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UH OH!
It’s a life
Pop Quiz
A quiz from FINRA lets you find out just how well
you understand modern money management.
Financial literacy levels are often related to financial wellness measures.
Do you think you have a solid handle on how money works? Do you want to take a pop quiz to find out?
The FINRA Investor Education Foundation offers the following five-question financial literacy test:
1) Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how
much would you have?
Answer choices: More than $102, exactly $102 or less than $102.
2) Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a
year. After one year, would the money in the account buy more than it does today, exactly the same or
less than today?
Answer choices: More, same or less.
3) If interest rates rise, what will typically happen to bond prices?
Answer choices: Rise, fall, stay the same or no relationship.
4) True or false: A 15-year mortgage typically requires higher monthly payments than a 30-year
mortgage but the total interest over the life of the loan will be less.
5) True or false: Buying a single company's stock usually provides a safer return than a stock mutual
fund.
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If your mind shut down after seeing the numbers in the first question, you’re not alone. (You can see the
correct answers below.) Only 14 percent of Americans surveyed in FINRA’s National Financial Capability
Study, which surveyed over 25,000 adults in 2012 and 2009, got all of the answers correct on the quiz.
Younger Americans scored particularly badly. Just 24 percent of millennials (defined as those between the
ages of 18 and 34) could answer at least four of the questions correctly. Among Gen Xers, between the
ages of 35 and 49, 38 percent answered at least four correctly, and almost half of baby boomers (ages 50
to 66) could do so. The silent generation, age 67 and over, outperformed all other groups, with 55 percent
answering at least four correctly.
While measuring financial literacy is notoriously challenging, this quiz has been widely embraced and used
by financial literacy experts. “Numeracy is an important aspect of financial literacy, and this quiz captures
that,” says Gary Mottola, research director for investor education at FINRA. People who can answer these
questions correctly also tend to score better on other financial wellness measures, including having
emergency savings, handling credit cards responsibility and saving for retirement.
It’s no surprise then that the group that scores lowest on the quiz – millennials – also struggles most on
other measures of financial capability. According to FINRA’s study, 23 percent of millennials spend more
than their income, and just one in three have a rainy day fund. They’re also more likely than other
generations to use costly non-bank borrowing methods, such as payday loans, pawn shops and tax refund
services. Among millennials, 43 percent report using one of these methods within the last five years. In
contrast, just 21 percent of baby boomers said the same.
Despite their relatively low levels of financial literacy and financial security, millennials report higher levels
of financial satisfaction than Gen Xers (23 percent versus 17 percent). Mottola attributes this finding to the
fact that millennials had their financial expectations shaped by the recession, so they are content with less.
On the first three questions of the quiz, which were developed by Annamaria Lusardi and Olivia Mitchell
almost 10 years ago, 30 percent of Americans answered correctly, compared with 53 percent of Germans
and 45 percent of people in the Netherlands. (In Japan, just 27 percent answered them correctly.)
Also concerning is that women tend to get lower scores on the financial literacy quiz than men. When it
comes to answering at least four quiz questions correctly, 29 percent of millennial males were able to do
so while just 18 percent of millennial women could. Millennial men are also more likely to have rainy day
funds and non-retirement investment accounts than millennial women.
Ready to find out how you scored? Here are the correct answers to the quiz questions:
1) More than $102. 2.) Less. 3) Fall. 4)True. 5) False.
Submitted by: Eleanor Lynn Martin./ Director Of EOC
Source: http://money.usnews.com/money/blogs/alpha-consumer/2014/06/20/how-to-measure-your-financial-literacy
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30 Money Saving Tips for Students
Do you have fine wine tastes on a cheap beer budget?
It’s ok – most college students are living on a budget. If
not, they’re likely students getting themselves into a
cycle of debt.
While neither is fun or easy, you can become smarter
about the way you spend your money. Keep in mind that
the key to financial success is being aware of how you’re
spending your money.
