How Working Can Help Your College Student

Wking-Help-College-Student

The financial, networking and training benefits of working while in college can seem pretty obvious. Students earn cash that can be used to offset loans, pay college costs and fund other expenses. They learn to value money and to budget. They can connect with professionals who may be able to help them locate and succeed in future jobs. They learn how to navigate the workplace, gain skills they can use in their careers and put classroom lessons into practical use.

What may not be so obvious is how working part-time during the academic year can also boost a student’s grades. Although a student’s first job is performing well in school, working for pay a few hours a week may help the student achieve more academically.

The most recent data available from the National Center for Education Statistics (NCES) backs up earlier research performed by Lauren Dundes and Jeff Marx of McDaniel College in Westminster, Maryland. Dundes’ 2006 study found that the academic performance of students who work 10–19 hours a week was better than all other students’ performance, including those who worked more or less and those who didn’t work at all.

According to 2012 NCES data:

  • The average GPA for all full-time college students is 2.99.
  • Those who worked 10–19 hours per week earned an average GPA of 3.07.
  • Those who worked 1–9 hours per week earned an average GPA of 3.10.
  • Those who did not work earned an average GPA of 2.98.

GPA Per Hours Worked

Estimated Hours Worked Per Week

Average GPA

0–40+ (overall) 2.988
0 2.981
1–9 3.105
10–19 3.065
20–29 2.972
30–39 2.895
40+ 2.971
Source: U.S. Department of Education, National Center for Education Statistics, 2011–2012 National Postsecondary Student Aid Study (NPSAS: 12)

Why Working Works

The reasons for the grade boost may vary widely by student, job and college, but researchers often conclude that the busier schedule forces students to better manage their available time.

Hanna, a graduate of an Iowa high school now attending Kansas State University, agrees. “Having the extra responsibility of a part-time job forces me to study more efficiently,” she said. “I know I won’t have the time to keep procrastinating.”

Another possible reason for the higher average GPA may be that students who work to pay for part of their education expenses are more invested in the outcome. Students who are likely to succeed because of their own goals and motivation may also be more likely to look for and obtain part-time work.

By: Iowa Student Loan

Student Loan Pro Tip: First Year Salary (Video)

Borrowing more than you can comfortably afford to pay back is setting yourself up for a difficult financial future. A simple rule to follow is not to borrow more to pay for college than your expected first year salary.

To learn more about student loans and avoiding debt, check out our Smart Borrowing resources: http://www.iowastudentloan.org/smartborrowing.

By: Iowa Student Loan

New Tool Helps Students Make Informed Grad School Decision

Iowa Student Loan Encourages Grad Degree Candidates to Consider Future Debt

Iowa Student Loan has a new online tool to help students make informed decisions about their borrowing levels and their ability to successfully repay new student loan debt when considering the pursuit of an advanced degree.

The Grad Degree Gauge is a free tool available online.

Users are encouraged to consider their current and potential annual salaries with and without the new graduate degree; previous and future borrowing to pay for their education; and opportunities in a career associated with the intended graduate degree.

“I felt [the Grad Degree Gauge] was extremely helpful,” said Jordan Doetkott, a first-year graduate student studying organizational leadership at Grand View University in Des Moines. “It was very user friendly and a great asset to someone pursuing a master’s degree….it was straightforward and easy to navigate.”

The results are displayed as a number on a 0–100 gauge. The overall result is a composite of four indicators:

  • Current student loan debt in addition to maximum advisable new student loan debt
  • Anticipated salary change from the amount expected to be earned by holders of the previous degree, or the user’s actual salary if the user is currently in the workforce, to the amount expected to be earned by holders of the intended graduate degree
  • Number of new jobs in the indicated career by 2024 as projected by the U.S. Department of Labor’s Bureau of Labor Statistics
  • Percentage of people working in the indicated career who have a graduate degree as indicated by the BLS Occupational Employment Statistics

“A lot of factors can come into play when people decide whether it makes sense to pursue an advanced degree,” said Steve McCullough, president and CEO of Iowa Student Loan. “We want the ability to repay student loan debt to be one of the main things that students think about, whether they are continuing their education straight from a previous degree or going back to school after being in the workforce.”

