Financial Literacy

This page is designed to help students in developing the skills necessary to make informed financial decisions.  Choosing how to pay for college is often one of the first major financial decisions that young adults make.  Financial literacy can provide an understanding of how to manage personal finances, establish financial goals, and form a plan to reach them.

The following resources provide information on key concepts that students should understand, good financial habits for students to practice, and tools and resources available to help communicate these concepts to students.

BUDGETING

The Basics of Budgeting

The basics of budgeting are to form good financial habits and develop an awareness of spending.  Many resources exist to help students create and manage their budgets.  StudentAid.gov hosts a budgeting video that can be useful when helping students in the early stages of this process.

The Benefits of Budgeting

Budgeting is important because

  • -it helps students meet their expenses and create plans to reach their financial goals
  • -short-term and/or long-term financial goals help create a framework conducive to financial success
  • -it helps students develop a sense of control over their money
  • -it reduces students’ anxiety levels regarding financial and academic matters
  • -it can contribute to students’ creditworthiness
  • -it improves students’ understanding of their school’s Cost of Attendance (COA)
  • -it identifies where funds should be going versus where they were actually spent, and demonstrates the importance of maintaining a balance between earning and spending

Setting Goals

Establishing academic, financial and personal goals is a good way to start the budgeting process.  Goals can provide students a context that allows them to better understand the benefits of saving and the long-term impacts of poor money management.

  • Academic Goals
    • Graduating on time (the length of time spent in school has significant financial impacts)
    • Getting good Grades while in school (these can lead to scholarship opportunities)
    • Obtaining a certificate, degree, or degrees
    • Becoming a leader in one’s field
  • Financial Goals
    • Short-term savings goals (placing a percentage of every paycheck in a savings account or accumulating minimal debt prior to graduation)
    • Long-term savings goals (e.g., paying off a car within five years or saving for a down payment to purchase a house)
  • Personal Goals
    • Establishing a Career
    • Choosing place of residence

Federal Student Aid offers additional budgeting tips at StudentAid.gov/budgetingtips as well as the resources below:

Budget Planner Worksheet

Saving Strategies

Managing Your Money

REPAYMENT

Understanding Repayment

Students being education about their responsibilities and options helps to decrease default and delinquency rates.  Students are required to complete entrance counseling before receiving their first loan.  Students can use the Financial Awareness Counseling Tool to access their loan balances, understand their repayment options, and use helpful interactive budgeting tools.  Financial Awareness Counseling can be accessed with or without a student login at StudentLoans.gov/myDirectLoan/

Students are encouraged to explore their repayment plan options, including income-based repayment plans.  Federal Student Aid’s Repayment Estimator is a useful tool which can help borrowers get an early look at which plans they might be eligible for and see estimates for how much they would pay monthly and overall.  It is available at StudentAid.gov/repayment-estimator.  Using basic money management skills will reduce students’ chances of making repayment mistakes that may adversely impact their credit scores.

Establishing contact with their loan servicer(s) prior to beginning repayment will help avoid misunderstandings about the payment amount and schedule. Students should be mindful of keeping the school and loan servicer updated on any changes in their contact information, such as their mailing address, that could lead to missing important notices or correspondence.

Borrowers experiencing difficulty meeting their repayment obligations may have options, including loan consolidation, changing repayment plans, deferment, or forbearance.  Students can contact their loan servicers with any questions regarding repayment at StudentAid.gov/servicer.

Other useful information regarding loan repayment:

Repaying Your Loans

Trouble Paying Loan

ref:Studentaid.gov for information