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CFA SOCIETY OF PITTSBURGH

CFA SOCIETY OF PITTSBURGH. Student Loans. High School Financial Literacy. STUDENT DEBT The Facts. 44.2 Million Americans have student loan debt. Delinquency rate is 11.2%. Since 1980, tuition costs at public universities have risen from $2000 to $9,410…a Jump of 344%!

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CFA SOCIETY OF PITTSBURGH

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  1. CFA SOCIETY OF PITTSBURGH Student Loans High School Financial Literacy

  2. STUDENT DEBT The Facts • 44.2 Million Americans have student loan debt. • Delinquency rate is 11.2%. • Since 1980, tuition costs at public universities have risen from $2000 to $9,410…a Jump of 344%! • Average Cost Per Year 4 Year Private: $50,900 • Average Cost Per Year 4 Year Public: $25,290 • So What’s the lesson? • It’s about how much you can afford! • Not about how much you can borrow

  3. Basics of a Loan Basics of a Loan • Lessens the burden of paying cash outright • Personal Loan • How are rates established? • Credit rating is considered: high credit score= low risk! • Variable interest rate loan changes • Payments can also change • Fixed interest rate loans do not change • Fixed Versus Floating

  4. Federal Vs. Private Loans Important to know the difference William D. Ford Direct Loan Program Major Difference= cost and credit scores What’s better? You tell me

  5. Grant, Loan, or Scholarship? • Grants & Scholarships are “gift aid” • Grants are need based • Scholarships are merit based • Can come from the federal government, state government, your college, or private organization • Pell Grants • Unlike a loan, grants and scholarships don’t need to be paid back! • Meet the requirements and deadlines! Thank the donors! How do I Maintain the Scholarship or Grant?

  6. Options for Repayment Methods for Paying Off Loans • Scholarships • Grants • Cash • Other Loans (Not suggested)

  7. Who Else Offers Student Loans? • Many institutions offer loans • Most notable are banks • Discover • SunTrust • Citizens Bank • PNC • Ascent • These are more costly!

  8. Types of Loans

  9. Subsidized Vs. Unsubsidized Subsidized vs. Unsubsidized • Federal government pays the interest for Direct Subsidized Loans • Accrues as soon as it is taken out (just like most loans) • Undergraduates who don’t qualify, may borrow Unsubsidized Loans • No subsidy • How are they Distributed? (In this Order) • Tuition and Fees • Room and Board • Other charges with your permission • These Loans are LEGAL AGREEMENTS • Must sign a Master Promissory Note

  10. Parent PLUS Loan Parent loan for undergraduate students Government backed Enrolled Half-Time Not based upon financial need Parent applies for loan and is responsible for repayment Graduate students may borrow as well

  11. Stafford Loan • Most common type • Backed by US Government • Subsidized and unsubsidized

  12. Stafford Loan cont. Subsidized Unsubsidized No subsidy, payments still deferred Annual limit: $5,500-$12,500 Cannot exceed $138,500 Medical students: $40,500 annually, $224,000 total • Payments upon graduation • Government covers interest (in school) • Family income less than $50,000 • Cannot accrue more than $23000

  13. FAFSA

  14. Free Application for Federal Student Aid • Fill out to determine need!

  15. Where are My Loans!? • Here’s a step-by-step guide • Go to studentloans.gov • Sign in

  16. Where are My Loans cont. 3.View My documents

  17. Where are My Loans cont. Where are My Loans cont. • 4. “Filter by Disclosure Statements” • 5. Click on a year

  18. Where are My Loans cont. • 6. “View and Print Disclosure Statement” • 7. View type of loan, amount, and interest rate!

  19. Where do I Start? How to Apply for Federal Loans • Complete the FAFSA (or renewal FAFSA) • Review Financial Award Letter • Contact School’s Financial aid office • Review and sign paperwork (MPN) *Parental guidance is recommended

  20. I Graduated! Now What? Methods for Paying Off Loans • Compare interest rates • Pay off loans with the highest interest rate first • Make minimum payments on others Refinancing is an Option • Interest rate on a private loan too much? • It’s possible to refinance at a lower rate

  21. Importance of Loan Payments • Ex: Graduate with $25,000 personal loan • Interest Rate: 7.5% • Minimum Payment: $200 per month • Time Period of Repayment: 244 Months (20 years) • Ex: Graduate with $25,000 personal loan • Interest Rate: 7.5% • Chosen Payment: $850 per month • Time Period of Repayment: 32 Months (2.7 years) • Interest Paid Scenario 1: $24,000 • Interest Paid Scenario 2: $2,700

  22. What’s the Point? • Affordability vs Excessive Borrowing • Determining if college is right for YOU

  23. Questions?

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