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MEDIA CENTER

The Money Minute - May 2012 

In this Issue

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Finances for High School Graduates

As parents across the country get ready to send their young adult into the world, Apprisen wanted to know how prepared they were to manage their own finances. We posed this question on our website last month and found out that sixty-one percent felt their student was not prepared at all, while only thirty-two percent felt they were only minimally prepared to handle their finances. This sends a strong message that parents need to do a better job to make sure their student has the skills and knowledge necessary to properly handle and protect their money when they are on their own.

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8 Free Ways to Have Fun this Summer

Summer is fast approaching and now is the time to start making plans. With kids out of school, you’ll need plenty of activities to keep them entertained and busy. The challenge is to help your family make the most of their summer without busting the budget. The good news is that there are many exciting and rewarding opportunities for you all to have fun, relax and not spend a whole lot of money. 

To read the entire article click here.

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Financing your College Education 

This year, more than 1.5 million students and their families will go through about 5 million college acceptance letters looking for the perfect fit for their educational needs. However, an even bigger consideration is finding the money to finance that education. It is very important for students and their families to not only seek out resources that will decrease out of pocket educational expenses, but also to have a realistic expectation of what their student loan payment will be after graduation.

Read the entire article.

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Feel Like Blowing the Whistle on Your Personal Finances?

MyCoach is about getting your personal finances on track and developing the skills you need to keep them there. Apprisen will be your partner to help you find real answers to your financial concerns. Over a period of two years, one of our certified credit counselors will work with you every step of the way as you set goals, develop a personal plan, and improve your finances. And the best part? There is no cost to this program.

Click here to learn more and apply for the MyCoach program.

 

Finances for High School Graduates 

As parents across the country get ready to send their young adult into the world, Apprisen wanted to know how prepared they were to manage their own finances. We posed this question on our website last month and found out that sixty-one percent felt their student was not prepared at all while only thirty-two percent felt they were only minimally prepared to handle their finances. This sends a strong message that parents need to do a better job to make sure their student has the skills and knowledge necessary to properly handle and protect their money when they are on their own. Only two percent felt their student was ready and five percent felt they were very prepared to handle themselves in the financial world. Apprisen offers these tips to start a discussion that will focus on how they will handle their money, their bank accounts and how they can start to build a positive credit history.

  • Have the money talk. Make sure you and your student agree on how money issues will be handled before they leave. Discuss who will be responsible for what expenses and what the monthly budget will be for those expenses. Help your teen establish a fixed amount that they can spend on food and entertainment. Have them avoid going to convenience stores and vending machines for quick snacks. Instead, scouring store ads or websites, such as Groupon or Living Social, will help them find discounts for economical food options. Investigate on-campus meal plans which are often built into student fees.  

  • Decide how bank accounts will be handled. Consider using a local bank or credit union at school. They sometimes offer special deals for students and it should be fairly easy to get a free checking account. Make sure the bank you use has ATMs easily accessible so you won’t have to pay ATM fees. They can add up fast. And make sure your student knows how to handle their checking accounts and ATM cards. Don’t assume they know. Put yourself as a joint owner on your teen’s account so you can have access to statements to see how he or she is handling it. When the account is opened, you have the option to “opt-in or “opt-out” of having transactions paid at the point of sale, if there is no money in the account.  If you “opt-out” the transaction will be denied and thus limit possible insufficient fund fees. If you “opt-in”, the transaction will be completed, however they could be subject to that NSF fee. An alternative might be to link the checking account to a line of credit to cover transactions when there is no money in the account. It would be critical to point out that this line of credit was not “extra money” but a safe guard in case of an error in the checking account. 

  • Help them establish a positive credit history. We live in a credit-dominated society with most of us dependent upon credit for major purchases. Ideally, while in school, your student should start to establish a positive credit file. Lenders, employers, service providers and landlords review this file, and having no credit or bad credit can prevent them reaching their financial goals after graduation. Due to the Credit Card Act, greater restrictions are in place to protect your student from getting credit that they don’t have sufficient income to support. However, with your help, they can still establish a credit history.  

