Celebrate College Savings Month with College Savings Iowa

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With back-to-school in full swing, I know it can be a busy time of year for parents and children alike. It also is a busy time of year for College Savings Iowa!

Since the program’s inception in 1998, our message has always been the same: by starting early, saving regularly and making smart investment choices, families can make their savings work for them. To celebrate College Savings Month this September, we introduced a new financial literacy initiative, College Savings Iowa InFocus, to help families learn how they can make their savings work for them.

This interactive learning experience introduces parents, grandparents and others to the benefits of saving for the higher education of a loved one. It offers savers the chance to understand the ins-and-outs of 529 plans. So join us in celebrating College Savings Month by completing College Savings Iowa InFocus! As a bonus for taking the extra step and learning about saving for your loved ones’ futures, families who complete the 10 minute tutorial are automatically registered to win a $1,000 College Savings Iowa account. Visit Iowa529InFocus.com to complete the tutorial and see the official rules.

College Savings Iowa is offering an additional $10 contribution to the first 500 people who complete the tutorial and open a College Savings Iowa account as another way to encourage families to take the first step towards saving. The newly established accounts must have a minimum $25 contribution and be opened within the first seven days of tutorial completion to be eligible for the $10 contribution.

By investing in your children’s education, you are investing in their future. I encourage you to make time and evaluate your college savings strategies. I know families are already busy juggling the demands of work and home, which means college planning may be the last thing on their minds. But with the cost of a higher education rising faster than inflation, nearly every family will face the question of how to pay for it when the time comes. Thankfully, the answer is quite simple – start saving today.

To learn more about College Savings Iowa, visit CollegeSavingsIowa.com or call 888-672-9116. Also, be sure to join the college savings conversation by following us on Facebook and Twitter (@Iowa529Plan) to learn about future giveaways, college savings tips and events!

Help make college a reality for the children in your life by starting to save today – you’ll be glad you did!

By: Michael L. Fitzgerald, Treasurer of State

Contributed by: College Savings Iowa

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.

4 Ways Dropping Classes Can Cost You

It happens to a lot of college students sooner or later: You enroll for a class, without realizing until after the semester starts that it’s just not for you. Colleges and universities plan for this by building in policies that allow dropping or withdrawing from classes, but doing so can cost you more than you realize.

4-Ways-Dropping-Classes_Cost-You

1. You may not graduate on time.

  • More tuition and fees to attend for extra semesters.
  • Increased loan balances.

2. Depending on your school’s policies and how far into the semester you are, you:

  • May or may not be eligible for full or partial refunds of tuition for dropped courses.
  • Likely will not be reimbursed for related costs like registration and payment plan fees.

3. If you enroll late in a replacement class, you may end up spending more for new books and materials instead of being able to rent or buy used.

4. Your financial aid might be affected.

  • A “withdrawn” or “F” on your transcript can lower your GPA, and you may lose financial aid if you don’t meet minimum requirements.
  • If you drop below half time, you will lose aid and benefits:
    • You will no longer be eligible for federal work-study programs.
    • You may lose all or part of federal and state grants.
    • Loans may enter a grace period or repayment immediately.

Before dropping a class, speak to your academic adviser and, if necessary, the financial aid office, about your options and how to avoid financial consequences.

By: Iowa Student Loan

5 Small Changes to Save Big

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It’s easy to spend a couple of dollars here and there without realizing how they add up. Before you know it, finances can be pretty tight.

Use these tips to help you make small changes that can save big money over time.

1. Make your own coffee.
Day-to-day caffeine runs can add up quick. Instead of $3 or $4 dollars for a large gourmet takeout coffee, spend less than a dollar per cup to make your own. Your favorite coffee chain might even have a brew-at-home version available at the grocery store.

2. Skip the fast food.
An average fast food meal costs $5 or more. Eating at home or on your meal plan instead for four meals a month saves at least $20 a month and $240 a year outright. If you tend to order a bacon cheeseburger and fries, your health may benefit from more nutritious meals as well.

