College

How Do I Get Credit

For the average job-holding, nine-to-five adult, the biggest question when it comes to credit is “Is mine good or bad?” But for many college students, the more pressing question is “Where do I even start?”

credit cards

The scene: Jason, a fresh-faced recent college graduate gets a new job and decides he probably will need a car to get to work. He finds an affordable, reliable vehicle but has to finance it because he does not have enough money saved to pay for it outright.

The problem: He’s rejected for financing not because he has bad credit, but because he has no credit.

This scenario plays out all too often for college students and many other young people taking their first few wobbly steps to financial independence, but there are several ways to prevent it.

Step 1: Know Where You Stand

Just because Jason had no credit doesn’t mean that every college student is stuck in the same conundrum. Many students may be making credit histories without even knowing it.

Ever had a student loan? The many college graduates drowning in student loan debt might have more credit to their names then the lucky few who graduate debt free. Basically, anything that requires monthly payments could build credit. Think back to loans, gym memberships, rent checks, and the like.

Everyone is granted one free credit report per year. Take advantage of this service by using a reputable credit-reporting bureau, such as Equifax, Experian, or TransUnion.

Step 2: Get a Credit Card

This part can be tricky. The credit conundrum can prevent people like Jason from getting credit cards simply because they have no credit. So how are they ever supposed to build their credit?

Most banks offer secured lines of credit to their customers. This means that account funds are used as collateral should credit holders fail to make payments.

Store credit cards often have more lenient requirements and lower credit limits, so they are also a good first step to establishing credit—as long as they’re handled responsibly!

Step 3: Take No-Interest Offers in Stores

Ever seen the “same as cash for 90 days” in-store offers on big-ticket items? It’s easy for them to sound like scams, but they’re not. Just be sure that you have the right amount of money, and sign up. This is, in essence a loan, and, if you make good, regular payments, it’s a no-extra-cost way to establish some credit.

Many of these offers have time limits set before you will have to start paying interest, so be sure to read the fine print with any of these offers to avoid getting in over your head.

How Do I Pay Off My Student Loans

Have you gone to college only to find that you are in debt up to your eyeballs? Student loans can be very scary! Paying student loans can be hard on a young person just starting out. Just remember that just because you have not landed that perfect job just yet does not mean that your student loans will go away all by themselves.

pay off student loans and debt

Paying student loans back is a great step to earning a solid financial foundation for your future. When you graduated from college the first thing most students think about is, “Time to relax for a few days then off to beat the streets for a job!”  When that first student loan bill arrives in the mail it can be very nerve wracking and overwhelming. However, you can make the transition from college student to a professional career individual by understanding the repayment process of paying your student loans off.

Every financial institution knows that there will be times that a payer of sums owed will/may fall upon hard financial situations. Student loans cannot be canceled but there are ways to assist you with your circumstances. Your financial adviser will explain options such as:

  • Making Payments
  • Loan Service’s
  • Choosing a Repayment Plan
  • Loan Consolidation
  • Deferment and Forbearance
  • Forgiveness, Cancellation, and Discharge
  • Understanding Default
  • Resolving Disputes

Making Payments – Once you graduate you will be responsible for making payments to your loan servicer. Each loan servicer may have different ways and times that the payments should be submitted. *Note* it is the students responsibility to contact the loan server even if he or she has not received a bill.

Loan services – A company that collects payments on a loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a lender.  If you’re unsure of whom your federal student loan servicer is, you can look it up on www.nslds.ed.gov.

Choosing a repayment plan – When it comes time to repay your student loans you will have a few choices for what type of payment plan will best suit your needs. The type of payment plan you choose will determine the amount and length of time you will be paying.

 

Types of payment plans available:

  • Standard Repayment Plan
  • Graduated Repayment Plan
  • Extended Repayment Plan
  • Income-Based Repayment Plan (IBR)
  • Pay As You Earn Repayment Plan
  • Income-Contingent Repayment Plan
  • Income-Sensitive Repayment Plan
  • Consolidate Your Loans

Deferment and Forbearance – If your financial situation is hard such as, unemployed, food stamps, returning to school, or going into the military this is the type of payment plan you can chose to postpone or lower your payments.

Forgiveness, Cancellation, and Discharge – This service is for students who have become totally or permanently disabled, or the school closed while you were in attendance, and certain types of teaching services and other such situations. This will put your loan in forgiveness, cancellation, or removed.

