Archive | May, 2017

Savings Tips for Summer Utilities

30 May

With Memorial Day behind us, it’s finally summer (technically summer doesn’t actually begin until June 21st)! That means spending days on the water, grilling burgers, getting some sun and… higher utility bills.

You can’t do anything about the heat and humidity, and unless you want to be miserable for months you will need to turn on the A/C. Rather than saving money by sitting alone in the dark all of the time, use these tips to help keep your utility bill in check.

Unplug what you don’t use

If it’s plugged in to the wall and not a power strip, it’s going to be using power! Unplug those phone charges, lamps that are really just for decoration, and other appliances when you’re not actually using them.

Use ceiling fans (properly)

Useful for regulating temperature in both winter and summer, ceiling fans can give you a nice breeze if they are set the right direction. Remember that fans only cool you down if you can feel the breeze from it! If you can’t feel the wind coming off the fan, it is actually wasting electricity.

Shut unused vents

Have a room that you don’t use or that roommate moved out for the summer? Close the vents in that room. There’s no reason to pay to keep a room that’s always vacant at a comfortable temperature.

Master the thermostat

If you have a programmable thermostat, adjust it to make it cooler when you’re home. 5 minutes reading the manual can save you significantly! If you have one that can’t be programmed, make a habit of adjusting it if no one will be home.

Embrace the darkness

Make your parents proud by shutting the lights off behind you when leave the room! If you’re playing video games or watching Netflix, you can turn the lights off too and enjoy the screen in all its glory.

Friends have benefits

Have a friend whose utilities are included in their rent? As long as they are cool with it, they may now be living in the new go-to hang out spot.

Laundry savings

Wash your clothes exclusively in cold water and skip the dryer. Hang a clothes line and let your clothes air dry. If a clothes line isn’t an option, consider some sort of drying rack.

Avoid using the oven

Using the oven can heat up a kitchen real quick. If you have a toaster oven, it can be a great substitute that creates much less heat. However, don’t use this as an excuse to eat out! It only takes a couple meals out to blow through what you have saved from doing everything on this list.

The Impact of the Potential Cut to Subsidized Student Loans

24 May

Casey Doten, Financial Aid Administrator – Purdue University

The newest federal budget proposal has proposed reductions to several federal student aid programs including cuts to Pell Grants, Work Study, and ending the Perkins loan program, Federal Supplemental Education Opportunity Grant (FSEOG), Public Service Loan Forgiveness, and subsidized federal loans to students. This budget proposal in its current state would have a direct financial impact upon any student with financial need, not just those in the lowest income brackets.
Cuts to Sub Loan.jpg

Ending subsidized federal loans would likely have the widest impact of the proposed cuts as there are currently over 29 million borrowers of these loans.

Subsidized loans are one of the most common forms of financial aid available to students who demonstrate financial need. They differ from unsubsidized federal loans because interest does not accrue on them while the student is still in school. If a student takes out a $3,500 subsidized loan their freshman year, it will still be $3,500 when they leave school while an unsubsidized loan would have accrued an extra $612 of interest in that time.

The difference becomes more stark when you compare subsidized versus unsubsidized over four years. A student taking out the maximum in federal loans each year for four years would borrow $27,000, of which $19,000 is subsidized. That student would have $27,785 of debt when leaving college versus a student who only had unsubsidized loan (which is what the budget proposal would lead to) would owe $29,353 when entering their grace period on the exact same amount borrowed, with the exact same interest rate.

Once a student begins repayment, all of that accrued interest gets added on to their loan balance and further gathers interest. For a student using the most aggressive payment plan, they will pay $2,081 more over the life of the loan because their loans were not subsidized.

Keep in mind these figures use interest rates from the past several years. Since student loan interest rates are keyed off treasury bonds rates, if the economy were to increase at the rate projected in the budget then student loan interest rates raise even higher as treasury bonds interest increases. This would further exacerbate the difference between subsidized and unsubsidized loans.

