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					                            PAYING




    TaKiNG STOCK Of yOur
      fiNaNCial fuTurE

Y
             ou’ve heard it before: Making and sticking to a budget. This money-
             management rule becomes more essential than ever during your college
             years when you begin to experience living on your own, paying for meals
             and providing for everyday life expenses.
                 Creating a budget is simple, and there are a number of free online
electronic tools and software programs to help you. Once you clearly identify your
spending habits, it’s easy to stay on top of your expenses, including your student loan
repayments. By paying bills on time and managing your budget, you also are helping
to build a good credit score for yourself—and that puts you on the right financial
track for the future.
                                                                WWW.GRADIND.COM   2011-12 | GRAD 35
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                        YOUR FINANCIAL GPA:
 lEarN abOuT
 CrEdiT SCOrES




 “When you go to look for a job today, the first thing that the employer
does is pull your credit report. It’s almost as important as your GPA.”
                                                                                         David Bach, author of Debt Free for Life




N
               umbers are important,     debts. Cell-phone providers, insurance     the first thing that the employer does
               especially your three-    companies and landlords are interested     is pull your credit report,” says David
               digit FICO credit score   in your credit score, as well. More        Bach, author of Debt Free for Life. “It’s
               number.                   employers, too, now use credit reports     almost as important as your GPA.”
                 Credit scores show      to help them determine a job candidate’s      And just like your GPA, your scredit
banks and credit-card companies          eligibility for employment.                score is something you can—and
just how likely you are to repay your       “When you go to look for a job today,   shoud—improve while in college.

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                                               “The best thing a college
  FICO scores range from 300 to 850.
The higher the score, the better. The

                                              student—or anyone—can do
median FICO score is 710, according to
FICO.

                                              when it comes to establishing or
  Several factors affect FICO scores,
including payment history, amount of

                                              maintaining good credit is to pay
debt owed, length of credit history, the
number of recently opened accounts

                                              their bills on time, every time.”
and the types of credit used, including
credit cards, retail accounts, installment
loans, mortgage and consumer finance                                                    Sharon Gilchrist, a Financial P.A. in Fishers, Indiana
accounts.
  Many of the financial actions you take
in college can have an effect on your
credit score—now and in the future.
So what should you be doing to build a
good credit history?
                                               ONLINE CREDIT RESOURCES
know your FICo score                           For more insight on credit scores and managing debt, check out the
   It’s important to regularly review your
                                               following organizations and resources.
FICO score. Visit www.myfico.com to get
a complete explanation of your FICO            tHe nAtIonAL FoUndAtIon FoR CRedIt CoUnSeLIng
score and how lenders view your credit         www.nfcc.org
worthiness. If you think there’s an error      Provides financial counseling and education.
on your report, contact both the credit
bureau and organization providing the          AnnUALCRedItRepoRt.Com
information to the bureau. Follow up           www.annualcreditreport.com/cra/index.jsp
with a written letter.                         Request a free copy of your credit report once a year from each of the nationwide
                                               consumer credit reporting companies.
pay bills on time
   Payment history accounts for 35             money mAnAgement InteRnAtIonAL
percent of a FICO score, which makes           www.moneymanagement.org
it all the more important to pay bills on      Offers financial tools and resources.
time. “The best thing a college student
—or anyone—can do when it comes to             mymoney.gov
                                               www.mymoney.gov
establishing or maintaining good credit
                                               U.S. government’s website dedicated to teaching
is to pay their bills on time, every time,”
                                               Americans the basics about financial education.
says Sharon Gilchrist, a tax accountant
in Fishers, Indiana.
                                               myFICo.Com
                                               www.myfico.com
Use credit cards wisely                        Information, articles and research on FICO scores.
  Under the 2009 Credit Card Act,
students under 21 are barred from              CREDIT BUREAUS
obtaining a credit card unless they prove
they can make payments or they get a           expeRIAn
                                               www.experian.com
co-signer. To help college students build
their credit, Jean Chatzky, financial
                                               tRAnSUnIon
editor and author of Money 911,
                                               www.transunion.com
suggests that parents consider adding
their child or children to their own credit
                                               eQUIFAx
card account as an authorized user for a
                                               www.equifax.com
period of approximately one year.

