Debt Management for the Real World Kim Siwarski Access Group and Colleen MacDonald SimpleTuition

Agenda Starting Debt Management at Enrollment – Helping the Responsible Borrower – Helping the Not so Responsible Borrower The Importance of Creating a Budget Understanding How Decisions of Today Alter Your Financial Future Beyond Exit Counseling Debt Management for the Real World

Debt Management Early and Often Financial worries distract from education Average undergrad student loan debt is now $20, in 3 recent grads have additional credit card debt of $ 10,000 or more Poor credit scores contribute to much higher payments on private student loans, decreased employment opportunities Source: Decision Partners Financial Literacy 101 webinar (2009) Debt Management for the Real World

Do you currently provide your students debt management Information? Debt Management for the Real World

When do you provide Debt Management information? Debt Management for the Real World

Types of Students Debt Management for the Real World

Student Borrowing Breakdown Loan Type Total Outstanding Debt Current est. monthly payment Total Paid over life of loan (includes interest) Amount paid in interest only Prior Borrowing History Perkins Loan$0 Stafford Loans$41,000$472$56,620$15,620 Grad PLUS$48,214$598$71,734$23,520 Private$0 Totals to date$89,214$1,070$128,354$39, A nticipated Loan Debt Perkins Loan$0 Stafford Loans$20,500$271$32,481$11,981 Grad PLUS/Private$13,970$169$20,251$6,281 Anticipated Totals for $34,470$440$52,732$18,262 New Total Repayment $123,684$1,510$181,086$57,402 Debt Management for the Real World

Beyond Exit Counseling Market workshops to your students – It’s all in the Title Money Attitude (Towson University) Dollars and Sense (Cal State- Northridge) Red to Black (Texas Tech) Cash Course (State University at Buffalo) How to Make School Cheaper (Monterey Institute) – Communicating benefits – Survey students to find out what is important What are you doing? Debt Management for the Real World

Make It Meaningful: Use Salaries Why to use them – Helps students with their financial realities – May affect job choice Where to get them – Career Development Office’s Employment Report – – – All_Surveys/Salary All_Surveys/Salary Debt Management for the Real World

Examples Earnings with Repayment First Year Public Sector Lawyer’s Salaries (Non-federal) OccupationMedian Salary * PaymentLoan Civil Legal Services$36,000$240$20,851 Public Defenders$43,300$288$25,022 Local Prosecutors$43,900$292$25,369 State Attorneys Gen’l$46,400$309$26,846 Public Interest Orgs.$40,000$266$23,110 Source: NALP 2007 Public Sector and Public Interest Attorney Salary report. Loan payment based on 6.8% term for 10 years at 8% of gross salary Debt Management for the Real World

Firm SizeMedian Salary * PaymentLoan 2-25$68,000$453$39, $81,000$540$46, $90,000$600$52, $105,000$700$60, $115,000$766$66, $145,000$966$83,927 Examples Earnings with Repayment First Year Salaries For Associates at Private Firms Source: NALP 2007 Public Sector and Public Interest Attorney Salary report. Loan payment based on 6.8% term for 10 years at 8% of gross salaryhttp:// Debt Management for the Real World

School NameLocationSchool Type Starting Median Salary Mid-Career Median Salary Berklee College of MusicBoston, MAArts & Design$37,300$66,300 Stanford UniversityStanford, CA Private Research Universities$60,200$119,000 Davidson CollegeDavidson, NC Liberal Arts$42,100$101,000 University of Georgia (UGA)Athens, GASocial$42,100$78,400 Iowa State UniversityAmes, IAState Schools$44,900$83,500 Starting Salaries after Graduation A Glimpse at the Future Source: Debt Management for the Real World

Relating to Archetypes Discuss Loan Repayment options by Types of Jobs Post Enrollment – May lessen the anxiety by depersonalizing choices – Draws from shared experiences & uses common themes Debt Management for the Real World

Standard Repayment Pays based on the lender/servicer payment schedule. May benefit from borrower incentives, but did not count on them. Plans to pay on time, assuming minimum monthly payment over the entire life of loan Extended Repayment Wants to pay the least amount of interest as possible Is willing to request extended repayment. A Person who will prepay Understands prepayment on highest interest rate loans first. Debt Management for the Real World Examples Careers General Manager General Practitioner History Professor Boutique Small Firm Lawyer Examples Careers Investment Banker Surgeon Economics Professor Corporate Lawyer

Graduate Repayment A Person who needs the lowest payment possible at the beginning. Assumes their income will increase dramatically within 5 years of graduation. Is willing to consolidate to minimize monthly repayment. If ever in a position to pre- pay, will plan to at that time. Income Based Repayment Qualifies based on 15% of his or her household AGI above 150% of the poverty line for his or her family size. Assumes they will meet the criteria for Loan Forgiveness because they will work qualifying employer for 10 years. Knows that they are good at annual paperwork and documentation. Debt Management for the Real World Examples Careers Entrepreneur Private Practice Biotech Academic Researcher Sole Proprietor Private Practice Lawyer Examples Careers Non-profit Manager Doctors without Borders State Historian Public Interest Lawyer

Compare the Options $60,000 Stafford Loan Balance Options Standard Repayment Graduated Repayment Extended Repayment Monthly Payment $690 $340 (2 yrs) $416 $812 (8 yrs) Repayment Period 10 years 25 years TOTAL PAID$82,858$86,118$124,933 Assumptions: 6.80% fixed interest rate and No payment incentives Debt Management for the Real World

Questions????? Kim Siwarski Director, External Sales and School Services: Colleen MacDonald Assistant VP School Channel Sales: