLENGES TO OVERCOME With the students of today and the job-seekers of tomorrow 1 2 3 S T U D E N T S F O R C E D T O I N C U R L A R G E A M O U N T S O F D E B T I N E X C H A N G E F O R A N E D U C AT I O N N O C L E A R PAT H T O A C A R E E R A N D N O G U A R A N T E E O F I N C O M E S U F F I C I E N T T O R E PAY L O A N S L A C K I N G P E R S O N A L F I N A N C I A L M A N A G E M E N T S K I L L S A N D P R O F E S S I O N A L S K I L L S R E Q U I R E D F O R E M P L O Y M E N T

1 S T U D E N T S F O R C E D T O I N C U R L A R G E A M O U N T S O F D E B T I N E X C H A N G E F O R A N E D U C AT I O N Average student loan balances of graduating seniors: M O R E T H A N 44 million A M E R I C A N S W I T H S T U D E N T D E B T 2015: 2016: 2017: $30,100 $37,172 $39,400 Source: US Dept. of Education, Federal Student Aid, https://studentaid.ed.gov/ C U M U L AT I V E D E FA U LT R AT E F O R F E D E R A L S T U D E N T L O A N S : 17.4% T O TA L F E D E R A L L O A N S I N D E FA U LT, F O R B E A R A N C E, O R D E F E R M E N T : 33.4%

TOTAL OUTSTANDING FEDERAL STUDENT LOAN DEBT 1958: Federal student loans first offered. Source: St. Louis Federal Reserve, Economic Database, https://fred.stlouisfed.org/ 1965: Higher Ed. Act allows government-guaranteed loans to be made by banks and private institutions. 1993: Direct lending program implemented (students borrow directly from the government). 2006: All federal loans are required to have fixed rates. However, many private loans still have variable rates. 2005: Fed. loan fees reduced from 4% to 1% and grad. students gain access to PLUS Loans. USD, in Billions $1,200 $1,000 $800 $600 $400 $200 10/1/1945 10/1/1954 10/1/1963 10/1/1972 10/1/1981 10/1/1990 10/1/1999 10/1/2008 10/1/2017 $0

TOTAL STUDENT DEBT OUTSTANDING (FEDERAL AND PRIVATE) 2006 - Present Source: St. Louis Federal Reserve, Economic Database, https://fred.stlouisfed.org/ USD, in Billions $1,600 $1,400 2006 2018: Student loan debt quadruples over twelve years. July 2018: Total outstanding student debt reaches $1.56 Trillion $1,200 $1,000 $800 $600 $400 $200 1/1/2006 1/1/2007 1/1/2008 1/1/2009 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 $0

DATA FROM STUDENT LOAN BORROWERS 30% 52% 53% 83% Owe over $70,000 Believe interest will not accrue on their loans while in school. Believe payments are automatically based on income Source: Student Loan Hero Survey, May 2018, www.studentloanhero.com Those aged 22 to 35 who blame education loans for not having purchased a home

First-Year Education Cost Comparison RAW 1-YEAR COST OF DEGREE PROGRAMS AT TWO EDUCATIONAL INSTITUTIONS: $60,000 $50,000 $40,000 F I R S T - Y E A R T OTA L C O S T S UVA PVCC $30,000 $26,126 $29,312 $24,122 COSTS INCLUDE: TUITION FEES BOOKS & SUPPLIES MANDATORY HOUSING AT UVA $20,000 $10,000 $0 $6,140 $6,140 $6,140 NURSING COMPUTER SCIENCE BUSINESS Sources: UVA & PVCC Cost of Attendance, 2018-2019, www.virginia.edu, www.pvcc.edu,

Two-Year Cost Comparison RAW 2-YEAR COST OF DEGREE PROGRAMS AT TWO EDUCATIONAL INSTITUTIONS: UVA PVCC COSTS INCLUDE: TUITION FEES BOOKS & SUPPLIES $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2 - Y E A R C O S T O F D E G R E E P R O G R A M S $44,012 $51,384 $42,004 $13,397 $12,758 $12,598 NURSING COMPUTER SCIENCE BUSINESS Sources: UVA & PVCC Cost of Attendance, 2018-2019, www.virginia.edu, www.pvcc.edu,