                                                                                                     WWW.GRADIND.COM       2011-12 | GRAD 37
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GETTiNG SChOOlEd
ON STudENT lOaNS




S
           tudent loans are a fact of
           life for most of today’s          “Deciding what is a reasonable amount of debt is
           college     students     and
           families. Research shows
                                           not an easy thing. It’s going to vary by a student’s
           that two-thirds of four-year    credentials and career aspirations, by their maturity,
undergraduates leave college with          the family’s income and how debt has historically
some form of debt. College seniors who
graduated in 2009 carried an average
                                           been viewed by that student and family.”
of $24,000 in student loan debt, up                                  Joe Russo, Director of Student Financial Services at Notre Dame
six percent from the previous year,
according to a 2010 report from the        students graduate, they also must          protections that students have with
Project on Student Debt. In Indiana,       complete exit counseling sessions to       federal loans, such as unemployment
the report shows that 63 percent of the    ensure they understand their rights        deferments, income-based repayment
state’s college graduates left school      and responsibilities as student loan       plans, public-ser vice loan forgiveness,
with an average student debt load of       borrowers.                                 and cancellation if the borrower dies,
$25,246.                                     Private student loans are made by        is severely disabled, or is defrauded by
  Before receiving a federal student       banks and lenders. Private lenders         a school.
loan, borrowers are required to complete   are not required by law to provide            Once a student graduates, leaves
an entrance counseling interview. Once     borrowers with the same options and        school, or drops below half-time

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                                                                                                           PAYING        GRAD


enrollment, there is a six-month                                                            monthly payment that they not only
period of time before the first loan                                                        can af ford but also pays back the
payment becomes due. It’s important
for students to make their full loan            BE SMART                                    loan as quickly as possible. The
                                                                                            longer it takes to pay of f a student
payment on time. Other wise, the loan
may enter into default, causing possible        NOW!                                        loan, the more interest you will pay.
                                                                                            To reduce interest costs, borrowers
long-term and serious consequences.                                                         can prepay their loan principal at any
                                                ❏ Don’t use loans for anything besides
Those consequences could include                                                            time, without penalty. If none of these
                                                  college expenses like tuition and rent.
garnishment of future wages, legal                                                          options provides payments you can
action, and damage to your credit               ❏ Put bill due dates in your planner so     af ford, you should ask your lender
rating.                                           you don’t forget to pay them.             or loan ser vicer about deferment or
   Financial aid experts advise students        ❏ Use federal loans before taking           forbearance provisions, which allow
to remember that student loans are                out private loans. Learn more at          temporar y suspension or reduction of
real loans—just as real as car loans or a         www.cashforcollegeindiana.org.            monthly loan payments.
home mortgage.                                  ❏ Never use credit cards to make a
   “In general, many prospective                  tuition payment unless you can pay        Step 4
students and families are not as fully            off the balance by your next credit       keep in touch.
aware of the consequences of borrowing            card statement.                             Students who move following
as they should be,” says Joe Russo,                                                         graduation should notify their lender
Director of Student Financial Ser vices                                                     or loan ser vicer of any change in
at Notre Dame. “Deciding what is a          well as additional information about            their address and telephone number.
reasonable amount of debt is not an easy    your loans.                                     Borrowers who fail to do so may incur
thing. It’s going to var y by a student’s                                                   additional charges for missed or late
credentials and career aspirations, by      Step 2                                          payments and risk severe penalties for
their maturity, the family’s income and     determine what you can                          student loan default.
how debt has historically been viewed       afford to pay each month.
by that student and family.”                  If you’ve already been hired for
   USA Funds®, an Indianapolis-based        your first job, you should know your
nonprofit organization that administers     starting pay. If you’re still looking
federal student loans, offers the
following tips to get college students on
                                            for employment, consult the campus
                                            placement office about starting salaries
                                                                                                AFFORDABLE
the right repayment track.                  for jobs in your field or the Bureau of             LOAN
                                                                                                PAYMENTS
                                            Labor Statistics website (BLS.gov).
Step 1                                        A good rule of thumb is that student
know what you owe.                          loan payments not exceed eight to 10
   Students     often    underestimate      percent of a borrower’s gross monthly               Maximum Monthly Loan
their outstanding college debt.             income. For example, if your starting               Payments You Can Afford
Some fail to maintain complete loan         salary is $25,000, generally you can
                                                                                                Based on Annual Income
records. Others forget that interest        afford monthly student loan payments of
accumulates on their unsubsidized           no more than $167 to $208.                          $15,000           $100 - $125
loans while they attend school. Your        Step 3                                              $20,000           $133 - $167
lender or ser vicer and school financial    Choose a repayment plan.                            $25,000           $167 - $208
aid of fice provided information to you       Borrowers have several repayment
about the amounts you borrowed.             options from which to choose. Most                  $30,000           $200 - $250
You should read this paper work and         borrowers use the standard repayment                $35,000           $233 - $292
calculate the total amount you will         plan. USA Funds’ loan-repayment
                                                                                                $40,000           $267 - $333
have to repay. If you have lost track       calculator in the Borrowers section of
of your paper work, use the National        www.usafunds.org can help you estimate              $45,000           $300 - $375
Student Loan Data System Student            your payments under various repayment               $50,000           $333 - $417
Access Web site at www.nslds.ed.gov to      options.
                                                                                                $75,000           $500 - $625
find the name of your loan provider or        Students are advised to select
ser vicer and contact information, as       a repayment plan that provides a                    $100,000          $667 - $833