  • Consider making them an authorized user on your credit card. This is a practice known as piggybacking, and is exactly what it sounds like. The student is attached to the parent’s card and has charging privileges, but no legal responsibility for payment since the card is not in his or her name. The activity on the account is reported to the credit bureau in both the parent’s name and the student’s name, thus the young adult builds a credit file of their own. This option allows the parents to monitor the student’s spending, and remove them from the card if things get out of hand.  However, keep in mind, if you mess up on the credit card, this will also be reported on your student’s credit report.  

  • Get a secured credit card. This type of credit card requires a cash collateral deposit which then becomes a line of credit, thus limiting any abuse. Make your student aware that sometimes, this type of card charges high fees which can greatly diminish their spending power. They can also expect a secured card to have an annual fee and a higher interest rate than an unsecured card. Make sure that the issuer reports to the credit bureau. If they do, and if they pay responsibly, a secured card can be a safe way to build a credit file. 

Make them aware that if they have unpaid cell phones contracts, library fines or other unpaid bills, those accounts could be sent to collections and thus turn up on their credit report as a negative item. It is important that they understand the importance of paying their bills on time, every time.

Finally, encourage your student to monitor their credit history. They can receive one free copy of their credit report from each of the credit reporting agencies, Equifax, Experian and Trans Union, once a year through annualcreditreport.com. This will strengthen their commitment to establishing good credit so when they graduate they will be in a stronger position to make their financial dreams come true.

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Financing your College Education  

This year, more than 1.5 million students and their families will go through about 5 million college acceptance letters looking for the perfect fit for their educational needs. However, an even bigger consideration is finding the money to finance that education.  According to the College Board, the average annual cost to attend a four-year public college is $8,244. For out of state students that number more than doubles to $20,770 and for private schools, it triples to $28,500.  Those costs do not include housing, living expenses or textbooks. It’s no wonder the national student loan debt is $1 billion. It is very important for students and their families to not only seek out resources that will decrease out of pocket educational expenses, but also to have a realistic expectation of what their student loan payment will be after graduation. Apprisen offers these resources to help you navigate your way through, what could be, the student loan nightmare.

Research various loan options to choose the best one for you.

  • Pell Grants are federal grants that do not have to be repaid and are awarded based on your financial need, up to $5,550 per year.
  • Military Tuition Assistance: Service members (active & reserve) are eligible to receive up to $4,500 per year. Military TA benefits do not need to be repaid.
  • GI Bill Benefits offer education benefits for service members and veterans. This funding covers tuition & fees, a monthly living allowance, and an annual book stipend. GI Bill benefits do not need to be repaid.
  • Perkins Loans are low-interest loan for students with exceptional financial need and do not accrue interest while students are enrolled in school, up to $5,500/year. 
  • Subsidized Stafford Loans are federal loans for students who demonstrate financial need and do not accrue interest while students are enrolled in school. These loans, which must be repaid, are available for up to $3,500 per year.
  • Unsubsidized Stafford Loans do not require students to demonstrate financial need; but, do accrue interest while students are in school. All dependent, undergraduate students may borrow up to $5,500/year. For independent undergraduate students, this limit rises to $9,500/year.
  • Private Loans often have variable interest rates, require a credit check and/or a cosigner and lack many of the repayment options of federal student loans. Students should exhaust all of their federal grant and loan options before taking out a private student loan.

The Consumer Finance Protection Bureau is launching a new tool on their website that will allow students and their families an opportunity to assess an easy to understand view of how their decisions today, when considering student loans, could impact their debt burden after graduation. Although only a prototype at this time, this tool can provide side by side cost comparisons of different universities, and of what your estimated monthly student loan payment might be. Although they are still working on enhancing this resource, this tool will give you some basic information so that you can make a more informed financial decision. To access this tool, visit www.consumerfinance.gov.

How to finance a college education is a decision that will impact your finances for many years to come. Take the time to do your homework and you can ensure that you make an informed decision.

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