Understanding Default – You never want to go into default with your student loans. The college, the loan servicer that made or owns your loan, loan guarantor, and the federal government all can take action to recover the money you owe.

A default with your student loans can affect

  • Denied rentals on apartments/homes
  • Higher deposits on utilities or denial of services
  • Home owners insurance
  • Cell phone services

If you need assistance with your loans, call your student adviser or contact your loan servicer today!

What are the Best Ways to Save for College?

Saving money for college is sometimes easier said than done, especially in today’s economy! The first thing a new parent thinks about when a child is born is diapers and bottles. Don’t forget daycare! However, as the child grows so does the cost of living. The parent has education expenses and clothing and food expenses. Not counting every day regular expenses such as the electric and water. It is very important to save for college if you don’t start early it can creep up on you before you know it.

saving for college

Some parents open a savings account when they find out they are having a baby. By opening this account at this early stage you are hoping you can get ahead of the game and have the funds saved for your child to attend the school of his or her dreams. You may even hope that this savings will be large enough to write a check and be done. This can be a great option, if you do not have to use any of the funds for anything else. However, there are other ways for saving money for college.

There is a state sponsored plan by the name of 529 College Savings Plan. This plan offers a tax-deferred flexible way to save money for your child to attend college. This type of plan is for those who believe factors such as tax-free qualified withdrawals, tax-deferred growth, and contribution flexibility as being an important part of a savings plan. The 529 College Savings Plan is beneficial for you and your child.

Another avenue that a person can begin saving money for college is with uniform gifts or transfers to minors. This type of saving for college will allow the transfer of ownership of assets to your child without the added expense of creating a trust fund. Remember to check this type of saving money for college plan before you initiate it because withdrawing money can come with a penalization because of surrender charges.

There are flexible options such as common stocks, CDs, bonds, and mutual funds. Keep in mind these options are taxable. Be sure and do your research before you choose any of the options above. Such as a CD, this option can be a good investment but the rates may be low. This option is FDIC insured because it is considered an asset. You will not have to worry about losing the principle when you need the funds. An important point to remember is that if a CD is not held until maturity there may be penalties incurred.

Saving for college can be nerve racking. However, if you are employed at this time and your company offers Roth IRA and Traditional IRA, this is an option as well. Most people have this type of account so he or she can save for his or her retirement. Before you decide to use this option to fund your child’s college career make sure you have exhausted every avenue. It is important to remember when using this type of savings for education purposes the 10% penalty is waived on the withdrawal if it is before the age of 59 ½ for you (the account holder), spouses, and children or grandchildren. Before you make any decision about saving money for college, ask advice from a financial adviser.

Just a Tip

Saving money is something we all struggle with from the young age of 16 to the adult age of 50.  After a little experimenting I have found a couple simple and easy ways to save money.  As a college student, these few methods are very simple and very do-able.

Bank Your Change

You may have heard of programs like this on television.  You use your card to make purchases and the bank rounds the purchase amount to the next dollar, putting the difference into the account of your choosing.  For me, the account my change is placed into is my CD account. When starting a CD account, you choose how long you wish to keep your CD untouched.  That means you will be forced to save money through saving your change.

The Jar Technique…

…otherwise known as the literal save your change technique.  I do not like to carry cash, but when I do I try to break it down to as much coin change as possible.  I think put it in an old mason jar and save it to a certain date or till the jar is full.  I also like to put my one and five dollar bills in the jar.  If I have something planned, like a dinner date with friends, a bowling night with family, a car wash, etc., I get the money in cash and put it in the jar as well so that I know I have it when I need it.  If you are like me and spend cash when you have it, the jar technique is an experiment you may want to invest in.

Savings jar
Even spare change put in a jar works for saving.

These are two small and simple ways to save money.  Whether you are a college student scrimping by for loan payments or an adult just trying to save a little pocket change, both these methods are worth your time.  Check them out and let me know how you do!

Tax Credits for Higher Education

Tax credits for higher education, are forms of educational assistance provided to students and or their parents to undertake payment of education expenses.

There are two types of recognized tax credits within the federal tax system overseen by the Internal Revenue Service and the federal government: The American Opportunity Credit and The Lifetime Learning Credit. To get access to this credit facility, one has to pay their post-secondary tuition for themselves, their spouse or their dependent. The credit may be claimed by the student or parent but cannot be claimed by both.

