Financial Literacy: Key to Retention and Default Prevention Fall 2012 NCASFAA Conference

1. Financial Literacy: Key to Retention and Default PreventionFall 2012NCASFAA Conference

2. What Is Financial Literacy? Why Is It Important? The ability of individuals to make appropriate decisions in managing their personal finances effectively Financial Literacy is critical for a healthy, sustainable economy and culture Understanding financial responsibilities and managing money can have a positive impact on repaying education loans!!

3. Financial Literacy – or Illiteracy Statistics • High School students’ survey administered to 6,856 12th graders (Jump$tart Coalition for Personal Financial Literacy, 2008) • The majority of high school students were unable to answer basic financial questions regarding credit, savings, interest, and insurance. • Correctly answered 48.3% of the questions • Lowest score since 1997 • Highest score ever was 57% - still considered failing - in 1997

4. Financial Literacy – or Illiteracy Statistics • College students’ survey administered to 1,030 full-time students (Jump$tart Coalition for Personal Financial Literacy, 2008) • Correctly answered 62% of the questions • College freshman correctly answered 59% of the questions • College seniors correctly answered 65% of the questions

5. Sample survey question – Jump$tart Coalition Sara and Josh just had a baby. They received money as baby gifts and want to put it away for the baby’s education. Which of the following tends to have the highest growth over periods of time as long as 18 years? A checking account Stocks A U.S. Government savings bond A savings account B. Only 16.8% of high school students and 19.2% of college students feel stocks are likely to have a higher return than all other choices…over an 18 year period.

6. Sample survey question – Jump$tart Coalition Many young people receive health insurance benefits through their parents. Which of the following statements is true about health insurance coverage? You are covered by your parents’ plan until you marry If your parents become unemployed, your insurance coverage may stop Young people don’t need insurance b/c they are healthy You continue to be covered by your parents’ plan as long as you live at home, no matter your age B. Only about 40% of high school students got it right. What’s scarier is that 33% answered “D”. 70% of college students answered correctly.

7. 2012 Financial Literacy Statistics – North Carolina

8. Financial Literacy Statistics – Postsecondary • The top five stressors for currently enrolled college students are: - the need to repay loans - the cost of education - borrowing money for college - the need to find a job after school - the academic challenge of course work • (Inceptia- Financial Stress: An Everyday Reality for College Students 2012)

9. More Statistics... • 1st year students more stressed than the average college student when it came to Cost of Education and Cost of Living • Overall, one third (34 percent) of respondents said financial stressors have had a negative impact on their academic performance or progress • Another 20 percent report they have had to reduce their course load due to these same stressors • (Inceptia - Financial Stress: An Everyday Reality for College Students 2012)

10. Financial Literacy Resources And Tools NEFE Tools America’s Promise Alliance Federal Government Resources Mapping Your Future Tools Cash Course Other Resources Get Financially Fit! CFNC Resources

11. National Endowment for Financial Education (NEFE) • Educate high school students about money management and financial planning • Help teens develop positive behaviors • Curriculum materials • Sponsors Include • Cooperative State Research, Education & Extension Service • USDA • Credit Union National Association, Inc. • America’s Credit Unions • Nefe.org

12. America’s Promise Alliance • Teach middle school and high school students about financial responsibility • Set of curriculum materials • Founded in 1997 • General Colin Powell is the Chairman • Partnership of over 400 organizations • Americaspromise.org

13. Federal Government Resources • U. S. Treasury • National Financial Capability Challenge (annual) • Educator’s Toolkit • mymoney.gov

14. Mapping Your Future • Budget Tools • Calculators • Show Me the Future Game - geared for younger students • Entrance and Exit Counseling • Mappingyourfuture.org

15. Cash Course Financial education resources for colleges Sponsored by NEFE Cashcourse.org

16. Other Financial Literacy Resources • practicalmoneyskills.com • financiallit.org • nslp.org • tgslc.org • usafunds.org • mygreatlakes.org

17. Get Financially Fit! • “How-to” Financial Education Toolkit – to develop a financial literacy program on college campuses • newyorkfed.org/regional/projects.html • Funding for this project provided by: • American Council on Consumer Interests • Federal Reserve Bank of New York • Association for Financial Counseling and Planning Education • Direct Selling Education Foundation

18. Did You Know… • Americans are more in debt today than any other time in history • Average college graduate has nearly $25,000 in student loan debt • The average student graduates with a credit card debt of around $4,000 • 1 in 3 students graduate with $10,000 or more in credit card debt

19. Top 5 things HS Students spend their money on

26. How did you do? If you chose mostly: • A answers – You put off making money decisions. • B answers – You like to see your money make money. • C answers – You enjoy spending and think little about how to pay for your purchases

27. How did you do? • D answers – You care about others who have less than you do, and you often feel guilty about having more than they do. • E answers – You like to save every penny. You do not enjoy spending money.

28. Financial Literacy Education Components • What is financial health? • Budget tools • Calculators – savings, credit card debt, loan repayment • Using credit responsibly • Borrowing to finance an education • Setting financial goals • Information about financial institutions, identity theft, etc. • Assessment tool

29. An Example: CFNC.org Financial Literacy Tools

31. Financial Literacy Scholarship – Decision Partners A $500 scholarship awarded randomly to two students per year who complete the Financial Literacy 101 or AMM course at CFNC.org. Eligibility Requirements: • Contest begins on July 1st of each year • Deadline is June 30th of each year • Be a NC resident • Be accepted for enrollment or currently be a student at accredited college or university • Complete FL 101 or AMM course at CFNC.org with a 80% or higher score

32. Financial Literacy – Elementary Students Videos Goals Money Grows Spend or Save

33. Financial Literacy Online, interactive course Multi-media or text Tools to help you make wise money management decisions Calculators Fact sheets

34. Financial Literacy 101 and AMM Course Topics

35. Building Blocks Of Financial Health

36. Budgeting 101 Identify income Identify expenses Remember the different types of expenses Fixed Variable Periodic Pay Yourself First! Funds transfer to a savings account Payroll deduction Internet transfer Envelope method

37. Budget Calculation Tool

38. Real World Calculator

39. Credit Cards - The Good, The Bad, And The Ugly When it is appropriate to use credit (for example, an emergency) What happens if you only make the minimum payment or run up the balance What happens if you fail to make payments Credit Card Calculator

40. Credit Report Basics Know what’s on your credit report! You should check it at least ONCE per year! What creditors are looking for: -On time payments -Your mortgage payments -Available credit on your credit cards -Total debt outstanding Missing even one credit card payment can knock your score down 50-100 points.

41. Credit Card Repayment Calculator

42. Investing in Your Education

43. Education Loan Repayment Calculator

44. Smart Borrower Calculator

45. Set Your Financial Goals Write your goals down!

46. Additional Resources - Text

47. Assessment Online quiz Questions asked after certain topics Certificate of completion

48. Additional Resources - Fact Sheets

49. Financial Literacy Games on CFNC.org

50. Financial Aid Administrator Access – Master Control Panel Homepage