Full Education Cost Comparison $200,000 T O TA L C O S T O F L O A N PAY M E N T S (10-YEAR REPAYMENT PLAN) RAW COST VERSUS FULL COST (EDUCATION LOANS) $150,000 $134,500 $162,473 $152,314 UVA PVCC COSTS INCLUDE: WITH INTEREST TUITION FEES BOOKS & SUPPLIES TOTAL OF PAYMENTS (INCLUDING ACCRUED INTEREST) $100,000 $50,000 $0 $78,736 $94,480 $89,828 $18,478 $17,597 $17,377 < $14K < $13K < $13K NURSING COMPUTER SCIENCE BUSINESS Sources: UVA & PVCC Cost of Attendance, 2018-2019, www.virginia.edu, www.pvcc.edu, Rate Data: US Dept. of Ed., Federal Student Aid, https://studentaid.ed.gov/

Full Education Cost Comparison RAW COST VERSUS FULL COST (EDUCATION LOANS) UVA PVCC COSTS INCLUDE: WITH INTEREST TUITION FEES BOOKS & SUPPLIES TOTAL OF PAYMENTS (INCLUDING ACCRUED INTEREST) $200,000 $150,000 $100,000 $50,000 $0 T O TA L C O S T O F L O A N PAY M E N T S (20-YEAR REPAYMENT PLAN) $179,210 $78,736 $217,462 $203,570 THE AVERAGE GRADUATE TAKES APPROXIMATELY 20 YEARS TO PAY OFF ALL STUDENT DEBT. $94,480 $89,828 $23,110 $22,008 $21,734 < $14K < $13K < $13K NURSING COMPUTER SCIENCE BUSINESS Sources: UVA & PVCC Cost of Attendance, 2018-2019, www.virginia.edu, www.pvcc.edu, Rate Data: US Dept. of Ed., Federal Student Aid, https://studentaid.ed.gov/

Cost Comparison Business Degree 20-YEAR TOTAL COST OF LOAN PAYMENTS FOR SOME INSTITUTIONS IN VIRGINIA: $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 JMU VIRGINIA TECH $62,206 $66,628 $149,533 $150,493 These figures do not include housing after the first year. UVA HAMPTON U WILLIAM & MARY $89,828 $117,586 $120,192 $203,570 $275,229 $278,911 Raw Cost of Attendance 20-Year Total Cost U. RICHMOND WASH. & LEE $231,330 $240,225 $547,862 $569,861

These examples also do not account for annual tuition increases, which historically far outpace other prices. Consumer Price Index vs. Tuition Index 1983 2018 CPI Tuition Index Average annual increase: CPI: 2.63% Tuition: 6.03% Source: US Dept. of Labor, Bureau of Labor Statistics, www.bls.gov Jan-83 Jan-88 Jan-93 Jan-98 Jan-03 Jan-08 Jan-13 Jan-18

OPPORTUNITY COST The monthly cost of loan payments is a burden on the budget, but also prevents students from making important investments. Sample scenarios: Amount Borrowed $50,000 $75,000 $100,000 Interest Rate 5.05% and 7.60% Monthly Payment $441 $692 $944 Total Monthly Payments (20 yrs.) $105,807 $166,093 $226,592

OPPORTUNITY COST The monthly cost of loan payments is a burden on the budget, but also prevents students from making important investments. Example Scenario: Amount Borrowed $50,000 $75,000 $100,000 Interest Rate 5.05% and 7.60% Monthly Payment $441 $692 $944 Total Monthly Payments (20 yrs.) $105,807 $166,093 $226,592

OPPORTUNITY If these funds were invested (instead of spent fulfilling loan obligations), Amount Borrowed COST Interest Rate Monthly Payment $75,000 5.05% and 7.60% $692 Total Monthly Payments (20 yrs.) $166,093 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Investment of $692 per month for 20 years (at 7% APR) 1 21 41 61 81 101 121 141 161 181 201 221

2 N O C L E A R PAT H TO A C A R E E R A N D N O G UA R A N T E E O F I N C O M E S U F F I C I E N T TO R E PAY LOA N S DEGREES ARE NOT GUARANTEED OFFERS OF EMPLOYMENT AND IN A SURVEY OF RECENT COLLEGE GRADUATES: 44% 78% 45% End up working in jobs that do not require a 4-year degree Earn less than $50,000 per year Believe that college was not worth the cost. Source: Consumer Reports Student Survey, 2016