One can choose to claim either credit for each student in a single tax year, not both credits. For instance, one cannot claim The American Opportunity Credit to pay their child’s tuition and then claim the Lifetime Learning Credit for more school expenses. However, if one incurs education expenses on more than one student within the academic year, they can opt to seek either credit individually, with each student/year case taken separately.

The American Opportunity Credit

This is an improved version of Hope Educational Assistance Credit. It was created as a part of the 2009 Stimulus Bill, which was part of the federal government’s intervention process during the economic crisis of this period. Whereas it is improved, it does have a few limitations; one can only claim expenses incurred during the first four years of college. It is also temporary, unless the congress acts upon it, it will expire at the end of 2012.

Credit can be up to $2,500 per eligible student. 40% of the credit is refundable, meaning that; one may be able to receive up t0 $1,000 even if they owe no taxes. Expenses that meet this criterion include tuition, fees, textbooks related to the course and equipment like lab and measurement equipment.

The student must be pursuing an undergraduate course or other recognized educational credential. The student must also be registered as studying for a minimum of half the time of the projected study year. The full credit is generally available to Individuals who make less than $80,000 or $160,000 in the case of married couples wishing to file jointly.

The Lifetime Learning Credit

Like the name suggests, it is fairly flexible and open to any education activity that is taken after secondary level, or any additional job or skills courses taken thereafter.

Credit can be up to $2,000 per eligible student. The credit one has access to be limited to the amount of tax you are required to pay as part of the returns.

As mentioned above, this facility is not limited to degree courses but has a fairly wide educational access qualification basis. The expenses that can be covered by this facility include tuition and fees, textbooks and assorted equipment.

Taxpayers who make earn less than $60,000 or $120,000 for married couples wishing to file a joint return can access the full breadth of this credit as well.

Links:
http://www.irs.gov/newsroom/article/0,,id=218389,00.html
http://news.yahoo.com/tax-credits-higher-education-080023894.html

How to Juggle College Finances

With disposable income becoming a bigger and bigger problem both in the United States and globally and inflation and the economic situation increasingly unpredictable, investment in aspects of our lives like education is becoming harder to manage.

college finances

College education, of course, makes a critical the most important part of one’s education and is traditionally a major source of concern for the majority of families in the United States.

College education represents an expense process that covers many facets, and for a lot of people, the one thing that is focused on is tuition fees. Of course tuition forms a critical part of one’s college education but several other expenses play a role as well, without which the college degree may be encumbered or possibly not even achieved.

Apart from tuition fees, colleges have different fee structures that include registration, and access to different facilities at the university that may not be included in the tuition fees structure.

Daily living expenses are also important, as one needs to take into consideration meals, accommodation, transportation and things of that nature. Study materials, like text books and laptop computers cannot be ignored either.

All these and many more mean the study process for a college student is a difficult and expensive one for a lot of people.

However, there are a number of ways of reducing the cost implications covering the requirements of a college education.

Keeping the college choice within your state of residence or home states cuts back on transportation costs considerably and makes access to scholarships easier especially if you focus on those which are within your locality; people tend, surprisingly, to ignore these.

You can also consider the advantages, cost-wise, of using community college, which have particularly pocket friendly tuition rates and permit one to carry college credit accumulated in high school.

Applying for Free Application for Federal Student Aid doesn’t hurt at all, especially if you have more than one child attending college. You may just fall through the cracks or the criteria can include you because of the obvious implied financial strain.

Once in college, it is important for the student to remain focused on his or her studies and goals. All those extra semesters or papers carried forward imply additional costs that add to your financial load. Some universities also offer programs that help you save or recoup on certain costs like tuition, travel costs for visiting family as well as text books (http://www.usnews.com/education/best-colleges/articles/2011/08/24/colleges-offer-hidden-savings-to-students). It helps to be on the look out for such initiatives.

Being prudent with your money at this point in your life is always going to be a challenge but it forms an integral part of learning financial discipline. Look out for student discounts in college towns, which are usually on offer at restaurants, shops and clubs. Prioritize your technical needs, for instance, do you really need to have a printer in your room? Make the most of what the college does offer you, like meals which make an unnecessary dent in your personal expense account when you eat out.

When looking to cut costs or save, it’s more often than not, the little things that actually count and the same applies to college-related expenses.