3. Stay home on date night.
Renting an inexpensive movie instead of going to the theater can save between $7 and $10 for each of you. If you and your significant other see a movie every other week, that’s about $200 a year in savings.

4. Drop the Wi-Fi subscription.
If your campus and local gathering spots offer free Wi-Fi, you may not need to pay for a separate Internet service. Even less expensive plans run around $40 a month. Drop it and save nearly $500 over a year.

5. Work part-time.
Working just 10 hours a week at minimum wage lets you bring in more than $2,400 a year. Plus, you gain valuable experience to improve your chances of landing a great job after college.

See more tips (PDF) on how to save money in college.

By: Iowa Student Loan

How Much Should You Save for College?

How-Much-Should-You-Save-for-College

At the start of your senior year in high school, how you’ll pay for college may not be a high priority yet. It’s something you should be thinking about, though, as you consider different colleges and the costs associated with attending each one.

A national study, How America Pays for College 2015, shows that the average student contributes 11% to the total cost of his or her college education. That is money from the student’s income and savings, not student loans.

So, how much should you plan to save for college this year?

That answer depends on a multitude of different factors, but the easiest response is “as much as possible.”

If you want a more precise number, though, there are things you can do now to determine how much you want to save during the next 12 months.

Create a Budget

Use an in-school budget tool to start forming an idea of how much money you’ll need to live on each month. It’s OK to guess right now and try out different calculations. How much will you cover with grants, scholarship and student loans, and how much will you need to have on hand each month for your extra costs?

If you live on campus in a dorm during your freshman year at college, many of your expenses will be set and you’ll be left with a smaller number of variable categories. But if you’ll be living off campus, you will have to calculate additional costs like your portion of the monthly rent, gas and car maintenance, and how you will fill a refrigerator.

Figuring out how much you will need each month can help you set a goal for the amount you definitely want to save during your senior year.

Compare Costs

While you’re creating different in-school budget scenarios, be sure to consider the costs needed for different schools you’re considering. Less-expensive schools might seem like the way to save money, but many times those institutions also have less money to offer in terms of scholarships and grants compared to more-expensive colleges or universities.

Anticipate that you will need more spending money than you think to ensure you don’t greatly underestimate how much you will need to save.

Reduce Expenses

Is your budget a lot higher than you expected? Check out these ideas for ways to save on supplies. Will any of those options help reduce your monthly budget?

You can also consider options such as:

  • Living at home and attending a community college for your first year or two to meet your general education requirements.
  • Planning to work part-time during college to help you cover some monthly expenses.
  • Cutting back on entertainment or other non-necessities to reduce the amount needed for spending money each month.

It may seem like a daunting task, but the more you’re able to save for college today means less that you will have to borrow in the future.

By: Iowa Student Loan

6 Ways to Help Your Student Save

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If you’re not independently wealthy, chances are you’ll be relying on a variety of sources to help your child pay for college: scholarships, loans, your own savings and earnings, and your student’s savings and earnings. How can you help your student maximize savings so you don’t end up draining your retirement resources to help them out?

1. Understand how much your student will need.

Many free online calculators provide estimated college expenses for a variety of college types for the year your student will enter college. Try different scenarios to understand the range of expected college expense.

2. Foster an environment of saving.

What do you do with your paycheck? If you expect your child to save 50% of earnings in a savings account, set an example by building your own savings. The same goes for discount shopping, clipping coupons and so on.

3. Encourage your student to reduce expenses.

If your child tends to spend a large portion of earnings and gift money on clothes, for example, work with him or her to find ways to dress in the same manner for less. Think creatively—garage sales, thrift shops and discount store sales can provide a wealth of bargains.

4. Explore interest-bearing accounts with your child. 

Leverage savings by depositing the money in an interest-bearing account. Spend some time researching options and discussing the risks and advantages to different account types. Make an appointment with a specialist at your own financial institution and attend with your student so you both learn your options.

5. Know the options to reduce college costs.

If you realize you and your child will not be able to save enough for college by the time he or she will be ready to enroll, consider how to reduce the overall cost of college. Will your student be able to live at home? Attend a less-expensive school, at least for part of his or her education? Work while attending college? Apply for more scholarships and grants? Graduate early?