Also, know that there’s a difference between being
cheap and having spending savvy. There’s nothing
wrong with living within your means, rather than beyond.
Stretch your dollar further with the following
money-saving tips:
1. Buy or rent used textbooks and sell last semester’s
books back.
2. Don’t make impulse purchases.
3. Never go grocery shopping when you’re hungry.
4. Limit the number of times you eat out monthly.
5. Cut out vices – smoking and binge drinking are
terrible for you and expensive.
6. Always pay bills on time to avoid late fees.
7. If you have a credit card, pay it off as quickly as possible. (It’s good to establish credit, but a bad
credit score follows you everywhere.)
8. Walk, use public transportation or ride a bike instead of having a car.
9. Live with others so you can split rent and utilities.
10. Cut out expensive cable packages you don’t need.
11. Consider more basic phone packages and plans or plans that include unlimited texting with free
incoming calls
12. Don’t buy the most expensive college meal plans. Figure out what you actually consume and
get the correlating package.
13. Shop where they offer student discounts. There are so many places that offer discounts to
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students with a school ID.
14. Look into a campus gym versus a gym in town. Many colleges offer memberships for free or at
a reduced rate for students.
15. When planning meals, make dinner with friends and split the cost of groceries. Often times,
you’ll be cooking too much for one person anyway!
16. Sell what you no longer use or need. There are plenty of stores and web sites, like Poshmark
and Craigslist, where you can sell your used clothing, furniture or tech items.
17. Don’t buy unnecessary school supplies. Why buy cumbersome notebooks when you can type
on your laptop? It’s better for the earth anyway!
18. Don’t buy books you will only need for a short period of time – check them out from the library
instead.
19. Take advantage of what your campus has to offer in terms of activities, rather than spending
money on going out. Many campuses have an array of museums, offer movie nights and other
social events for cheaper or, sometimes, for free.
20. Skip expensive Spring break and summer trips – look into alternatives, like volunteering,
instead.
21. Wait to get a pet until after college – a pet can become very expensive. Not only do you have
another mouth to feed, but veterinary bills are costly. If you love animals, there are plenty of
shelters that need volunteers.
22. Go to class. You’re paying for it and skipping is like throwing money out the window!
23. Drink water. It’s free and better for you, anyway.
24. Make your own coffee. While coffee shops are convenient, they charge hefty prices that really
add up over time.
25. Open a savings account that earns interest. Credit unions have fewer fees and are great for
students.
26. Use a free tool, like FinAid’s Student Budget Calculator or the one offered by Mint.com, to
keep track of your finances. It’s harder to be frivolous when you see where your money is going.
27. Never take out a loan for anything that’s unrelated to your education.
28. Don’t buy music. Use free services like Spotify or Pandora.
29. Look into class requirements and the options for testing out of classes. Why pay for a class
you could easily test out of?
30. Consider becoming a resident advisor. Many get free room and board.
“If saving money is wrong,
I don’t want to be right.”
~William Shatner
Submitted by: Michelle Gasek, Billings Site Coordinator
Source: http://www.fastweb.com/financial-aid/articles/3968-30-money-saving-tips-for-students?print=true
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You can throw the reminders in the Cuisinart or chuck them into a garbage can, but that won't make the debt go away. Debt
hovers like a carrion bird over a dying beast, with annual rates of 20% or more compounded monthly, month in and month
out. You can't wish it away. But you can pay it down with determination, our free debt-fighting resources, and the good
graces of a few wealthy relatives (see tip No. 5). Here are nine ways to get out of debt:
1. Pay more than the minimum
First, break the habit of paying only the minimum required each month. Paying the minimum -- usually 2% to 3% of the
outstanding balance -- only prolongs the agony. Besides, it's precisely what the banks want you to do. The longer you take to
repay the charges, the more interest they make, and the less cash you have in your pocket. Don't play their selfish game.