 

Additional Resources
Also being debuted by Iowa Student Loan is the Parent Handbook, which consists of valuable tips that help families of students in sixth through 12th grades prepare for success in college and other postsecondary options. The Handbook is designed to address common questions and provide a roadmap for academic and financial success.

By: Iowa Student Loan

Find a Budgeting System that Works

When someone says budgeting some people find themselves cringing a little at the thought.

For many, the idea of a budget means less freedom and less fun. But the truth is that having a budget provides a lot more freedom in the long run.

To make things easier, you can use the word “plan” instead of “budget.” Everyone has made a plan at one time or another, whether it’s a small list of things to do, a get-together with friends, or a trip.

Making a budget is simply another form of making a plan. It’s figuring out how much you have coming in (income) and what expenses you have to cover (bills/spending). Your budget is a plan to have enough income to cover all your expenses while ensuring there’s enough left over to do what you really want to do.

Understanding how much money you have enables you to plan ahead for bigger things and provides you more freedom because you’ve already determined what you can afford and how you want to spend your money.

Budgeting can seem overwhelming but there are a lot of great tools and resources to help you get started.

Mint.com is free and does all the work for you. This online tool links to all of your accounts over a secure site and tracks income, spending and overall debt. There’s lot of features, including setting spending limits, email alerts, goal setting, and a mobile app.

Other ways of tracking your spending include resources such as Dave Ramsey’s EveryDollar, Feedthepig.org, your bank or credit union’s online system, or a simple spreadsheet. Some people even use the envelope system where cash is added to envelopes each month and bills and expenses are paid directly from there.

No matter what system you find is right for you, it’s important to track your spending and know where your money goes. The more financially responsible you are, the more freedom you will find when it comes time to do the things you really want to do.

Note: some systems, including Aspire Servicing Center’s,  do not support automated integration with sites like Mint.com and may require you to manually input your info.

Contributed by: Iowa College Access Network

This is Contributed Content. Any opinions, advice, statements, services, offers, or other information contained in Contributed Content are solely those of the respective author(s) or contributor(s) and do not necessarily state or reflect the opinion of Iowa Student Loan and/or this blog. See the “About” page for additional important information about Contributed Content.

Planning for Student Loan Repayment

Header image: Planning for Student Loan Repayment

It can be tough to know where to start with student loan repayment. After you graduate from college, you typically have six months before repayment starts on your student loans. This is your grace period, the time for you to figure out your job and living situation before you are expected to start making payments.

Gather Your Loan Information
The important thing during this time is to get your budget in line and figure out how much your monthly payments are going to be. The National Student Loan Data System (NSLDS) is the US Department of Education’s central database for student aid and has the list of all your federal loans, how much you owe, your interest rate, who your loan servicer is, and their contact information. Visit https://www.nslds.ed.gov/nslds/nslds_SA/ to get started (you’ll need your FSA ID to gain access).

Private loans will not appear on the NSLDS website, so you’ll have to contact each lender individually for the loan information if you have any private loans.

Consider Consolidation
Once you have all your loan information gathered, the next decision is whether or not to consolidate. Consolidating your loans will take all your individual loans and payments and combine them into one balance and one payment.

Keep in mind that federal loans and private loans can only be consolidated together through some private loan options, and you will be forfeiting federal loan benefits to do so.

  • Private loans: Consolidation of private loans can be a good idea if you can get a lower interest rate than your current loans have individually. When you look into consolidation, inquire about the current loan rate. You can contact your loan servicer or visit their online account portal to determine your consolidation options and your repayment options.
  • Federal Loans: For federal loans, visit https://studentaid.ed.gov/sa/repay-loans/consolidation to see the benefits of consolidation. While you can’t lower your federal loan rate, you may find other reasons this is beneficial for you.

Entering Repayment
Once you start repayment, there of several types of options for federal loans:

  • Standard Repayment
  • Graduated Repayment
  • Extended Repayment
  • Revised Pay As You Earn Repayment
  • Pay As Your Earn Repayment
  • Income-Based Repayment
  • Income-Contingent Repayment
  • Income-Sensitive Repayment

For all the details on these Federal Repayment Options, visit https://studentaid.ed.gov/sa/repay-loans/understand/plans. For private loan repayment options, contact your loan provider.