6. Set goals and monitor progress.

Use what you’ve learned about college costs and financial products to set goals. Then, periodically check that your student is working toward those goals. You may consider a matching contribution or other reward for progress.

By: Iowa Student Loan

Interview Tips for On-Campus Jobs

Working on campus offers several benefits for college students from convenience to flexibility. In addition, you may gain valuable skills and contacts for your future career path. Use these tips to help you land the job.

Interview-InfographicDownload a PDF of this infographic.

Before Interview Day

  • Look at the department or office website to understand its mission and activities. Then, articulate how those are tied to your own goals and how you can help your employer.
  • Ask how long the interviewer expects the session to take and schedule appropriately. Plan to arrive early.
  • If you’re communicating with the interviewer, ask about the office dress code. If you’re unsure how to dress for your interview, err on the side of more business than casual, even if it means overdressing for your 8 a.m. class.
  • Know your availability. How many hours can you work during the week without affecting your studies? Do you have a regular activity or commitment that you’ll need to schedule around?
  • Ask potential references who aren’t related to you if you can give out their contact information.
  • Prepare your answers — with examples — to common interview questions, such as:
    • Name an accomplishment you’re proud of.
    • What previous jobs have you had and what did you do?
    • Tell me about an area you’d like to improve on.
  • Think of at least two questions to ask the interviewer.
  • If you’re nervous or haven’t had a job interview before, work with your campus’s career services to practice.

Day of the Interview

  • Have the interviewer’s contact information with you in case you’re unavoidably delayed.
  • Bring a copy of the resume and cover letter you submitted when you applied, as well as a transcript or other documentation that show your qualifications if the job is related to academic ability. Bring along your reference information as well.
  • Arrive five to 10 minutes before your scheduled interview time.
  • Silence or turn off your phone and put away earbuds and other electronics.
  • Dispose of any food, drinks or gum before you enter the office.
  • Introduce yourself and shake hands firmly.
  • Be friendly and relaxed (but still professional).
  • Show that you’re attentive by making eye contact with the interviewer, nodding and smiling as he or she describes situations or asks questions, and paraphrasing questions in your response.
  • Don’t feel like you need to rush every answer. Thinking for a few seconds can help you make sure you convey the impression you want to give. If you don’t understand a question, ask for clarification.
  • Before you leave, ask about the next steps and the timeline for those.
  • Thank the interviewer for his or her time and shake hands again.

After the Interview

  • Within 24 hours, send a more formal thank-you by email.
  • If you haven’t heard anything within a couple of days after the timeline you were given at the interview, follow up. Let the interviewer know that you are still interested in the job and offer to provide any additional information needed.

By: Iowa Student Loan

Fixed or Variable: Which is Best?

Fixed-or-Variable

When faced with the need to find funds to close the gap between college costs and available financial aid, many students and their families turn to private student loans. One of the first choices a family looking at a private loan needs to make may be choosing between a variable and a fixed interest rate. Which is best? The answer: it depends.

First, you should know that variable rates are typically lower than fixed rates. Why? Nobody can predict the future accurately. Because a bank is in the business of making money they must always consider the risk of lending money. One of those risks is called “interest rate risk” – the risk that in the future the bank will need to pay a higher interest rate to its lender for the money it has lent to you. A fixed rate loan, especially one with a long term like a mortgage or a student loan, offers a rate that anticipates higher future rates.

On the other hand, a variable rate loan is usually presented to the consumer as a base rate (such as Prime or LIBOR) plus a “margin”. This assures that the bank will always earn money because when the rate the bank pays to borrow money changes, the base rate will change in the same direction, but the bank will always have a consistent “margin” – that extra percentage they add on to the base. Banks love predictable cash flows – hence, the lower rate for variable rate loans. But, there is a risk to you – what if the base rate increases significantly over time? Your payments will increase to a level that may be higher than one you are able to afford.

So, in the end, the choice between a fixed and variable interest rate is a personal choice based mainly on the borrower’s long-term and short-term goals. What should you consider when weighing the decision between variable and fixed rate loans? Experts say that the answers to just a few questions can help make the decision easier.