Instead, bite the bullet and pay as much as you can each month. If your minimum payment is $100, double that to $200 or
more. Examine your normal expenses -- you can find the money. (For a gazillion ideas, check out our Living Below Your
Means discussion board.) Skip eating out at lunch, and bring it from home instead. Eliminate desserts. Give up happy hour.
We all have "luxuries," and you know what yours are.
Make a few sacrifices, and you will find the extra dollars needed to increase your debt repayments dramatically. Those
increased payments will save you hundreds, if not thousands, in interest payments. Plus, you will get out of the hole you've
dug for yourself much more quickly. Is it fun? No. But it sure beats living a hand-to-mouth existence, fearing bills each
month.
2. Snowball your debt payments
Take a long, hard look at all your credit cards. Pay particular attention to the one with the lowest interest rate. Have you
reached the maximum limit on that card? If not, consider transferring a higher-interest bill to that one. Many credit cards
permit this, and it's positively Foolish to trade an 18% debt for one at 12%.
If your entire balance is too large to fit on one low-interest card, pay at least the minimum amounts due on all of your cards
except one. Funnel the majority of your debt repayments into that one credit card, and pay it off as quickly as possible. When
the balance on that card reaches zero, move on to the next with the same aggressive repayment plan.
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Lather, rinse, and repeat. This method of repayment is aptly called "snowballing." As your debts decrease, the amount of
money you have to attack them increases. Your payments snowball until all of your debt is pummeled. Pretty neat, eh?
Another way to transfer higher-interest debt to a lower-interest card is to take advantage of the promotional offers many banks
use to entice you to their line of credit. You've seen the come-ons. "Transfer all your credit card balances to us, and pay just
5.9% until next January." It could be worth it. Moving to 5.9% from 18% interest could mean substantial dollars to you. And
the money saved in interest could then be applied toward the principal each month, thus reducing your outstanding debt
balance even further.
Take care, though, before you act. Examine the offer closely. Look for the hooks. Will the interest rate after the introductory
period be higher than you're paying now? If so, you may have to switch again at that time. That, in turn, could give rise to
another surprise. Banks have caught onto the charge card hoppers who switch from card to card to take advantage of the low
introductory rates. Many of these offers now stipulate that if you transfer balances from the new card within a 12-month
period, the normal interest rate will be applied to all outstanding balances retroactively. That proviso could be a bitter pill to
swallow for someone short on cash, and it certainly doesn't help the debt repayment schedule. Read the fine print, Fool.
3. Cash out your savings account
You could cash out your savings and investments and use the proceeds toward debt repayment. Yeah, no one wants to do that.
But sometimes it's just Foolish to do so. Even when debt interest is at 12%, your investments would have to pay more than
18% before federal and state taxes to equal that outflow of dollars. We doubt the dollars in your savings account are earning
anywhere near that rate of interest. Pay off the debt, and it's the same as getting that 18% return without any risk on your part.
The higher the interest rate on your debt, the more attractive repayment versus investment becomes.
4. Borrow against your life insurance
Do you have life insurance with a cash value? If so, borrow against the policy. Yes, you're borrowing your own money. But
the interest rate is typically well below commercial rates, and you can take your time repaying the loan. Do repay it, though. If
you die before it's repaid, the outstanding balance plus interest will be deducted from the face value of the policy payable to
the beneficiary. While that seems a small price to pay to get out of debt now, it could be burdensome to your loved ones
should you sleep the eternal sleep before paying it back.
5. Finagle family and friends
Perhaps your family or friends could float you a loan. Who else knows, trusts, and loves you like they do? Unless you're really
the black sheep of the flock, chances are you'll get a very favorable interest rate. They may even tolerate a late payment or
two.
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But if you want to maintain the relationship, it's best to keep things on the straight and narrow by using a written agreement.
You should clearly establish the interest and repayment schedule in writing to avoid misunderstandings and hard feelings.