Pick the plan that allows you to pay the debt down in the fastest amount of time with the least amount of interest. Some of the repayment options offer extended repayment terms up to 25 years and very low monthly payments. However, this just means you are incurring more interest and carrying the debt with you through most of your adult life. Other major financial decisions (such as purchasing a home) in your future can be impacted by your choice of student loan repayment plan.

You also want to focus on planning for retirement. After graduating from college retirement seems a lifetime away, however now is the best time to capitalize on that lifetime of savings. The more you can contribute to a 401(k) or Roth IRA now, the more time it has to grow.

The sooner you are out from under your student loan debt, the sooner you can start capitalizing on your financial freedom and bring your focus on your future goals.

Contributed by: Iowa College Access Network

This is Contributed Content. Any opinions, advice, statements, services, offers, or other information contained in Contributed Content are solely those of the respective author(s) or contributor(s) and do not necessarily state or reflect the opinion of Iowa Student Loan and/or this blog. See the “About” page for additional important information about Contributed Content.

How Making Interest Payments Can Save You Big Money Later

If you’re funding part of your college education with student loans, you may occasionally receive statements, even though no payments are due. Ever wonder why?

Those statements are important, and understanding why can save you money in the long run.

They notify you that, even though you don’t have to make payments while you’re in school, interest is adding up on your loans — every single day. If this interest is not paid as it accrues or before your loans enter repayment (usually six months after you leave school), it will be added to your principal balance. If it is added to your principal balance (a process called capitalization), you will then owe more than you originally borrowed. And, the now larger principal balance starts to accrue interest on a daily basis, so you will be paying interest on the accrued interest.

How can you minimize this increase to your loan balance? If you manage to earn or save some money while you’re in school, you can make monthly payments that pay down the interest as it accrues.

Here’s an example of how making small payments every month could save you more than $1,500 over the full life of student loans.

Note: The information below is an example only. Your payment amounts will depend on the types of loans you receive and the interest rates and the repayment terms on those loans.

Making-Interest-Payments-SaveYouMoney-infographic

Download a PDF of this infographic.

Establishing Financial Habits

Making everyday spending decisions—like whether to order pizza or go to the Caribbean for Spring Break—in college, helps you establish the financial habits you’ll use in the future.

Although eating out every Friday night sounds like a good thing, it may be worth it to give up that treat in exchange for savings of thousands on your future student loan payments.

By: Iowa Student Loan

A Monthly Budget Can Help You Repay Loans

Low on cash and wondering how you will start repaying your student loans?

Make and stick to a budget to make your monthly payments. Check out our budget calculator for more help.

If you are not out of school and in repayment, we have other calculators to help you succeed:

If you have trouble balancing your budget, check out these tips to reduce your spending:

By: Iowa Student Loan

Know Your Student Loan Servicer

KnowYourStudLnServicer

As you begin your life after college, you likely have several different responsibilities, from a new job to managing your own insurance and other activities. One important task is to get to know the servicer or servicers for your student loans.

What Is a Student Loan Servicer?

Your student loan servicer is the organization that handles customer service, including collecting and tracking your payments, for the loan. Depending on the number and type of your student loans, you may have one servicer or several.

Why Do I Need to Know Who My Servicer Is?

You need to be aware of your servicer for several reasons.

  1. You will soon need to start repaying your student loans, and you need to know where and when to send payment. You may also want to set up features, such as an online account and automatic withdrawals, that will help you manage your student loan payments.
  2. Your servicer can help you understand and choose from available payment plans. Most borrowers enter repayment under a standard payment plan that pays off the loan in equivalent monthly payments over the full term of the loan, but you may be able to choose a different plan that works better for your current situation. If you are entering the workforce at less than what you expected to earn, you may be able to make lower payments based on your income or according to a preset formula at first. If, on the other hand, you have the chance to make higher payments now before you have additional family, car and housing expenses, work with your servicer to determine the best way to pay down your debt.
  3. Your servicer may offer assistance if needed. If you don’t have or lose your income or you face another difficulty that makes student loan repayment challenging, you may be eligible to postpone payment. You will need to work with your servicer to understand your options and choose the one that works for you. Be aware that interest continues to accrue on student loans during repayment, and unpaid interest may capitalize, or be added to your principal balance, at the end of assistance. In certain cases, you may be eligible to have some or all your student loan debt forgiven, and your servicer can help with that as well.

