A+ R A-

Money Matters

No More Credit Cards for College Students

E-mail Print PDF

November is the month that many high school seniors are thinking about what they’ll do after graduation, applying for college, and collecting information to complete the Financial Application for Federal Student Aid that’s due January 1. This month, my column will be devoted to answering personal finance questions related to families with high school seniors.

College students were being targeted by credit card companies on college campuses and students were graduating with more than $3,000 in credit card debt. President Obama decided to do something about it so he created the Credit Card Accountability, Responsibility and Disclosure Act of 2009, also known as the Credit CARD Act.

According to a Sallie Mae research study titled “How Undergraduate Students Use Credit Cards: Sallie Mae's National Study of Usage Rates and Trends” the average undergrad carried $3,173 in credit card debt alone. That is the largest amount of credit card debt by college students since the study began. The average college senior graduated with $4,100 in credit card debt. That’s up from 41% when the same study was conducted in 2004. That might not seem like a lot until you consider that the credit card debt is on top of the student loan debt they carry. Things were definitely getting worse until the CARD Act went into effect back in 2009.

New Rules
The CARD Act created many positive changes for Americans and college students are no exception. Now, if you are younger than twenty-one years old you will not be able to get a credit card unless you can prove that you have sufficient income to pay back any debts or you can get a co-signer.

Credit card issuers used to play very fast and loose with college students. They would sit at tables on campus and offer free gifts to students to encourage them to apply. Many students didn’t understand how their credit scores were being affected even if they weren’t approved for a card. Students didn’t understand how interest was calculated. They didn’t understand how paying the minimum required payment would lock them into debt for years.

Good or Bad
Of course, there is good and bad in every decision. Some argue that students may not have access to a vital source of supplemental income during college years. Others applaud the new rules as a way to help young Americans stay clear of the mire of debt that many older Americans are already ensnared in.

Do you agree or disagree with the new credit card rules for college students?

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, including “10 Things College Students Need to Know About Money”. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. To schedule Shay to speak at your event or to find out more about her work, visit her at www.BiggerThanYourBlock.com.

Attending Community College Saves Thousands

E-mail Print PDF

November is the month that many high school seniors are thinking about what they’ll do after graduation, applying for college, and collecting information to complete the Financial Application for Federal Student Aid that’s due January 1. This month, my column will be devoted to answering personal finance questions related to families with high school seniors.

There are several options available to students looking to attend college: trade schools, community colleges, and public or private 4-year universities. Like all things in life, there are wonderful aspects and challenging aspects to each option. When thinking about the return on investment (ROI) of college education, few options compare to attending a community college and then transferring to complete a bachelor’s degree.

13th Grade
In many ways, attending a community college is more challenging than attending a 4-year college. When a student chooses to attend a community college they usually choose one that is close to home. I have heard students refer to community college as “13th grade” because so many of their high school friends have chosen to attend the same community college. Talk about distractions. So many students have been told that they have to attend college if they want to “be somebody” that they automatically enroll in college with no thought to why they are attending. Those students can distract other students from focusing on the goal of community college: graduating.

This is not an issue limited to community college students, but we have all heard people say that community college isn’t “real” college so students don’t have to study. I have attended community colleges and two 4-year universities, for undergrad and grad school, and the social distractions I faced at community college were more emphasized at the community colleges. My hat is off to anyone that has graduated from a community college, especially with all those distractions.

Rigor
There is also a perception that community colleges are less rigorous than 4-year colleges. Nothing could be further from the truth. Most college professors are not tenured, so they are constantly searching for colleges at which to teach. Most of my professors at community college also taught at local universities. The classes I took at my community colleges helped me become a well-rounded person. My professors were dedicated, professional, and well-educated. Some of the classes were tougher than ones that I had at 4-year colleges.

If you have a moment, check out the professors at your local community college. You’ll find that many are published authors, have extensive experience in their respective fields, and are dedicated to helping students move on in their academic careers.