And it goes without saying that you must be scrupulous about adhering to that schedule. Otherwise, you can forget the family
reunions and birthday presents.
6. Get a home equity loan
Do you own your own home and have equity that's accumulated
through the years as you've paid off the mortgage? If so, now's the
time to consider a home equity loan (HEL) line of credit for the
maximum amount possible.
A HEL gives you two ways to save. First, by using the loan
proceeds to pay down your debt, you trade something like an 18%
loan for a 6%-7% loan. Second, if you itemize deductions on your
income tax returns, HEL interest is a deductible item under most
circumstances. In a 25% marginal tax bracket, the 6% loan really
has an effective rate of 4.5%, and that's probably the cheapest
interest rate you'll see on personal indebtedness.
The danger here is falling into a common trap. Many get an HEL,
pay off existing debt, and then ring up the charges on the credit
cards all over again. Now they have the HEL to repay on top of
the credit cards. The hole just got much deeper. Fools use the HEL
to pay off the credit cards, and then keep them paid off until the
HEL is repaid.
7. Borrow from your 401(k)
Do you participate in a 401(k) qualified retirement plan at work? Most 401(k) plans have a feature that lets you borrow up to
50% of the account's value, or $50,000, whichever is smaller. Interest rates are usually a point or two above prime, which
makes them cheaper than that found on credit cards. Thus, 401(k) plan loans may be a Foolish option to debt repayment. Not
only is the interest typically much lower than that on credit cards, the best part is you pay it to yourself. That's right, every
dime in interest paid on a 401(k) loan goes directly into the borrower's 401(k) account, not the lender's.
But there are drawbacks. First, the loan and interest will be repaid with after-tax dollars, but the interest will be taxed again
when you withdraw money from the 401(k) years later. Additionally, you must repay this loan within five years. If you leave
your employment prior to full repayment, the outstanding balance becomes due and payable immediately. If it's not repaid,
that amount will be treated as a distribution to you. You'll be taxed on that amount at ordinary rates. And if you're under the
age of 59 and one-half years, you will also be assessed an additional 10% excise tax as a penalty for an early withdrawal of
retirement funds. Accordingly, ensure any 401(k) loan can be repaid before you leave your job.
8. Renegotiate terms with your creditors
OK, you've done all you can. Savings are gone; relatives have been tapped out; you don't have a home or 401(k) to borrow
against. You feel like you're against that proverbial wall. The money just isn't there. Is bankruptcy the only way out? No way.
Try pulling an ace out of your sleeve prior to taking that step. What ace? The threat of bankruptcy, of course.
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Let your creditors know your situation. Tell them that if you are unable to renegotiate terms, you'll have no other recourse
but to declare bankruptcy. Ask for a new and lower repayment schedule; request a lower interest rate; and appeal to their
desire to receive payment. Faced with the prospect that you may resort to such a drastic step, creditors will do what they can
to protect themselves against a total loss.
Indeed, many will negotiate away the farm before they'll write off your debt. As lawyers love to say, everything is negotiable.
Therefore, what do you have to lose, except time? It's worth a try. And if you don't wish to do this yourself, organizations
exist that can do it for you.
9. As a last resort, file bankruptcy
What if you decide you can't pay down your debt using any of the methods listed above? What should you do? The absolute
last resort is bankruptcy. Within Fooldom, we firmly believe everyone has a moral obligation to repay their debts to the
utmost of their ability. There are times, though, when repayment may be impossible. In those cases, bankruptcy may be the
only available course of action. Nevertheless, be aware of the significant drawbacks.
Your credit record will contain this information for 10 years, thus ensuring you will have a tough time obtaining credit you
can afford during that period. Additionally, as odd as it seems, it costs money to file for bankruptcy. Attorney and court filing
fees cost in the hundreds of dollars, and they must be paid to obtain the relief sought. Finally, bankruptcy laws have gotten a
lot tougher in recent years, so you may not qualify for complete relief.