While graduating in four years is considered the norm, only 36% of students pursuing bachelor’s degrees do so. If a student takes even one more year to get their degree, the time for their interest to accrue becomes even greater. Loans for these students who can receive subsidized loans totals $32,341 on graduation, while unsubsidized-only adds up to $35,305. These two groups have a $3,513 difference in the life of the loan.

All told, subsidized loans would collectively save the 29.5 million current borrowers $45.5 billion assuming they all graduated in four years. That number only grows higher when realizing that many students take more than four years to graduate.

How to Have a Successful Move-in Day at Purdue

23 May

By Bryttani Watson, Residence Education Coordinator for the Honors College & Residences

MainJourney

move in day gateway-arch.jpgSummer goes by faster than you might imagine, so it’s important to start thinking about move-in before August rolls around. You’ve elected to be a Boilermaker, and to live on campus, which is a wise choice. It’s been proven that those who live on campus adjust to college life and persist to graduation at a higher rate than those who live off campus. All that’s left is to pack your bags, move in, and embark on a wonderful year at Purdue University.

Whether this is your first year living on campus or your fifth, move-in can be busy, and stressful if you’re not prepared. Here are some helpful hints to make your move-in a success:

1. Label Everything. From the box of books to the bags (and bags, and bags) of clothes, label everything with your first initial, last name, and room number. Having your items properly labeled will provide Boiler Gold Rush team leaders (if you’re a first-year student) with the information they need to deliver your belongings to your room, thereby avoiding any doubt or forgetfulness.

2. Pack Light. More than likely, you won’t be able to fit EVERYTHING from home in your new residence hall room, so don’t overdo it. You shouldn’t need a 26-foot U-Haul. You can stock up on toiletries, snacks, and other necessities after you’ve moved in, so we suggest only bringing the essentials.

3. Review A Campus Map/Download the Purdue App. It’s important to know where you’re going as best as you can. You can check out University Residences’ Facebook page for updates on traffic and construction around town, especially the State Street Project. There will be several signs, police officers, and staff members who can help point you in the right direction if you get turned around.

You can also download the Purdue app on your smartphone. It’s complete with a campus map, access to your myPurdue account and email, and other useful functions, as well.

4. Be Early. Be Patient. With nearly 40,000 students attending Purdue and 13,000 living on campus, West Lafayette and surrounding areas will be busy, so getting in ahead of schedule can’t hurt! Traffic can be horrendous, so try your best to be patient and allow yourself plenty of time to arrive on campus. At the end of the day, you can kick back knowing that you’re all moved in.

5. Eat Breakfast/Lunch Before You Arrive. With the time spent waiting in lines and moving everything into the residence hall, you will be tired and hungry, maybe even hangry. Eat a good meal before embarking on move-in and bring snacks, because before you know it, you’ll have missed second breakfast, lunch, and maybe even diner.

6. You Check-In. Don’t Send Your Parents or Guardian. University Residences needs you to be present. We have a lot of information to give you and it’s not your mom or grandma who will be living with us all year, it’s you! Plus, someone needs to stay with the car.

7. Bring Your ID. Ideally, we ask that you bring your Purdue ID with you, but if you have yet to receive your ID card, a driver’s license or passport will be sufficient. Be sure not to leave your purse or wallet in the car, or worse, pack your ID in a box somewhere.

8. Communicate. If you separate from your parents, make sure you have a game plan for meeting up later. Nothing is more frustrating than a full cart and nobody to tell you what room to go to (although, this shouldn’t be a problem because you labeled all of your items, right? See tip No. 1).

9. Don’t Be Afraid to Ask Questions. Staff could not be more excited that you are moving in and all they really want to do is help. From resident assistants to hall administrators, we want to make the move-in experience as stress-free and wonderful as possible, so if you need anything, please let us know.

We’ll see you in August!

Video

How Do I Get a Perfect Credit Score?

18 May


John Ulzheimer from Credit Card Insider answers credit questions weekly on Credit Card Insider’s YouTube channel.

A “perfect” credit score, or even a FICO score above 800, sounds wonderful – but just how useful would it be? It turns out that you won’t really get any benefit from those last few points, because lenders are prepared to offer their best rates to people with lower scores. But, if you are going for perfect but can’t quite get there, it’s probably due to your average age of accounts. This is a component of your score that can only be maxed out by spending decades being a responsible credit user, so you’ll just have to wait.