                                                                                                  WWW.GRADIND.COM   2011-12 | GRAD 39
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COST-OF-LIVING
  rEaliTy ChECK




A
                gallon of gas. Parking.         The cost of living varies from state         average is $807.)
                Dining out. Buying a         to state, city to city, so deciding where     • Utilities will cost 16.4 percent less.
                home or renting an           to live post-college should not be taken      • Transportation will cost 10.6 percent
                apartment. All of these      lightly. While the allure of California’s       less. (The average cost to balance
                cost-of-living   expenses    sandy beaches may sound appealing               your tires in Los Angeles is $11.30
add up very quickly.                         when compared to the Midwest                    compared to $9.15 in Indianapolis and
  It pays to do your research and see        farmlands of Indiana, there are several         $10.29 nationally. )
where you could save money, especially       reality checks to keep in mind.               • Healthcare is 14.4 percent less. (The
when you’re in college. Analyze your            For example, based on an income of           average cost of ibuprofen in L.A. is
receipts or debit card statements to see     $50,000, if you move from Los Angeles           $11.26 vs. $8.32 in Indianapolis and
where you could cut costs. Making a          to Indianapolis:                                $9.36 nationally.)
sandwich at home is cheaper than eating
on campus, for example.                      • Groceries will cost 14 percent less. (For     To see more differences in living costs
  Be money smart with bigger                   example, a T-bone steak costs $10.34 in     between metropolitan areas nationwide,
decisions, too. Start looking for housing      Los Angeles vs. $8.17 in Indianapolis;      use Indiana’s Cost of Living Calculator at
early, before all the affordable options       the national average is $9.01.)             www.stats.indiana.edu/tools/col.asp.
are taken. Ask yourself if you need a        • Housing will cost you a whopping 64           The bottom line: every cost-of-living
parking pass or if taking the bus, walking     percent less. (An apartment in L.A.         decision has pluses and minuses and will
or biking are better options. Consider         runs an average of $1,830 a month           impact your budget. Make wise choices
renting textbooks or buying them used.         vs. $793 in Indianapolis; the national      now and in the future.

40 GRAD | 2011-12   WWW.GRADIND.COM
                                                                                                                                                     PAYING                   GRAD



budGETiNG
fOr lifE

Y
               ou’ve heard the mantra
               many    times:    budget,
               budget, budget. Once
               you experience living on
               your own, this money-
management          rule      becomes     more
essential than ever.
  Having a budget is a necessity.
Now is always the perfect
time    to   take    stock      of
your money goals – and
establishing a budget is
                                                 BUDGET CALCULATOR
the first step.                                  A number of online resources are available to help you determine your
  Creating a budget is                           expenses and estimate your total available income, including the Department
simple, and there are a                          of Education’s budget calculator at www2.ed.gov/offices/OSFAP/DirectLoan/
number of electronic                             BudgetCalc/budget.html. Remember to consider all of your available
                                                 resources and the total cost of your education.
tools    and       software
such as Quicken or
                                                 To get you started, use the following checklist to write down the average
Microsoft Money to                               amount of money you spend monthly:
make the process even
                                                 Housing payment .............................................................................................................. $______
easier. The first step                           Car payment ..................................................................................................................... $______
to creating a budget                             Tuition and books (or loan repayment)........................................................................... $______
is to determine how                              Electric................................................................................................................................ $______
much money you’re                                Water ................................................................................................................................. $______
cur rently        spending.                      Gas..................................................................................................................................... $______
Next, set weekly, monthly and yearly             Sewer ................................................................................................................................. $______
financial objectives. Now, you can begin         Garbage ............................................................................................................................ $______
tracking your spending to see if it’s            Telephone .......................................................................................................................... $______
meeting your budgetary goals.                    Cell phone ......................................................................................................................... $______
                                                 Internet ............................................................................................................................... $______
  Once       you    clearly    identify   your
                                                 Cable ................................................................................................................................. $______
spending habits, it’s easy to see where
                                                 Home maintenance .......................................................................................................... $______
certain expenses can be eliminated or
                                                 Groceries ........................................................................................................................... $______
reduced. For example, an ATM machine
                                                 Laundry .............................................................................................................................. $______
may be a convenient way to get money             Gasoline ............................................................................................................................ $______
but it’s a convenience that often comes          Vehicle maintenance......................................................................................................... $______
with a cost. Banks typically charge              Recreation/entertainment ................................................................................................ $______
a fee for cash withdrawals, meaning              Subscriptions ..................................................................................................................... $______
those fees can quickly add up. Another           Insurance (car, health, home) .......................................................................................... $______
common expense is that daily latte or            Personal car (hair, spas, etc.)........................................................................................... $______
fruit smoothie. At $5, you’re spending           Holiday/birthday gifts...................................................................................................... $______
$1,825 a year! Try cutting back on this          Clothing ............................................................................................................................. $______
expense to just one or two days a week           Doctors, dentists, prescriptions......................................................................................... $______
and you’ll be surprised at the money you         Other .................................................................................................................................. $______

