WASFAA 2013 – Discovery in the Desert

HELPING STUDENTS PLAN FOR FINANCIAL SUCCESS

Presented by:Jack EdwardsStanford University, Graduate School of BusinessColleen MacDonaldSimpleTuition

GSB

Enrollment

2

MBA Students

820 Full-time

MSM Students

81 Full-time

PhD Students

04 Full -time

MBA PROGRAM

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.

3

MS IN MANAGEMENT

Program is geared for middle management who are sponsored by their employer.1 year programTuition = $108,000Self sponsored only receive loans

4

PHD PROGRAM

Receive full fellowship that covers tuition, health insurance and provides a living allowance stipend

5

FINANCIAL LITERACY PROGRAMS GEARED TO FINANCIAL SUCCESS

Financial Aid At the GSB Understanding Your Credit Score Budgeting Mandatory Exit Counseling for

Graduating students Strategies for Loan Repayment

6

STRATEGIES FOR LOAN REPAYMENT Example of What Workshop Could Be:

GETTING ON THE SAME PAGE Balancing Wealth and Debt Understanding Your Indebtedness Assess your qualification for payment

by someone else Creating Your Plan Reviewing Your Options

Repayment Plans Consolidation

MANAGING YOUR DEBT 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

BALANCING WEALTH AND DEBT 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 obligationshttp://www.wikihow.com/Decide-Whether-to-Invest-or-Pay-off-Debt

HOW MUCH SHOULD I BE PAYING TO STUDENT LOANS?

Federal guidelines – payments should equal 8% of before-tax income

Rule of thumb - Maximum payment 20% of before-tax income

BUDGET PLANNING

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

WHERE AM I?

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

REPAYMENT ASSISTANCE 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

SmarterBuckswww.smarterbucks.com

Upromisewww.upromise.com

CHOOSING YOUR REPAYMENT PLAN

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

DIRECT LOAN REPAYMENT PLANS

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

Easy

Difficult

Easy

Easy

Moderate

PAYBACKSMARTER.COM DEMONSTRATION

See side-by-side calculations of the variety of repayment options

Free, all-in-one repayment calculator

LOAN PREPAYMENT

You have the right to make prepayments on your federal student loan(s) without penalty

Pay more than the minimum amount required or make 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

PRIVATE LOAN CONSOLIDATION OR REFINANCING

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

DEBT SNOWBALL CALCULATOR

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

SUCCESSFUL REPAYMENT MEANS...

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