Have more credit questions? Be sure to check out Credit Card Insider’s guide to credit and cards, or their blog!

Federal Student Loans are Getting More Expensive This Year

15 May

Casey Doten, Financial Aid Administrator 

College can be an expensive investment. So it makes sense that many students have to take out loans in order to fund it. Unfortunately, borrowing federal loans for the 2017-18 just became a little bit more expensive.

The interest rates on all federal loans went up 0.69% for the 2017-18 school year. So undergraduates taking out Federal Direct loans for 2017-18 will be paying 4.45% on their loans, up from 3.75% in the 2016-2017 school year. This also impacts other types of federal loans: graduate Direct loans will increase from 5.31% to 6%, and PLUS loans for parents and grad students will increase from 6.31% to 7%.Interest rate increase.png

So how much more does this interest rate increase cost you?

A freshman taking out the federal limit of $5,500 in unsubsidized Federal Direct loans for the 2017-2018 school year will be impacted by the new, higher interest rate. Compared to those freshman who started a year before, the 2017-2018 freshman will accrue $161 over their four years of college, (plus their post-graduation grace period) before they even begin making loan payments. For a student who doesn’t take 15 credits every semester, that number will only grow higher.

Once repayment begins, interest is also applied to that $161 that accrued while the loan was in deferment. So that extra 0.69% in interest ends up costing $456 more over the life of the loan if the student uses the standard 10-year payment plan, which has the lowest total interest paid. The grand total repaid at the new, higher interest rate is $8,134 on the original loan of $5,500.

Unfortunately, this means paying $456 more than students who began only one year earlier for the same loan.

Keep in mind that this change only impacts loans which are being taken out for the 2017-2018 school year. Any federal student loans already taken out and disbursed before July 1, 2017 will not be effected by this change.

However, variable interest rate private loans from previous years may also be increasing. While the change in federal loan interest does not cause private loans to change, they both calculate their interest rates based off the Treasury Department’s auction of 10-year notes. This means that when federal loan interest rates rise, old private loans with variable interest rates can similarly expect to see an increase.

If you want to calculate your own loans for the 2017-2018 year, use a two-step process:

  1. Input your loan information into the Accrued Interest Calculator along with how many months until repayment begins (this is often years until graduation plus three months). This will give you the loan’s balance when repayment begins.
  2. Plus those loans into the Federal Student Aid repayment calculator and see what your repayment is, including information on the different payment plans available.

Even with the higher interest rates, Federal Direct loans are almost always a better option than private loans. They typically have lower interest rates and more flexible repayment plans to go along with fixed interest rates.

While this increase in interest shouldn’t dissuade you from making the investment in your education, hopefully it gives you the opportunity to think about how much you may borrow. Anything borrowed has to be paid back, with (higher) interest.

Which Student Loan Repayment Plan is Right For You?

12 May

All information on repayment plans is from this article by David Evans, Ph.D.
Additional info added by Casey Doten, Purdue Financial Aid Administrator

Congratulations on your graduation! It’s an exciting time as you move into new jobs and new places! However, something from your past will be coming back soon – your student loans. Six months after leaving school most student loans are due for repayment. By default you are put into the the Standard Repayment Plan (which is also the most aggressive repayment option), but you have more options! Choose which Federal Loan repayment plan is the best one for your life.

There are two main types of repayment plans you can choose from: traditional and income-driven. For borrowers that will qualify for Public Service Loan Forgiveness (PSLF), income-driven plans may be the better option. Income-driven plans will require an annual verification of income. This fact sheet describes each of the repayment plans as well as pros and cons of each. For more information about each of the repayment plans visit the Federal Student Aid website.

Traditional Plansstudent-loan-repayment-plans

Standard Repayment Plan

The Standard Repayment plan consist of equal monthly payments over a 10-year period of time. This repayment plan is good for those who can handle making their monthly payments and make enough money to afford them. This payment plan is best for those who have minimal other debts and start working right out of school.