can save.                                        TOTAL MONTHLY EXPENSES ............................................................... $______

                                                                                                                                     WWW.GRADIND.COM                 2011-12 | GRAD 41
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  mONEy maTTErS


JObS, mONEy &
COllEGE SuCCESS




F
         or many students, the answer       some students work only in the summer,          Don’t overdo it. Various reports
         to college expenses is to get a    many also have a source of income while      have indicated that the more students
         job. Whether you’re working,       classes are in session, either because       work, the more likely they are to drop
         considering employment or          they need the money or the experience        out of school—and their grades often
         looking ahead to a job after you   is beneficial. For example, working for a    suffer, too. Some authors suggest that
graduate, it takes wisdom to make the       professor may be a great opportunity to      working more than 20 hours per week
right choices.                              learn more about your field. You’ll also     makes you more likely to drop out, while
                                            gain a valuable reference for job or grad    others say more than 15 hours per week
Working in college                          school applications, even if the pay isn’t   is too much. If this is your first semester
  A majority of young adults have held a    that great.                                  working, keep it manageable. Don’t
job by the time they are 22, according to      Here are some tips to keep in mind as     let your boss pressure you into more
the U.S. Department of Labor. Although      you consider balancing school and work:      hours than you can handle. In the long

42 GRAD | 2011-12   WWW.GRADIND.COM
                                                                                                          PAYING         GRAD


run, you will save more money if you
keep your grades up, avoid paying for
                                              “Various reports have indicated that the
unnecessary extra courses and graduate       more students work, the more likely they
on time than if you earn money at a job
that winds up costing you a semester’s       are to drop out of school—and their grades
worth of classes.
   Want to stay on campus? Work-
                                             often suffer, too.”
study is a federal student employment
program that guarantees you a job on         may have that information, and might        Obtaining multiple credit cards can be
campus. You will be notified if you’re       even keep data on graduates from            alluring—especially once you have a
eligible. It’s important to file the FAFSA   your college with your major. Knowing       steady source of income. Stick to one or
every year because your financial aid        average salaries will help you negotiate    two cards with low maximum spending
eligibility status may change. However,      after you are offered a position, too.      limits. Using them responsibly will
you don’t have to be a work-study student       Prioritize your obligations. Your        increase your credit score, and having
to take advantage of the convenience of      first paycheck may seem huge—until          a low limit will ensure that you can’t go
on-campus employment. Check with             you confront a pile of bills. Don’t let     overboard. If you have credit card debt
your professors, the library, dining         yourself be tempted to splurge on           from college, paying it off should be just
halls or cafes and tutoring services in      items you don’t need. Make paying off       as important as repaying student loans.
your department. Your college may post       student loans priority one. The faster      Both can cost you thousands more in
employment opportunities online, too,        you pay them off, the less you’ll owe in    interest if you dawdle on payments.
or you can ask friends where they work.      interest. Talk to your loan lender about    Waiting a little longer for that flatscreen
   Of f-campus jobs have costs, too.         increasing your monthly payment if your     TV or trip to the beach won’t hurt you.
Off-campus jobs may offer a larger           salary allows. See page 39 for guidelines
paycheck than on-campus opportunities,       on monthly payments at different salary     Cheaper steps to a degree
but often, you’ll pay in other ways.         levels.                                       College tuition can seem impossible
You’ll have to factor in the cost of            Avoid the credit card trap.              to pay, and when you’re trying to keep
transportation, and the lost time driving
to the location. Off-campus employers
may not be as forgiving about tests and
class deadlines, or they may be unwilling        HOW FAMILIES PAY FOR COLLEGE
to change your schedule when you head
into a new semester. On the other hand,
they allow you to meet new people and
get away from your daily life.

