Tag Archives: financial literacy

Project Time

25 Oct

When I was in high school I had a column in our school newspaper called “Sports For Idiots” and each month I would review a new sport and give basic information about the sport. I would write about the general rules, how many points are scored for each goal, home run, touchdown, etc, how many players on the court, field, ice, etc, and explained some common lingo so that the uninformed can gain a general working knowledge of the sport and understand and perhaps enjoy better the sporting events they watch. It was definitely my favorite running column that I wrote.

I think my experience doing this has prepared me for my new gig as the Financial Literacy person in my office. Having the ability to help totally uninformed people to gain important knowledge that will benefit them profoundly is apparently my thing. I am working to help our students gain the skills that will allow them to make responsible well informed choices about their financial future and it has given me a new sense of purpose in my sometimes mundane job. I am pretty excited about this if you can’t tell :).

dos-equis-meme

College decisions: what do you need to know?

28 Apr

desk

I recently posted about college tours and our brief family trips to UCLA and Pepperdine. I am a Financial Aid Counselor at a local private university and I work closely with the Undergraduate Admissions department on our campus in Enrollment Management. I also run the loan program here as well as community outreach and financial literacy. I am highly involved with many families as they make their college decisions whether I am at my desk or giving a high school presentation.

College is very expensive these days, I feel that this is not news but somehow year after year families have sticker shock and start looking around their accounts for money they didn’t remember to start saving before their kid was on the verge of graduating high school. Sometimes our circumstances do not allow for us to save masses of money for college in advance, and that okay too. The most important thing to me as a financial aid administrator is that people make responsible decisions.

Now let me tell you a little story about my college experience. When I was going away to school I was sat down by my dad and told “this is how much I can give you to help pay for your college and housing and the rest is going to be on you to get a loan which I will co-sign for”. He showed me a figure and I said, “Ok, fine, sure, whatever, no problem, let’s sign that application”, because I was an idiot. I can laugh at myself now knowing what I know and sitting where I sit. I was just like so many other kids who have NO real concept of money. What is money? You know that you need to get it so you can pay for stuff. But in today’s world that students are growing up in (even with my generation) there is no real interaction with money: you have a job, that job direct deposits your money to your bank account, you go to the ATM or on your iphone and look at a balance, then you use a credit card or debit card to pay for things, you get an email when your online statement is available. And I find for most students that I knew when I was a student and for those I come into contact with they do not really grasp the concept of how much living costs either and what kinds of jobs provide you with salaries that will support the lifestyle that students assume they will live post graduation.

There are four components that I find very important when working with a student on where they should attend school. Now I want to state that I am not a dream crusher who is up on a soap box telling students they shouldn’t go to the schools of their dreams, but I am someone who wants to make sure that students make wise and responsible decisions while fully knowing the consequences of their choices.

1. Knowing The Cost: finding the school(s) of your dreams is great, that school where you feel like you are at home just by stepping on campus, you can picture yourself making the most of your youth, the school that has the perfect major for you and staff that gives you the warm and fuzzies. Now comes the most important part- how much does this cost? I can’t tell you how many times I have worked with families that say: “I told my kid they could go wherever they wanted, they want to go here- so now I need to make it work, because I promised”. I will tell you right now a very important lesson: do not make promises to your children unless you know for a fact that you can fulfill them, therefore making a promise to a 14 year old that in 4 years you can any college they want as long as they do well in school – not a good idea! So what does this ‘most amazing college ever’ cost? This is something that you need to look into and take a good close look and then project out for four, maybe even up to six years. You need to look at the direct charges for the school (anything the school is actually charging you), account for housing costs (on or off campus), transportation, food, supplies, etc. then extrapolate that amount over time and account for a typical 4-6% increase in charges per year as is customary in most institutions. This may end in the conclusion that someone is going to need to take out a loan (either the parent or the student).

2. Picking a Major: this is probably one of the toughest things to do. When you open a college catalog you become inundated with so many majors it can make your head spin. Some of these majors you probably have never even heard of or you have no idea what kind of jobs come with different majors. It’s important to look at your skills and to spend some quality time pontificating about what type of job you would like, what could you see yourself being happy doing, what will fit into the lifestyle you would like, and what will help you afford the lifestyle that you would like to have realistically. If you like the idea of being a doctor but will literally pass out at the sight of blood, it may not be a realistic goal for you, but that doesn’t mean that you can’t do something else in the field of medicine that can fulfill you. I am not saying you should not follow your dreams and your passions but be aware of your limitations and how this passion for whatever subject matter or major will help you to attain a career that will allow you to support yourself in the future. One suggestion I have when it comes to looking into which major to select is not only to work backwards from which job you would like to have but also look at the salaries that come with that job which will be important in later steps.

3. Repayment of Student Loans: The reality of this day is that most college students are graduating with some college loan debt, it’s unfortunate but true. Students find themselves in situations where they want to go to a school and they just cannot afford it without outside assistance. Often I see student’s signing up for monster loans without batting a eye, without realizing what the payments on this type of loan will look like and how they will be able to afford them. I too was in this boat, I signed on the dotted line thinking arbitrarily: “I will make enough to pay this” without knowing even what the beginning salaries for the field I *hoped* I would break into and without knowing what the costs of my other living expenses will be. Don’t fall in that trap, at least look into what this is going to cost you on a monthly basis, don’t be surprised when you graduate about what your payments will soon be. And always know that you cannot dismiss student loan debt through bankruptcy.

4. Affording Post-grad Life: it’s great that you have now picked your major and know the job that you want to get when you graduate, what else? You should consider the cost of the lifestyle that you would like, or at least look into the lifestyle that you will be able to afford once you land this job you plan to get. First, consider the lower end of the salary range, since you are new to the field and are a new graduate, then think about the amount of taxes that will come out, then the cost of rent, insurances (medical, dental, car, etc), utilities, loan payments, credit card payments, personal expenses, etc. and if you somehow can squeeze a couple dollars a month- savings or a retirement account. One good suggestion that my husband made for this is looking at an area that you would like to live in and check out rents, this will typically help give you a good point of reference. Will you be living with mom and dad for a while? Will you be living with one roommate? Or five?
In summary these are four components, not a step by step, which means you may go back to one (picking a major) once you realize that the salary you can expect wont allow you to afford your rent and your loan payments that you got to be able to pay for school. Or you may realize that you love the major and can swing it on the salary but not with loans you need for an expensive school so you may decide a less expensive school is for you. The most important thing is to get all the information and do your homework!

piggy