The Pros: You’ll pay off your loan faster compared to other plans, and pay less interest as a result.

The Cons: Your monthly payments will be higher than those made through other plans.

Graduated Repayment Plan

The Graduated and Extended Repayment plans could be an option for you if your income is low when you graduate but will increase quickly. Under a graduated plan, payments start out low and increase during the repayment period, usually every two years. This is a good plan if you can’t afford your current payments but know you will make more money in the years to come.

The Pros: Your loan is still paid off within 10 years.

The Cons: You’ll pay more interest over the lifetime of your loan compared to the Standard Plan.

Extended Repayment Plan

An Extended Repayment Plan is an option if your loan amount is more than $30,000 and you want to stretch your repayment to 25 years.

The Pros: Smaller monthly payments (since they’re spread out over as many as 25 years) and more time to pay off your loan.

The Cons: You’ll be saddled with payments for a longer period of time as well as pay more interest.

Income-Driven Plans

If you qualify for an Income-Driven plan, these are often the most attractive options if you’re willing to recertify your payment each year (it’s not very difficult). However, some of these are contingent on when you took out loans! If you’re interested in student loan forgiveness*, you’ll need to be enrolled in any one of these plans.

Income Based Repayment Plan

If you’re not making enough money to cover all of your monthly expenses the Income Based Repayment (IBR) Plan would be a good option. There are two separate calculations for IBR which are dependent upon when you took out your student loans.

The Pros: The IBR plan takes into account your annual income as well as your family size. Your payment will be 10% of your discretionary income** if you were a new borrower on or after July 1, 2014. Otherwise it will be 15%. Any outstanding balance on your loan will be forgiven after 20 (for undergraduate loans) or 25 (for graduate loans) years.

The Cons: You will have to pay income taxes on any forgiven debt unless you qualify for PSLF (this is true for all loan forgiveness).

Income Contingent Repayment Plan

If you have a federal Direct Loan (other than a PLUS loan), you could opt for the Income Contingent Repayment (ICR) Plan. Your payments could be as low $5 or even $0.

The Pros: Your monthly payment will be the lesser of 20% of your discretionary income or on a repayment plan with a fixed payment over 12 years. You can have your remaining loan balance forgiven after 25 years of regular payments.

The Cons: You’ll pay more over the lifetime of your loan than you would with a 10-year plan, your payment could be lower than the monthly accrued interest and your loan principal will grow. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

Income Sensitive Repayment (ISR) Plan

The Income Sensitive Repayment (ISR) Plan is only available for those with Federal Family Education Loan (FFEL) Program. Payments are based on your annual income, family size, and total loan amount. You would pay the loan off in fifteen years.

The Pros: Each lender has their own calculation, but generally it is between 4% and 25% of your monthly gross income, although your payment must be greater than or equal to the interest that accrues.

The Cons: It’s only available for up to five years. After that time, you must switch to another repayment plan. You must reapply annually, and there’s no guarantee that you’ll have continued enrollment in the plan.

Pay as You Earn Repayment Plan

The Pay as You Earn Repayment (PAYE) Plan is another option for those not able to afford their current monthly payments.

The Pros: The PAYE plan takes into account your annual income as well as your family size. Your payment will be 10% of your discretionary income. Any outstanding balance on your loan will be forgiven after 20 years.

The Cons: PAYE is only eligible to those who were new borrowers on or after October 1, 2007 and must have received a disbursement of a Direct Loan on or after October 1, 2011. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

Revised Pay as You Earn Repayment Plan

The Revised Pay as You Earn Repayment (REPAYE) Plan is very similar to PAYE. This plan was created to allow more borrowers the opportunity to have their payments lowered to 10% of discretionary income.

The Pros: Not dependent upon when you took out your student loan, the payment will be 10% of your discretionary income. Any outstanding balance on your loan will be forgiven after 20 (for undergraduate loans) or 25 (for graduate loans) years.

The Cons: If you are married, your spouse’s income will be considered whether taxes are filed jointly or separately. You will have to pay income taxes on any forgiven debt unless you qualify for PSLF.