There are two types of personal bankruptcy relief: Chapter 7 and Chapter 13. Chapter 7 is straight bankruptcy that allows the
discharge of almost all debts. Those that aren't discharged are alimony, child support, taxes, loans obtained through filing
false financial statements, loans not listed in the bankruptcy petition, legal judgments against the petitioner, and student
loans.
While Chapter 7 relieves you of the responsibility of repaying most creditors, you may have to surrender much of your
property to help satisfy the debt. However, different states have different laws that grant you exemptions on certain types of
property, such as a certain amount of equity in your home, a low-value vehicle, small amounts of jewelry and other personal
property, and tools you use in your trade or business. These exemptions usually aren't huge, but they do mean you won't have
to start over with absolutely nothing.
Chapter 13, sometimes called the "wage-earner plan," is different. You keep your property but surrender control of your
finances to the bankruptcy court. The court approves a repayment plan based on your financial resources that provides for
repayment of all or part of your debt over a three-to-five-year period. During that time, your creditors are not allowed to
harass you for repayment. You also incur no interest charges on the indebtedness during the repayment period. When all
conditions of the court-approved plan have been fulfilled, you emerge debt-free from the bankruptcy.
Submitted by: Michelle Gasek, Billings Site Coordinator
Source: http://www.fool.com/personal-finance/credit/9-ways-to-pay-off-debt.aspx#.VF1zfvG6jAg.mailto
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Credit cards are easy to use because they give you instant buying power for items you may not
otherwise be able to obtain; and because of this people can find themselves in debt quickly if they
don’t have a plan. Credit card interest rates are typically very high and may range from 12% to
23%. The longer you take to pay the money back, the more interest you pay on the money you
borrowed. Credit cards should be used only for purchases that can be paid in full at the end of the
month as you can see in the example below.
The High Cost of Credit Cards…
You buy a flat screen TV at the local electronics store with a credit card.
 Initial cost
 Interest rate on credit card
 Minimum monthly payment
=
=
=
$3,500
21%
$80.00
How long does it take you to pay off the TV
making ONLY the MINIMUM monthly payment?
84 months
How much do you pay in total for the flat screen TV with interest?
$3,500
+
$3,220
=
$6,720
(Initial Price) (Amount of Interest)
(Total amount you pay)
What if you doubled the minimum payment and paid $160 a month?
How long does it take you to pay off the TV
making a monthly payment of $160?
28 months
How much do you pay in total for the flat screen TV with interest?
$3,500
+
$980
=
(Initial Price) (Amount of Interest)
$4,480
(Total amount you pay)
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Look at the difference in the amount of interest you pay! By paying $160 a month instead of
the minimum $80 a month, you saved yourself $2,240 in interest.
If you saved up your money and paid for the TV upfront (without putting it on a credit card)
you would have saved $3,220 in interest.
How much would you want to save?
The Rule of 72 is a quick way of estimating when you will have paid twice the principal
amount or earned twice that amount. Simply divide 72 by the annual interest rate. The
result will tell you the approximate number of years it will take for the principal to
double.
Example:
Interest rate on your credit card is 20% 72/ 20 = 3.6
In about 3.6 years, you will have paid twice as much for the item.
Do you know?
$ Credit card companies target college students.
$ Many students do not monitor their spending and find themselves with a large amount of debt
very quickly.
Submitted by: Shauna Downard, Financial Wellness Coordinator, Great Falls College MSU
Marty Foxman, Great Falls Site Coordinator
Source: http://mus.edu/prepare/Dollars_and_Sense_2014.pdf
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Many consumers use debit, credit and prepaid cards, often interchangeably, to purchase goods and services. However, these
three types of cards are quite different. Consider the following.
 Credit Card - You are borrowing money that you must pay back, in addition to interest, if you do not pay the balance in full
by the due date.