EARNING POTENTIAL MANY COLLEGES BARELY DIFFERENTIATE TUITION BETWEEN MAJORS, REGARDLESS OF DIFFERENCES IN CAREER EARNINGS AVERAGE 10-YEAR EARNINGS FOR VARIOUS DEGREES: $800,000 $675,000 $650,000 $480,000 10 YEAR COST $162K $134K $152K $130K Sources: Payscale.com, Salary.com, US Dept. of Labor, Bureau of Labor Statistics, www.bls.gov ENGINEERING / COMPUTER SCIENCE NURSING BUSINESS EDUCATION

3 L A C K I N G P E R S O N A L F I N A N C I A L M A N A G E M E N T S K I L L S A N D P R O F E S S I O N A L S K I L L S R E Q U I R E D F O R E M P L O Y M E N T ECONOMICS & PERSONAL FINANCE (HIGH SCHOOL COURSE) VIRGINIA STATE REQUIREMENT WHAT FINANCIAL EDUCATION OPPORTUNITIES ALREADY EXIST? WEB-BASED SOFTWARE PROGRAM USED IN HIGH SCHOOLS STUDENTS CLICK THROUGH CURRICULUM - MINIMALLY INTERACTIVE - EASY, COMMON-SENSE QUESTIONS W!SE (Working In Support of Education) STUDENTS TAKE W!SE EXAM TO MEASURE LEARNING - BASIC, NON-CHALLENGING CONTENT - LOW PASSING SCORE

Sample screenshots from the TM financial literacy training program

Sample question from W!SE exam: A person who owns stocks may decide to buy bonds and mutual funds in order to: A. Diversify her investment portfolio. B. Avoid paying taxes on capital gains. C. Reduce her variable expenses. D. Eliminate the need for retirement planning. Passing score for the W!SE exam: 66% Sample question from FCLA course: A married couple earned annual salaries of $70,000 and $45,000 last year, respectively. They jointly owned stocks that provided $1,500 in dividend income and sold some other stocks that resulted in a short-term capital gain of $2,700. a. Determine their adjusted gross income for federal tax filing, assuming they opted for the standard deduction and file jointly as a married couple. b. Do you believe there would be a benefit to filing separately (splitting dividend and capital gain income)? If so, state your reasoning.

Sample question from W!SE exam: Sample question from FCLA course: A person is earning an after-tax income of $4,200 per month. He currently has the following monthly bills: What should be the first financial goal for a recent college graduate who is single and has a full-time job? A. Buy a house. B. Buy a life insurance policy. C. Have a three- to six-month emergency fund. D. Create a stock portfolio. 1) Monthly mortgage payment of $1,450 (5% APR, with $180,000 balance remaining) 2) Flexible credit card payment minimum of $40 (18.9% APR, with balance of $3,100) 3) Monthly education loan payment of $415 (6.9% APR, with $17,500 balance remaining) 4) Monthly utilities (water, heat, electric) of $270 a. Determine the order of importance in paying each of these bills and state your reasoning. b. How would you suggest this person use a one-time $5,000 bonus he received from his employer?

Sample question from W!SE exam: Sample question from FCLA course: The assets and liabilities (in no particular order) are listed below for two individuals. Generally, it is better to receive $100 today than $105 four years from today because the $100 can be put to work immediately through savings or investing. This is an example of: Sarah Salary: $52,000 Retirement Account: $31,000 Student Loans: $26,000 Savings Account: $4,000 Checking Account: $800 Mortgage: $140,000 Ronald Salary: $61,000 Retirement Account: $22,000 Student Loans: $32,000 Savings Account: $1,000 Checking Account: $1,800 Credit Card Balance: $3,850 A. The Rule of 72. B. The time value of money. C. Financial planning. D. Net worth. a. Determine the net worth of each individual, if possible. b. Which of these two people do you believe is in better financial condition? Give a reason for your answer, and state what (if any) additional information might help you make your decision.