Costs
Can you believe that you get all those good things with such a low sticker-price? In 2008, MSN Money put the yearly cost at a community college at $2360 per year and rates haven’t risen dramatically since then. Regardless which college you attend, every student will take foundation classes like English, math, arts, etc. Students don’t take upper-division courses until Junior and Senior year. Saving a few dollars on tuition now can help parents squirrel away more money for tuition at that private university your student wants to attend, sock away some cash for an international trip after the student earns their bachelor’s degree, or help the student purchase a home to start creating a foundation for wealth. The bachelor’s degree that will hang on the wall will not have an asterisk that denotes that the student started a community college.

Taking out a bunch of student loans is not the best way to pay for college. As we’re seeing, college costs may not be as good of an “investment” as they have been in the past. Of course scholarships and grants can help, but choosing a less costly option can help you save all your scholarship-seeking strength for those upper division years at that college with the great name.

Strategy
Earning an associate’s degree before transferring to earn a bachelor’s degree takes having a strategy and working to make that plan come to fruition. Look at the bigger picture: you want your student to earn a degree that will potentially bring them a lifetime earnings that is double a high school graduate. You want them to have a well-rounded education that will place them in the right circles allowing them to network with people that can help them get where they want to be. You want them to build wealth by leveraging their education. All those things can be achieved by creating an educational plan (does the student want a B.A.?, B.S.? M.A.? M.B.A.? M.F.A.? Ph.D.? M.D.?), choosing a community college that will create a strong foundation, using available funds efficiently (maybe you can encourage your student to do an internship or volunteer instead of working), and supporting your student emotionally, physically, and financially.

Choosing a college is a huge decision and many times money does play a part. Make sure that you’re choosing a college that provides what you need at a cost that won’t leave you mad enough to go down to the Occupy Wall Street encampments.

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, including “10 Things College Students Need to Know About Money”. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. To schedule Shay to speak at your event or to find out more about her work, visit her at www.BiggerThanYourBlock.com.

How to Spend Your Financial Aid Money

E-mail Print PDF

Most college students end up taking advantage of financial aid while in college because there are several different scholarships, grants, and loans available to students. The key is to get as many scholarships and grants (free money) as possible while taking out as few loans (money you have to pay back) as possible. Once the money arrives you’ll have to manage it well.

Open an Account at a Credit Union
The easiest way to manage your financial aid check is to deposit a portion into your checking account and a portion into a savings account at a financial institution. If you don’t have a checking account or a savings account at a financial institution this is the perfect time to open them. Find out which credit unions are available to you by visiting www.CoopNetwork.net and plugging in your zip code.

Of course you could choose to use a check-cashing place, but they are going to charge you to cash your check plus you’ll get a hunk of cash that can be lost. The other option would be to open an account at a traditional bank, but credit unions have the largest ATM system in America.

Create a Spending Plan
Now that you have your checking account at a credit union it’s important to figure out how much money you have and how you’re going to spend it. If you don’t write down a spending plan it will be harder to stick to it. Take a moment to jot down all of your upcoming expenses and then write down how much of your financial aid check you’re going to allocate to each expense during which month.

Execute Your Plan
Since you already know how much money you have coming in and what you want to spend it on, it’ll be easy to deposit the portion that you’ll need per month into your checking account and deposit the rest in your savings account; moving money once each month to cover that month’s costs. Keeping the money that you’re using during the month separate from the bulk of your money will help you not overspend. You don’t want to end up with more semester than cash.

The worst thing that can happen is that you end up partying all of your money away. You don’t want to spend all your money at the beginning of the semester and end up being short later on. Using a credit union to manage your money, creating a workable plan, and executing that plan is the best way to spend your financial aid money.

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, contributes to multiple online media platforms, and is a foster care alumni. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. To schedule Shay to speak at your event or to find out more about her work, visit her at www.BiggerThanYourBlock.com.

What Outcomes Are You Looking For?

E-mail Print PDF

November is the month that many high school seniors are thinking about what they’ll do after graduation, applying for college, and collecting information to complete the Financial Application for Federal Student Aid that’s due January 1. This month, my column will be devoted to answering personal finance questions related to families with high school seniors.

One of the most important things you’ll have to think about this month is: what am I going to do after I graduate? You may be considering working, attending a trade school, attending college, or you may just still be considering. As you start thinking about your options you’ll have to consider the monetary cost of each of these options, but you’ll also have to consider what you’ll gain from each option as well as what you’ll lose by not choosing one of the other options.