Summary

Federal student loans offer various ways for repayment. If you are in a situation (like so many others who have taken out student loans) that is not ideal for standard repayment of your loan, consider these options. There is a lot to consider when you are trying to decide which repayment plan to choose. Using the Federal Student Loan Repayment Estimator can help you make your decision by showing you what your payments would be under each of the plans described above.

*A note about loan forgiveness: There are two different kinds of loan forgiveness, Public Service Loan Forgiveness (PSLF) and loan forgiveness from your income-driven repayment plan ending. While both plans require you to be enrolled in an income-driven plan to reap the benefits there are some key differences:
-PSLF requires being employed at a qualifying employer in public service (non-profits, government, etc.) for 10 years/ 120 qualifying payments before forgiveness takes place. Standard forgiveness is after 20 or 25 years depending on your repayment plan.

-Any loan amounts forgiven under PSLF are tax-free, but not under standard forgiveness! So if you still have a balance on your loans after 20 (or 25) years, you will owe taxes on what is forgiven as if it is income. While it’s still better than paying the amount back, it’s important to know it will have ramifications.

**Discretionary income = Your income – 150% of the poverty level in your state for your family size

Dear Class of 2017, About Your Loans

10 May

From WiseBread New Graduate Help Center: Reyna Gobel, Student Loans Expert

girl surprised by letter

 

Dear Not-Yet-In-Trouble Federal Student Loan Borrower,

You might have heard that the Department of Education will be sending out letters to millions of student loans borrowers. The letters target borrowers whose grace periods are ending, as well as borrowers who exhibit signs of trouble that could lead to defaulting on their loans. If you haven’t started repayment yet but are fretting about how you’re going to possibly repay all that money — stop worrying.

I’m writing you this letter to not only give you important details about student loan repayment, but also to help you be aware of potential issues well before trouble starts.

I Defaulted — Here’s How to Avoid My Mistakes

I defaulted on a federal student loan simply because I didn’t know it existed. I had over a dozen student loans from different lenders; I forgot about one loan and went into default. It’s easy to do, but it’s also easy to avoid. Just log in to the National Student Loan Data System. You’ll see all your federal student loans on this site, along with contact information. Either arrange to pay each individually, or consolidate them into one loan. This is also a great time to get a free credit report – it can alert you to any problems you might have, like having missed a loan or bill payment.

Then, know yourself. If you can’t keep track of each individual loan, you really need to consolidate them into one loan to streamline payments (ask your loan servicer about consolidation options). Once consolidated, you can still choose a plan where payments are based on income, such as Pay as You Earn. And if you’re interested in the public service loan forgiveness program, know that it’s only available through loans originated by or consolidated with Federal Direct Loans.

Realize That Even With the Pay as You Earn Plan, You Might Have Payment Problems

The income-based Pay as You Earn repayment plan bases payments on your income and family size, but it doesn’t fully consider your expenses if your circumstances change. For example, at some point, you may have to help support a sick parent or child. You could also have bought a home when your income was higher. After a pay cut, a majority of your income could go towards your mortgage.

If you experience a financial setback, you have three options:

  • Call your servicer and see if your Pay as You Earn payment amount can be adjusted. You have to supply your income annually, and you may have forgotten to do so this year, causing your payments to set based a higher income level.
  • Ask for a deferment or forbearance, which are temporary payment breaks. Taking a break should only be done if the situation isn’t permanent. Always take a deferment when possible over a forbearance when any of your student loans are subsidized. The government pays the interest on subsidized student loans during periods of deferment.
  • If your income is lower because you took family leave for six months, you may not want to change your plan. However, for long-term pay cuts where your income-based repayment is too high for your budget, you should ask your servicer to also calculate payment options and see which payment option offers the lowest monthly payment.

Don’t Feel Embarrassed If You Don’t Know Something About Student Loans

I wrote two editions of a 240-page book on student loans, and I still don’t know everything about them. I read articles and play with the student loan repayment calculators every day. There’s always something new to learn. For instance, the public service loan forgiveness employer verification form wasn’t created until after the first edition was released. Now, thanks to that form, you can find out if you qualify for the public service loan forgiveness program right away and register for it right after you start working or after you’ve already started repayment — the choice is up to you. Never be afraid to ask your servicer questions about any of these programs.