1 2 3 S T U D E N T S F O R C E D T O I N C U R L A R G E A M O U N T S O F D E B T I N E X C H A N G E F O R A N E D U C AT I O N N O C L E A R PAT H T O A C A R E E R A N D N O G U A R A N T E E O F I N C O M E S U F F I C I E N T T O R E PAY L O A N S L A C K I N G P E R S O N A L F I N A N C I A L M A N A G E M E N T S K I L L S A N D P R O F E S S I O N A L S K I L L S R E Q U I R E D F O R E M P L O Y M E N T NONE OF THESE ISSUES IS SUFFICIENTLY ADDRESSED BY THE HIGH SCHOOL PROGRAMS, EVERFI, OR SOCIETY IN GENERAL.

EMPLOYMENT READINESS and INTRODUCING

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS and Economic Perspectives and Data Analysis Employment and Professionalism Income, Taxation, and Budgeting Loans and the Credit System Money and the Banking System Insurance and Investments

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS and Economic Perspectives and Data Analysis Has the world changed over time? How do people around the world live? Where can we find reliable data to answer our questions? Understanding bias individual and population (media) Understanding ROI (Return on Investment)

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS Employment and Professionalism and Understanding the job market and why employees are hired Determining qualifications and personal qualities employers look for What should we write on our application? Where should we be looking for a job? How do we create a resume and cover letter? How should we dress for (and act during) the interview?

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS Income, Taxation, and Budgeting and Salaries versus wages and what to expect from various professions Understanding our paycheck and withholdings Types of taxes including Federal and State income taxes, Social Security, Medicare, and others Tax deductions, credits, and how to file Basic business entities and how they are taxed Building a responsible budget based on our monthly after-tax income and expenses

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS Loans and the Credit System and Understanding why loans exist and how they contribute to the economic system Interest rates (APR vs. APY and fixed vs. variable) Calculating compound interest and loan amortization tables Types of loans including education, auto, mortgages, credit cards, etc. Understanding credit, credit scores, and how our credit is determined

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS Money and the Banking System and Understanding types of currency and its purpose as a medium of exchange, store of value, etc. The role of banks as both depository and lending institutions Understanding the business of banking the services provided and how banks generate revenue Risk management and the financial crisis Understanding the causes and effects of inflation, deflation, and monetary policy, as well as the role of the Federal Reserve

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS Insurance and Investments and Insurance as both a risk management business and as a valuable service Types of insurance, why each exists, and how premiums are calculated The effect of the time value of money on all aspects of finance and as the basis for investing Types of investments and understanding risk versus reward Retirement planning (types of accounts, strategies, and how to perform important calculations)

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS and Topics studied from institutional perspective as well as consumer perspective Critical thinking and problem-solving required; very few multiple-choice questions, mostly open-ended More comprehensive, realistic, and challenging than current personal finance/economics courses in HS Employment strategies are embedded in the course Instructors are finance industry experts

Finance Career and Leadership Academy (FCLA) EMPLOYMENT READINESS and Student assessment structure: Short quizzes throughout lessons (textbook) Exams after each unit is completed Projects/Activities based upon lessons; includes individual and group work, mock interviews, and role-playing scenarios Numerical grade assigned based upon assessments Grades of 94% and above will be considered for scholarship opportunity (for further advanced training in Banking & Finance and potential career opportunities for successful candidates)

Finance Career and Leadership Academy (FCLA) IN ADDITION TO EDUCATION, WE ARE CREATING A TOP PERFORMING STUDENTS FROM THE FCLA WILL HAVE THE OPPORTUNITY TO EARN A SCHOLARHIP TO OUR COMMERCIAL LENDING TRAINING PROGRAM THROUGH:

Commercial Lender Training Program Courses offered through the Center for Financial TrainingSM Courses offered online Instructors are bankers Partner of the American Bankers Association (ABA) Courses are transferrable as college credits (Recommended by American Council on Education ) Accredited by St. Joseph s College of Maine towards BS (Banking)

Commercial Lender Training Program Courses assigned through the Center for Financial Training SM Principles of Banking Economics (Macro) Business Math Statistics Financial Accounting Money and Banking Analyzing Financial Statements Commercial Lending Consumer Lending Legal Foundations in Banking Business Communication Sales Essentials Real Estate Appraisal Real Estate Finance Real Estate Law

FCLA Commercial Lender Training Program Qualities of top-performing, scholarshipeligible students: Earned course grade of 94% or above Contributes intelligent, valuable insights and conversation to class Puts forth maximum effort Professional conduct and appearance

Questions?