Give the Gift to Save

Christmas is literally right around the corner and I know that many of us will be doing some last minute shopping!  When I pick out gifts for my college friends, I try to pick things that I know will be beneficial in ways that go beyond just making them happy.  Give these gifts ideas a good look over, you might just want to add them to your wish list.

1. Gift cards

Well, as if that one wasn’t obvious enough.  My favorite gift card to receive? Food or gas cards.  They are probably two of the things I spend most of my money on and I jump at any chance at spending some else’s money on them!

2. Hulu Plus or Netflix subscription

Buy them a year or couple month’s subscription to either Hulu Plus or Netflix! I am obsessed with watching and re-watching Drop Dead Diva on Netflix.  You’ll save them the money they would be wasting buying the seasons of their favorite show on DVD…or you could just buy them their favorite show and favorite season on DVD!  The choice is up to you. (cough, cough, Netflix!)

3. Coffee Machine

Does your friend need a serious Starbucks fix in the morning? It’s okay, no judgment. We all need our caffeine. We just don’t need to pay 5 dollars for a small…or whatever the heck that Italian word is.  Buy your friend a coffee machine and the first cup of the semester is on her! Enough said.

Now it is your turn.  Tell me what you think would be a great gift to give or receive that would save you money! Send all answers to megan@investinged.com and the best answer will be spot lighted in the next article.  So don’t be shy, share the savings!

 

Budgeting College Style

Every college student knows that money does not exactly grow on trees. Sometimes you have to make choices about what you do or buy based on how much money you have. This is called budgeting and it is an important skill to have, especially in today’s economy.

college saving

The summer is an especially hard time to budget because of all the fun stuff to do and the free time to do it, but the more you save now the more you will have come the fall, and the start of the school year.

A few tips to help budget and save money are:

1. Limit how many times you go out to eat, each time you go out you are typically paying for food at a higher price than you need to. For lunch it is easy to buy cold cuts and make sandwiches instead of going to a deli to buy them. Not only will it be cheaper, but cold cuts can last for several meals making the cost even less.

2. Try to find free or cheaper things to go to. Look around your area for free activities such as concerts, fairs or even just going to the park or the beach. It is easy to find fun things to do that are free or inexpensive if you just spend sometime looking for them.

3. Keep track of your spending. If you keep a record of what you spend your money on, you not only will see how much you money you have and how much you are spending, but you can also see what you do not need to buy, and places where you can save a little extra money.

Happy Halloween!

At the time of year when witches, ghosts, and spooky stories are on everyone’s mind, it seems only appropriate to bring up some scary financial decisions that many Americans make. When words like mortgage, investment, vacation, and retirement come to mind, people understandably begin to panic. For me, the spookiest financial decision I have ever made was to go to an expensive private university. With college prices increasing annually at rates exponentially faster than other commodities, it is sure to be on the forefront of many people’s minds.

Happy Halloween!

Although there are undeniable benefits to a college education, does an education from an expensive, private university get you much further than education from a more affordable state school? Am I guaranteed a starting salary equivalent to the yearly cost of my education? Am I willing to pay off loans for the next 25 years of my life?

These questions prove overwhelming to think about in the long run. For me, the decision to attend an expensive university was a calculated choice. However, in hindsight, I felt like I did not have all of the facts. For instance, where you go for an undergrad degree does not really matter if you don’t know exactly what you want to do. I, for one, am content to study everything from anthropology to Spanish, either of which I could study at any decent state university. Other financial factors include geographical location; if you choose a far away school, you must consider air fare. If you are lucky enough to receive financial aid, know that it may vary greatly year to year since you must submit a yearly application. Text books at any university cost hundreds of dollars per semester, something that people forget to consider as an included cost when they choose the expensive university. Scholarships, if you are lucky enough to get them, may have very strict retention clauses, and may be awarded only for a limited number of terms.

That being said, investing in education is an investment in your future. I have made an effort to use as many resources offered by my fancy private university as possible to ensure a stable future, especially given the historical state of the job market into which I will shortly be entering. The hundreds of thousands of dollars in interest and principal I will be paying off for several decades only give me a greater incentive to create a stable and lucrative future for myself.

College is a terrifying monetary commitment, one which couples begin saving for before they are even parents. Fortunately or unfortunately, a bachelor’s degree is becoming a prerequisite for innumerable careers. The question should not be should you go to college, but rather, are you willing to cope with the consequences of paying off 4 years of education for the next 25 years of your life? Now that is something only you can answer.