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Debt Management for the Real World

Debt Management for the Real World. Kim Siwarski Access Group and Colleen MacDonald SimpleTuition. Agenda. Starting Debt Management at Enrollment Helping the Responsible Borrower Helping the Not so Responsible Borrower The Importance of Creating a Budget

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Debt Management for the Real World

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  1. Debt Management for theReal World Kim Siwarski Access Group and Colleen MacDonald SimpleTuition

  2. Agenda • Starting Debt Management at Enrollment • Helping the Responsible Borrower • Helping the Not so Responsible Borrower • The Importance of Creating a Budget • Understanding How Decisions of Today Alter Your Financial Future • Beyond Exit Counseling

  3. Debt Management Early and Often • Financial worries distract from education • Average undergrad student loan debt is now $20,000+ • 1 in 3 recent grads have additional credit card debt of $ 10,000 or more • Poor credit scores contribute to much higher payments on private student loans, decreased employment opportunities Source: Decision Partners Financial Literacy 101 webinar (2009)

  4. Do you currently provide your students debt management Information?

  5. When do you provide Debt Management information?

  6. Types of Students

  7. Student Borrowing Breakdown

  8. Beyond Exit Counseling • Market workshops to your students • It’s all in the Title • Money Attitude (Towson University) • Dollars and Sense (Cal State- Northridge) • Red to Black (Texas Tech) • Cash Course (State University at Buffalo) • How to Make School Cheaper (Monterey Institute) • Communicating benefits • Survey students to find out what is important • What are you doing?

  9. Make It Meaningful: Use Salaries • Why to use them • Helps students with their financial realities • May affect job choice • Where to get them • Career Development Office’s Employment Report • www.careeroverview.com/salary-benefits.html • www.salary.com • www.payscale.com/research/US/All_People_in_All_Surveys/Salary

  10. Examples Earnings with RepaymentFirst Year Public Sector Lawyer’s Salaries (Non-federal) Source: NALP 2007 Public Sector and Public Interest Attorney Salary report. http://www.nalp.org/press/details.php?id=63. Loan payment based on 6.8% term for 10 years at 8% of gross salary

  11. Examples Earnings with Repayment First Year Salaries For Associates at Private Firms Source: NALP 2007 Public Sector and Public Interest Attorney Salary report. http://www.nalp.org/press/details.php?id=63. Loan payment based on 6.8% term for 10 years at 8% of gross salary

  12. Starting Salaries after Graduation A Glimpse at the Future Source: http://www.payscale.com/best-colleges/top-colleges.asp

  13. Relating to Archetypes • Discuss Loan Repayment options by Types of Jobs Post Enrollment • May lessen the anxiety by depersonalizing choices • Draws from shared experiences & uses common themes

  14. Standard Repayment • Pays based on the lender/servicer payment schedule. • May benefit from borrower incentives, but did not count on them. • Plans to pay on time, assuming minimum monthly payment over the entire life of loan Extended Repayment • Wants to pay the least amount of interest as possible • Is willing to request extended repayment. • A Person who will prepay • Understands prepayment on highest interest rate loans first. • Examples Careers • General Manager • General Practitioner • History Professor • Boutique Small Firm Lawyer • Examples Careers • Investment Banker • Surgeon • Economics Professor • Corporate Lawyer

  15. Graduate Repayment • A Person who needs the lowest payment possible at the beginning. • Assumes their income will increase dramatically within 5 years of graduation. • Is willing to consolidate to minimize monthly repayment. • If ever in a position to pre-pay, will plan to at that time. Income Based Repayment • Qualifies based on 15% of his or her household AGI above 150% of the poverty line for his or her family size. • Assumes they will meet the criteria for Loan Forgiveness because they will work qualifying employer for 10 years. • Knows that they are good at annual paperwork and documentation. • Examples Careers • Entrepreneur • Private Practice • Biotech Academic Researcher • Sole Proprietor Private Practice Lawyer • Examples Careers • Non-profit Manager • Doctors without Borders • State Historian • Public Interest Lawyer

  16. Compare the Options$60,000 Stafford Loan Balance Assumptions: 6.80% fixed interest rate and No payment incentives

  17. Questions????? Kim Siwarski Director, External Sales and School Services: ksiwarski@accessgroup.org Colleen MacDonald Assistant VP School Channel Sales: cmacdonald@simpletuition.com

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