Helping Students Plan for Financial Success

1. WASFAA 2013 – Discovery in the Desert Helping Students Plan for Financial Success • Presented by: • Jack Edwards • Stanford University, Graduate School of Business • Colleen MacDonald • SimpleTuition

2. Enrollment GSB

3. COA = $87,081 ($55,200 tuition) • 75% – 80% apply for Financial Aid • 55% – 60% receive Fellowship Fellowships awarded based on demonstrated financial need. Loans available for both domestic and international students. MBA Program

4. Program is geared for middle management who are sponsored by their employer. 1 year program Tuition = $108,000 Self sponsored only receive loans MS in Management

5. Receive full fellowship that covers tuition, health insurance and provides a living allowance stipend PhD Program

6. Financial Aid At the GSB • Understanding Your Credit Score • Budgeting • Mandatory Exit Counseling for Graduating students • Strategies for Loan Repayment Financial Literacy Programs Geared to financial success

7. Example of What Workshop Could Be: Strategies for Loan Repayment

8. Balancing Wealth and Debt • Understanding Your Indebtedness • Assess your qualification for payment by someone else • Creating Your Plan • Reviewing Your Options • Repayment Plans • Consolidation Getting on the Same Page

9. You can view your debt as a portfolio that you can leverage to achieve your financial goals • You may choose to pay off your debt … • As fast as you can, OR • More slowly based solely on what you can afford due to your living expenses, OR • More slowly to maximize your ability to save and/or invest for the future Managing Your Debt

10. Build a rainy day fund • Prioritize your debts • Compare the annual return on investments to interest rates on debt • Consider tax implications • Mortgage interest payment typically tax deductible • Ordinary investments generally subject to income taxes • Tax deferred investments • Think about future financial obligations http://www.wikihow.com/Decide-Whether-to-Invest-or-Pay-off-Debt Balancing Wealth and Debt

11. Federal guidelines – payments should equal 8%of before-taxincome • Rule of thumb - Maximum payment 20% of before-taxincome How much should I be paying to student loans?

12. Housing – 23-33% • Life and Car Insurance – 4-6% • Food - 12-20% • Transportation – 7-10% • Student Loan Repayment – 1- 20% • Personal Debt Repayment – 1-8% • Entertainment and Recreation – 4-6% • Clothing – 4-7% • Savings – 5-10% • Medical – 3-5% Favorite Budget Calculator: • http://www.oprah.com/money/Suze-Ormans-Monthly-Expense-Budget-Calculator Budget Planning

13. What do I owe? • Federal Perkins – 5% fixed rate • Federal Subsidized Stafford - 6.8% fixed rate* • Federal Unsubsidized Stafford - 6.8% fixed rate • Federal GradPLUS – 7.9% fixed rate • Federal Consolidation - up to 8.25% • Private Loans - ranging from under 3.0% to 11% *Rate may vary for undergraduate loans Uncertain? • Contact the Financial Aid Office for assistance • Find your federal loans on www.nslds.ed.gov • Review credit report for Private Loans Where am I?

14. Public Service Loan Forgiveness • Loan Repayment Assistance Programs • Stanford GSB Programs http://www.gsb.stanford.edu/finaid/forgiveness/ • Federal and State Jobs and Community Organizations http://www.finaid.org/loans/forgiveness.phtml • List of programs for legal professionals http://www.americanbar.org/groups/legal_aid_indigent_defendants/initiatives/loan_repayment_assistance_programs.html • List of programs for medical or health professionals https://services.aamc.org/fed_loan_pub/ • Searchable list by state of teacher programs http://www.aft.org/yourwork/tools4teachers/fundingdatabase/ • Perkins Loan Cancellation Options • Rewards Programs • SmarterBucks www.smarterbucks.com • Upromise www.upromise.com Repayment Assistance

15. Define your financial goals • Develop an affordable budget plan • View your debt as a portfolio • Assess your qualification for loan forgiveness • Finally, select the repayment plan that best meets your needs Choosing Your Repayment Plan

16. If you want to pay the least amount of total interest over the life of repayment • Standard Repayment Plan with a 10-year repayment schedule will result in the least amount of interest paid If you want the lowest possible monthly loan payment • Income Driven Repayments may calculate the lowest monthly payment for those who qualify, but it could result in negative amortization and that will add to the total debt being repaid • Graduated Repayment Plan monthly payments steadily increase every 2 years • Extended Repayment Plan over 25 years will result in a lower monthly payment than Standard Repayment over 10 years without the possibility of negative amortization • Loan Consolidation may be used in combination with income driven Direct Loan Repayment Plans Easy Difficult Easy Easy Moderate

17. See side-by-side calculations of the variety of repayment options PayBackSmarter.com Demonstration • Free, all-in-one repayment calculator

18. You have the right to make prepayments on your federal student loan(s) without penalty • Pay more than the minimum amount required ormake an extra payment at any time • Reduces interest paid over the life of repayment • When prepaying on a loan: • Verify where your prepayment should be mailed and include written explanation as to how the prepayment is to be applied • Request that your prepayment be applied to principal, if permitted • Prepayments typically should be targeted at your loans having the highest interest rate Loan Prepayment

19. Combines one or more education loans into single, new loan with new loan terms and conditions. • May lowers payments based on new interest rate of through extended repayment periods (up to 30 years). • Credit-based and generally require strong credit to be obtained • Rates vary depending on • Credit history • Credit score • Debt to income ratio • Fixed vs.. variable • Other factors Private Loan Consolidation or Refinancing

20. Accelerate debt payoff using the rollover method • Make extra payments on your first debt • Once first debt is paid off, use the freed-up payment amount to pay down the next debt even faster. • Continue the process (building like a snowball) until all debts are paid off. • Method works for all forms of debt. Favorite Debt Snowball Calculator: http://financialmentor.com/calculator/debt-snowball-calculator Debt Snowball Calculator

21. Knowing how much you have to repay and to whom • Understanding the terms and conditions of your loans, your options in repayment, and your rights and responsibilities as a borrower • Keeping good financial records • Defining your goals • Developing an affordable budget plan • Selecting the repayment plan that best achieves your goals given your budget plan Successful Repayment Means...