Talk to Your Friends Who Are or Will Be in Repayment Soon

I’m not the only person who has experience with and advice about student loans. Talking to your friends can help you figure out repayment options and possibly pick better ones based on their choices and experiences. Just remember, they might have different circumstances than you, such as income level, children, or other debt that impacted their choices. Therefore, you shouldn’t copy their decisions. But you’ll be more informed and learn questions to ask your servicer. Plus, they may have missed payments, recovered, and now have advice about that. Learn from others’ student loan mistakes and victories.

The Most Important Part of This Letter?

The help you get doesn’t end here. You can tweet me anytime — @ReynaGobel— and ask questions. My articles will be posted here every week. You can ask me questions in my CollegeWeekLive web chats or get more helpful advice in my book CliffsNotes Graduation Debt.

Finally, remember you never want to receive a “dear troubled borrower” letter. The second you think you might miss a payment, talk to your loan servicer about options for a payment break or new repayment plan. With federal student loans, that one call will likely save your credit.

Reyna Gobel is a writer, author, public speaker, and student loans expert.  Her financial advice appears on Wise Bread’s New Graduates Help Center, in her video course How to Repay Federal Student Loans, in CollegeWeekLive newsletters and keynotes speeches, and in her audiobook How Smart Students Pay for School, now in its second edition. Be sure to check out her website for more helpful information on repaying your student loans.

Budgeting for College Students

4 May

Keys to Successful Budgeting Step 1: Not simply to make a budget but to use critical thinking and analyzation. Ask yourself these questions. What are the highest priorities in your life? What’s most important to you? What kind of life do you imagine for yourself? Your priorities are personal Successful Budget is your deepest-held […]

via Successful Budgeting — PennyPinchers

So You’ve Graduated College: Now What?

3 May

Congratulations! You did it!

Graduated College NExt.jpg

As you’re taking your last finals, you can finally relax for a day before you start worrying about what comes next. You may have your future planned out perfectly, or maybe you were so focused on finishing you have no idea what comes next. Either way, that’s okay!

Searching for Jobs

The number one thing on most people’s mind post-college is the job search. The most common question during the job search: Which Jobs Should I Be Applying For? Between those tips and our Job Searching Pinterest board you should be good to go for all of your resume, cover letter and interviewing needs!

Where you live may be determined by your job search, or it might be the other way around! If you’re not sure where you’ll be laying your head, we help you weigh your options.

Student Loan Repayment & Forgiveness

Six months after graduation, your student loan repayment will come knocking. Even if you paid attention during your exit counseling, it’s likely you’ll run into questions you aren’t sure how to answer. Our first recommendation is not to panic, you’ll be okay!

You may be curious as to what your options are for student loan repayment and what might be best for you, but some inspiration from someone who is going through repayment might help your confidence.

If repayment starts to get away from you then you might have to deal with a default, which isn’t ideal but it’s not the end of the world.

If you became a teacher, you’ll probably want to check out the 4 loan forgiveness programs for teachers.

Grad School

Maybe instead of going into the working world, you’ve decided on grad school? Other than knowing your loans are going to stay in deferment (but gathering interest if not subsidized), you’ll want to stay on track of the graduate school application checklist.

Taxes & Credit

Nothing will make you feel more adult than having to pay taxes. But luckily your time in school has some tax advantages. Your school should provide a 1098-T form to use as an educational credit on your taxes for tuition you’ve paid, but once you start paying down interest on student loans you’ll also be able to use a 1098-E form!

Last, but not least, in the adult realm is credit! Luckily your student loan payments can help you build your credit. Understanding your credit score is going to be very important if you look into car loans or a mortgage for a house!

All in all, being in the adult world is pretty nice. You don’t have to worry about tests and homework, it’s a lot easier to find a nice life routine, and it’s a lot easier to have quality time with pets (or other humans). So use these resources well and make your transition into post-college as easy as possible!

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