According to the Census Bureau, in 2002 high school graduates earned $25,900 per year while college graduates earned $45,400 per year, but that’s not the end of the story. According to CollegeBoard.com, attending college in 2002 cost about $22,541 per year and most college students took out student loans to pay for it. Costs to attend college have increased over the last ten years. If you thought those numbers were dismal, take a look at the Occupy Wall Street protestors for final confirmation that graduating from a good college may or may not start you on the road to prosperity. Ending up with $30,000 in student loan debt and then getting a job that will pay $30,000 doesn’t sound like a good investment to me.

Instead of getting on the track that you think will take you where you want to go, make sure you start out thinking about the outcome you’d like to have (the career trajectory you’d like, the income you’d like to earn, or the debt you’d like to leave school with). Starting with the end in mind might help you choose which college to attend (in-state tuition versus out-of-state costs), what kind of school you’d like to attend (trade school, community college, public college, private college), or what tools you’ll use to pay for college (working, grants, scholarships, loans). Once you know where you’d like to be, you can start analyzing information to make a plan to get there.

Imagine deciding that you want to buy lotion. You can buy a bottle for $1 from a discount store or you can buy a bottle for $6 from a big-box store. Buying the cheaper bottle is obviously going to cost you less money upfront, but we all know that the quality of the cheaper brand is sometimes less that we desire. If we end up buying more bottles of the cheaper lotion over the same amount of time that we could have purchase the one bottle of more expensive lotion then buying the cheaper bottle is not cost efficient. Only you know what outcomes you’d like to have.

Whatever you choose to do, you’ll need to think about the value of that option, not just the monetary cost of that option. The more you consider the outcome you want, think about the best way to get there, create a plan based on value, and work to make it happen, the better off you’ll be.

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, contributes to multiple online media platforms, and is a foster care alumni. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. Visit www.BiggerThanYourBlock.com to hire Shay to speak at your event.

Decrease Stress About Money

E-mail Print PDF

During the Great Recession many, many, many people lost jobs, homes, relationships, and stability. Now some people are underemployed while others are still looking for work. People are concerned about 401k balances, paying mortgages, mounting credit card debt, and whether to default on student loans. Of course it’s normal to have stress over these things, but you don’t want to let stress take away your biggest money-maker: your health.

Understand Your Position
Stress comes from many sources, but one that I hear again and again from coaching clients is that they aren’t sure how much debt they are in but they are sure it’s “a lot”. The stress of not knowing is usually worse than the stress of being aware. Take a moment to figure out your net worth and I promise you’ll feel better.

Make a list of all of your assets (things that you own of value), add up the value of those things and write it on a sheet of paper. Next, make a list of all of your liabilities (money that you owe companies and people, and yes, the $20 you owe your Mom counts too), add up the value of those things, and write it on a sheet of paper under the value of your assets. Lastly, subtract your liabilities from your assets. If you have student loan debt, a mortgage, and a car payment your net worth will more than likely be negative.

Forgive Yourself
Now that you see how much money you actually owe, take a deep breathe. Whatever decisions got you to this place have already happened. Beating yourself up about it won’t set things right. At this point you’re going to have to accept that you had a higher income job before, or that you made some bad spending choices, or that your business isn’t bringing in as much money as you would like. Wallowing in misery isn’t going to help. Remember, only 10% of your life is what happened before. What you do now is the 90%.

Get to Work
You know where you stand financially, and you’ve stopped berating yourself about it, so now you’re ready to make a plan and execute it. I can’t tell you what that plan is. Maybe you need to make an uncomfortable call to the company that holds the loan for your credit card/home/car and ask them to reduce the interest they are charging you. Maybe you need to freeze your credit cards in ice to stop you from using them. Maybe you need to have a talk with friends and family about why you will not be buying extravagant presents anymore.

Once you start working towards getting a handle on your financial concerns I promise that your stress levels will go down. You’ll feel better with every payment you make and every step you take toward financial stability.

You know what you need to do, so get to it.

Shay Olivarria is the most dynamic financial education speaker working today. She has written three books on personal finance, contributes to multiple online media platforms, and is a foster care alumni. She's been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. To schedule Shay to speak at your event or to find out more about her work, visit her at www.BiggerThanYourBlock.com.

Page 3 of 10

Quantcast