Do you believe interest rates will increase significantly over time?

To answer that question you may need to do some research or consult with an expert, but, in general, if you imagine interest rates will increase beyond the offered fixed rate (and stay there) over the term of your loan (around 15 years if you include the time in school), you may want a fixed rate.

Do you imagine being able to pay off the loan faster than the repayment schedule assumes because of an expected windfall in the future or a very high-paying job?

In that case, a variable rate may work for you.

Do you like consistency so you can more easily create a budget?

A fixed rate is the one for you – you won’t see any gains when interest rates drop but you also won’t see any losses when they increase. And you will know exactly what your payment will be for all 120 months of your repayment term.

Do you want to start repaying your loan immediately (which is a good idea)?

Then a variable rate may be best for you as the monthly payments will generally start off lower than a fixed rate loan.

No matter which loan type you select you can choose either type for the next loan. If you follow the old saying of not putting all your eggs in one basket (what financial planners call “diversifying your risk”), you may want to consider taking out some fixed rate and some variable rate loans over the course of your college career.

By: Iowa Student Loan

Partnership Creates Greater Access to Financial Literacy Tools

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Students and families now have the chance to gain even greater access to personalized college planning and financing information while visiting a few of the Iowa College Access Network’s (ICAN) locations.

ICAN, a Student Loan Coach contributor, recently teamed up with Iowa Student Loan to create mobile learning stations in three of its 11 office locations.

Providing statewide outreach, ICAN helps more than 500,000 students, parents and education professionals prepare for life after high school each year. An important aspect of that preparation includes financial planning for college.

For the past few years, ICAN has provided visitors instructions to Iowa Student Loan’s online smart borrowing resources and tools. These tools help families borrow less for college, and target majors that lead to jobs. Now, with the help of the learning stations, students and parents will be able to experience those tools while on-site at three ICAN locations, allowing for immediate discussion of personalized results and options with ICAN’s team of highly-qualified student success advisors.ICAN_Station

The tablet- and laptop-based stations have been set up at ICAN center locations in Hiawatha, Ankeny and Coralville. The stations provide the technology needed to access Iowa Student Loan’s suite of financial literacy tools — Student Loan Game PlanSM and ROCI Reality Check — in addition to other resources regarding college financing.

Student Loan Game Plan is an interactive educational resource demonstrating how student loan debt can affect a student’s financial future. It provides customizable results based on major interests and individual situations, and provides an action plan to help reduce the need to borrow for college. During the month of July 2015, 14 percent of users were able to reduce the amount of student loan debt they planned to incur by an average of $1,800 after using Student Loan Game Plan.

The ROCI Reality Check provides users with job prospects, earning potential and maximum suggested student loan debt loads based on a student’s chosen major, allowing them to see the potential return on college investment, or ROCI.

By: Iowa Student Loan

Getting a Jump on Interest

If you have some extra cash from earnings, gifts or your own savvy shopping skills, you may want to invest in your financial future by making an interest payment on your student loans.

Here’s an example situation:

Private student loan amount: $10,000

Interest rate: 7%

Repayment term: 10 years

Extra payment made: Beginning of first year of a four-year college career

Interest-Rate-Chart-1

Simple interest is calculated based on a $10,000 principal balance x interest rate x term of 54 months (48 months in-school + 6-month grace period). The total repayment amount includes interest accrual over the life of the loan and is based on making a single interest-only payment before the repayment period begins. Savings over the life of the loan is equal to the monthly reduction in payment amount multiplied by the 120 payments made over the life of the loan.

Now, let’s assume you need to take out $10,000 in private student loans at the same rate for each of four years, and you are able to make one-time payments each of those years.

Interest-Rate-Chart-2

Calculations are the same as above except interest accrues over 36 months + 6-month grace period for a loan taken out the second year of college, 24 months + 6-month grace period for a loan taken out the third year of college and 12 months + 6-month grace period for a loan taken out the fourth year of college.

The information above shows how making one-time interest-only payments can help reduce your student loan burden.

By: Iowa Student Loan

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