Working after college
  Ideally, all that hard work in college
will result in a job. You’ll enter a very
different world with no tests, classrooms
or open schedules. Don’t let the
questions about salaries and benefits,
the bills and the loan repayments scare
you. Stay money savvy by following this
sage advice:
  Do your salar y research first.
Research average starting salaries in
your field. Search for national averages
on www.bls.gov, or check out Indiana
averages at www.HoosierHot50.com.
Keep in mind that these numbers don’t
reflect what you’ll make your first year
on the job. Your campus career center

                                                                                                WWW.GRADIND.COM    2011-12 | GRAD 43
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your grades up, you can’t afford to work
all the time. Money-smart students have
found ways to lessen the blow, though.
Follow in their footsteps:
                                                        CASH FOR COLLEGE
   Study in the summer. Do some
                                                           Led by Learn More Indiana, the Cash for College
number-crunching          (and     course
                                                        Web site helps Indiana students and families save,
planning) to see if taking classes                      apply and pay for college. The interactive Web site at
through the summer will allow you to                    www.cashforcollegeindiana.org features a variety of
graduate early and save a year’s worth                  resources, including online tools, grade-specific goals,
of tuition. It may be worth the foregone                special events, student contests and more.
salary from a summer job, or you may                       Also available for students of all ages is Indiana’s
be able to take just one or two summer                  College Cost Estimator at www.indianacollegecosts.org.
classes each year and have a job, too.                  The Estimator is a free service that provides Hoosiers
   Transfer credits, save more green.                   with customized, side-by-side comparisons of
You may be able to take classes at a                    expected college costs at Indiana’s public and
                                                        private colleges and universities.
community college for a lower cost-per-
credit rate. If your college charges you a
full-time, per semester rate, you’ll want
to see how many credits are required
                                                    “Workers with a college degree earn on
to drop to a lower part-time rate—and              average $1 million more over a lifetime than
you’ll want to make sure you don’t lose
any scholarships or financial aid. Even            those with only a high school diploma.”
if you’re taking a class in the summer,
you’ll want to make sure it transfers.             giving up. Workers with a college degree             one-year scholarships from your college.
You can look up general courses on                 earn on average $1 million more over                 Often they are specific to a department
www.TransferIN.net to see how they                 a lifetime than those with only a high               (like biology or management). Search
transfer among Indiana’s colleges,                 school diploma. You may be able to finish            the web for other opportunities. You
but you’ll also want to speak with your            your degree in a more wallet-friendly                can find a list of federal scholarships
advisor to make sure your major doesn’t            fashion by transferring to a different               and grants at www.students.gov, or sign
have additional requirements.                      institution. Make sure you know which                up for www.fastweb.com to learn about a
   Don’t give up on your degree.                   courses will transfer towards a major at             plethora of other opportunities.
Financial worries are among the most               your new college.                                       In today’s economy, your college
common reasons students drop out of                  Search out scholarships. Many                      degree will be one of your most valuable
college, according to a Gates Foundation           college students think they’ve done all              assets. Plan ahead so you know you can
survey. If tuition bills have you eying a          the work before they arrived on campus.              pay for and get the best possible return
full-time job instead, think twice before          Think again! See if you are eligible for             on this investment.



                                                                                                         “Do some number-
    PAYING FOR COLLEGE 101                                                                              crunching (and
       The Free Application for Federal Student                                                         course planning) to
    Aid (FAFSA) is the starting point for most
    student financial-assistance programs. To                                                           see if taking classes
    maximize your chances of getting student
    financial aid, it’s important to submit the                                                         through the summer
    FAFSA as soon as possible after January 1 of
    the year in which aid is requested.
                                                                                                        will allow you to
       In Indiana, the FAFSA filing deadline is March 10. (Most financial aid offices require
    students applying for financial aid to complete the FAFSA application every year.)
                                                                                                        graduate early and
       After the first year, students will receive a FAFSA Renewal Application containing pre-          save a year’s worth
    printed information from the previous year’s FAFSA application.
       Learn more about the FAFSA at www.fafsa.ed.gov.                                                  of tuition.”
44 GRAD | 2011-12   WWW.GRADIND.COM

				
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