FIN 101: week 9
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This 4 page Class Notes was uploaded by Rachel Rusnak on Wednesday May 11, 2016. The Class Notes belongs to FIN 101 at Ball State University taught by Professor Boylan in Summer 2015. Since its upload, it has received 16 views. For similar materials see Personal Finance for Fiscal Wellness in Finance at Ball State University.
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Date Created: 05/11/16
Personal Finance 101 Professor Boylan 1 Chapter 9: College Financing. ***on the test*** 1. Life’s Big Purchases. a. House- $182,000 average. b. Postsecondary education- $128,000 average. 1. Under $20,000 student first (fr/ soph). 2. $20,001-$30,000 ? 3. $30,001 or higher money/ job (jr/ sr/ super sr.) ii. Common belief is that students need to pay their own way to school so that they have “buy in” or some “skin in the game.” 1. Don’t pay for college= don’t care about college. iii. Pell Grant Spending. 1. #1 place where people are getting money. c. Car (multiple)- $30,000 average. d. Insurance (multiple)- $5,000 average. 2. What is Financial Aid? a. Financial aid is funds provided to students and families to help pay for postsecondary education expenses. i. Only for college. ii. College funding is financial aid. 3. Where do we get Money for College? a. 29% grants and scholarships. b. 28% parents. c. 18% students borrow. d. 12% student income from jobs. e. 9% students borrow from parents. f. 4% from relatives and friends. 4. Student Debt Loads Increasing. a. 1993- 4% of students had debt ($14,500). b. 2011- 66% of students had debt ($26,600). c. 2014- 72% of students had debt ($33,000; monthly payment $326). 5. Is It Worth Getting a Degree? a. What Americans earn in a lifetime. i. Less than high school $1,000,000 ii. High school grad $1,400,000 iii. Some college $1,600,000 iv. Associate’s degree $1,800,000 v. Bachelor’s degree $2,400,000 vi. Master’s degree $2,800,000 vii. Doctoral degree $3,500,000 viii. Professional degree $4,200,000 b. 67% of new jobs require more than a high school degree. c. More education= more money earned. 6. Financial Aid Income Statement. a. (+) Revenues (get as much as you can). i. Work study programs. ii. Pell grants and other grans. iii. 21 century scholarships. iv. Internships (paid) and jobs. v. Scholarships. vi. Gifts of money. b. (-) Expenses (keep low). i. Tuition and fees. Personal Finance 101 Professor Boylan 2 ii. Books and technology. iii. Food and housing. iv. Internships (non-paid). 7. Financial Aid Balance Sheet. a. (+) Assets (in a great world). i. 529 plans. ii. Tuition payment plans. iii. Employment plans. iv. Military benefits. v. Savings. b. (-) Liabilities (keep low). i. Stafford loans. ii. Federal Perkins loans. iii. PLUS loans. iv. Private and bank loans. c. (=) Net Worth. 8. What is Cost of Attendance (COA)? a. Billed by or paid directly to the college, such as tuition and on campus housing. b. Necessary expenses such as personal care items that are not paid to the college. c. Cost of attendance varies widely among different types of colleges. 9. What is the Expected Family Contribution (EFC)? a. Amount family can reasonably be expected to contribute, but not what the COA family will pay to the college. b. EFC the same regardless of what college the student attends. - EFC. Two components: i. Parent contribution. FN ii. Student contribution. d. Calculated using data from a federal application form and a federal formula. 10. What is Financial Need (FN)? a. The difference between the cost of attendance and the Expected Family Contribution. b. Need will vary based on the cost of different colleges. c. Your financial need determines how much aid you may receive. d. Colleges may not be able to offer enough aid to meet your financial need. 11. Categories of Financial Aid. a. Need-based. i. Award on the basis of financial need, as calculated using a form such as FAFSA. 1. Ex: grants. b. Non need-based. i. Awarded on the basis of a student’s ability or talent, such as academic achievements, athletic ability, musical talent, or ethnic background. 1. Ex: scholarships. 12. Types of Financial Aid. i. People who want to give out financial aid money can be discriminate however the want. b. Scholarships. c. Grants. d. Loans. e. Employment. f. Internships. i. 60% of graduates that had at least one internship got at least on job after graduation. Personal Finance 101 Professor Boylan 3 13. How Can You Improve? a. Check for grants and scholarships. b. Look for the cost of attendance. c. Watch out for the loans. d. Look for your expected contribution. i. Bottom line: make sure to carefully examine all financial aid awards. If you don’t understand something in the award offer, contact the school. 14. Is a Refund a Refund? a. It is really a loan you have to repay back. 15. How NOT to Blow it with Financial Aid. a. Adding $1,000 to a child’s bank account could mean $2,000 less in aid. b. Failing to apply for a second child could mean thousands of dollars of aid. c. Grandma giving $5,000 from her 592 plan could mean $2,500 less in aid. d. A $10,000 raise in income could mean $3,000 less in aid. i. Use your money first then the government money second. 16. Prepaid Tuition Plans. a. State Plans. b. Private Plans. 17. Tax-Free College Savings Plans. a. What they are. b. Invest IN one. c. Tax-Free investment plans. 18. Commercial Loans. a. Personal loans. b. Home equity loans. c. Other loans. d. You cannot default. i. Loans= cannot default. 19. Employer-Sponsored Loans. a. Offered by employers. b. Offered by US Military. 20. Alternatives to traditional College. a. Vocational school- Ivy Tech. b. Internet schools- University of Phoenix. 21. Transferring IN. a. Make sure you give advance notice and work with our current academic advisor and the new school advisor to ensure you are taking classes that will count for your degree at the new school. b. Other classes usually transfer in as electives. c. Go to a school with higher accreditation (move up the food chain). d. Be prepared for the “extra effort” needed at a tougher school. 22. Transferring OUT. a. Make sure you don’t waste money by going to a lower accredited school. b. Make sure you are at a school that specializes in your chosen field. c. Make sure you go to a school that cater to an education not yo your personal need. d. Coordinate between advisors. 23. 4> 5? a. Completing a degree in 5 years is significantly more expensive than completing in 4 years. b. The sooner you get out the more you make and save. 24. Common Federal Aid Programs. a. Federal Pell Grant. b. Academic Competitiveness Grant. Personal Finance 101 Professor Boylan 4 c. National Science and Mathematics to Retain Talent (SMART) Grant. d. Federal Educational Opportunity Grant (FSEOG). e. Federal Work-Study. f. Federal Perkins Loan. g. Stafford Loans. h. PLUS Loans.
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