How Do I Locate My Servicer?

Your servicer may be the entity that provided your loan or it may be a separate entity that acts on behalf of the current owner of the loan.

  1. Determine if you have federal student loans. Often called Stafford or Direct loans, these loans are provided by the federal government and were likely included in the financial aid package you received from the college you attended.
  2. Use your FSA ID to log in to the National Student Loan Data System. If you filed a Free Application for Federal Student Aid after May 2015, you probably created an FSA ID then. If it’s been some time since you filed a FAFSA, you may need to visit fsaid.ed.gov to create an ID. Then go to nslds.ed.gov to log in and view your federal loan information, including the servicer.
  3. If you have private student loans you obtained from a bank, credit union or other lender to pay remaining college costs after your financial aid, refer to the information your lender provided when you took out the loan and progressed through school. As the due date for your first payment approaches, you will likely receive communications from the lender or servicer about how to make your payment.

If you can’t locate a private student loan servicer, contact the entity that lent you the money or your financial aid office. You may also be able to see your lender or servicer name on your credit report (remember to access a free report at annualcreditreport.com).

By: Iowa Student Loan

Decision-Making Tips for Student Loan Debt

When available financial aid and federal student loans are not enough to cover the total college costs, many families turn to private student loans. These loans can be a useful way to cover the gap, but they are not all created equal.

When you are considering private student loan debt, use these decision-making tips.

Understand how student loan interest accrues.

  • Student loans accrue interest on a daily basis. Even if the borrower is not required to make payments while in school or for a period of time after leaving school, interest is accruing, so the repayment amount is more than the original loan amount.
  • Capitalization, or the addition of accrued interest to the principal balance, occurs in specific circumstances. According to the terms outlined by the loan’s credit agreement or promissory note, any unpaid interest will be added to the principal balance at specific times. When unpaid interest is added to the principal, interest begins to accrue on new balance, meaning that interest will be paid on interest.
  • Generally, payments are applied to any unpaid, outstanding interest with any remaining payment amount going toward principal. If a payment is not enough to cover all outstanding interest, the unpaid portion of interest is carried over to be paid by the next payment.
  • Increases to the loan balance may be prevented by payments that at least cover interest any time they are not required, such as while the borrower is in school. Most lenders allow prepayment of any amount without penalty.

Know your comfort level with interest rates.

  • Would you prefer a fixed or variable rate? A fixed rate is set for the life of the loan regardless of market conditions, helping ensure payment amounts remain constant. A variable rate may go up or down, sometimes dramatically, during the life of a loan, causing corresponding changes to payment amounts.
  • Is it important to know the interest rate before submitting the application? Some lenders provide only a range of available rates before the loan application is processed; others specify the criteria to receive specific rates. In either case, the borrower is able to decline a loan and reapply elsewhere if not satisfied with the rate received.

Be aware of fees and underwriting and credit criteria.

  • Read any information about what types of fees are assessed and when. Will an origination fee be charged when the loan is received? When do late fees kick in?
  • These fees are separate from the interest rate. An origination fee is a one-time expense; late fees are only assessed for payments made after the due date. Interest is charged on the balance of the loan until it is paid off. Compare the annual percentage rate (APR) between loans for a more accurate picture.
  • Some lenders publish more information about their underwriting and credit criteria than others do. If you are unable to find details about the types of borrowers who qualify for loans or specific rates, contact the lender for more information.

Some loans carry benefits for the borrower or cosigner.

  • Borrower benefits, such as a reduction in interest rate or the ability to release a cosigner from payment obligation, are sometimes earned by making a certain number of on-time payments, setting up automatic payments or another qualification.
  • Make sure you understand all eligibility requirements for benefits, including reasons for losing them. A payment received even a day late could be enough to end benefits.

Consider the broader picture.

  • Beyond the specifics of a particular loan, think about the lender. You or your student will likely be working with this lender for many years after leaving college while repaying the debt. Does the lender service its own loans, and does it have a good reputation for customer service?
  • Other considerations might be whether the lender is focused solely on student loans or is likely to try to market other items like credit cards to you or your student in the future, as well as whether the lender reinvests in the community through employment, nonprofit endeavors and education about student loan debt and products.

By: Iowa Student Loan

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