 Debit card - Issued by your financial institution and linked to your checking or savings account, the money taken from the
account is yours and you will never incur interest charges.
 Prepaid Card - You are spending the money deposited onto them, and they usually aren't linked to your checking/share
draft or savings/share account. Prepaid products include "general-purpose reloadable" cards, which display a network brand
such as American Express, Discover, MasterCard, or Visa; gift cards for purchases at stores; and payroll cards for employer
deposits of salary or government benefit payments. Be aware of the possibility of unanticipated fees and, with certain types of
these cards, the potential for limited consumer protections against unauthorized transactions.
You may be charged an overdraft fee if you use a debit card for a purchase, but there aren't enough funds in the account and
you have given your financial institution written permission to charge you for allowing the transaction to go through (overdraft
protection). You can revoke the authorization to pay overdraft fees if you don't want to risk paying them, and future debit card
transactions will be declined if you don't have the funds in your account. Similarly, a credit card issuer may decline a
transaction that puts you over your credit limit unless you have explicitly agreed to pay a fee to permit over-the-limit
transactions.
You should contact your financial institution for further information if you wish to choose this option. Although you can opt-out
of overdraft protection and prevent this fee, there may other fees that your financial institution may charge if you do not have
funds in your account for other types of transactions, such as a non-sufficient funds or NSF fee.
In any case, it is best to review the disclosures you received when you opened your account, including the fee schedule. If you
have misplaced or lost your copy, you can always contact your financial institution, or there may be a copy online.
Prepaid cards are sometimes marketed with celebrity endorsements and promotional offers. While these offers seem
attractive, be aware that you may have to pay for various fees, including a monthly surcharge, charges to load funds onto the
card, and fees per transaction.
As an alternative to a traditional checking/share draft account or prepaid card, consumers who don't plan to write checks, but
do want to do financial transactions electronically may want to consider opening a "checkless" transaction account that allows
you to pay bills and make purchases online or with a debit card.
Federal law limits your losses to a maximum of $50 if a credit card is lost or stolen. For a debit card, your maximum liability
under federal law is $50 if you notify your financial institution within two business days after learning of the loss or theft of your
card. But, if you notify your financial institution after those first two days, under the law you could lose much more.
Your liability for the fraudulent use of a prepaid card currently differs depending on the type of card. Federal law treats payroll
cards the same as debit cards, but currently there are no federal consumer protections limiting your losses with other
general-purpose, reloadable prepaid cards and store gift cards..
For all cards, industry practices may further limit your losses, so check with your card issuer.
Also, take steps to guard any cards from thieves. Never provide any numbers in response to an unsolicited phone call, e-mail,
text message, or other communication you didn't originate. Immediately review your statement for unauthorized transactions.
Submitted by: Linda Ornowski, Kalispell and Pablo Site Coordinator
Source: http://www.mycreditunion.gov/Pages/pocket-cents-debit-credit-or-prepaid-card.aspx
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Slumping tax revenues have led to budget cuts
at U.S. colleges, and many schools have been
forced to raise tuition and pare back aid.
American students—particularly the 1.75 million
in grad school—increasingly rely on financial aid
to get through college, but misunderstandings
often lead to missed opportunities.
Let’s be honest about something: financial aid is tricky, confusing and overwhelming. As is with all things
complicated, it’s easy to see why students and parents alike believe everything they’re told about the
process. Unfortunately, that means students are told a lot of “falsehoods.” One of the best things
students and parents can do for their financial aid chances is to know how the facts stand up against the
myths.
Myth #1: I won’t qualify for aid.
This is perhaps the biggest and most believed myth about financial aid. While there are individuals with
income thresholds that won’t receive financial aid, it’s imperative that these families still fill out the Free
Application for Federal Student Aid (FAFSA). Firstly, every single student, regardless of their parents’
income, qualifies for unsubsidized Stafford and PLUS loans just by filling out the FAFSA.
Second, aid dollars can never be predicted; and with that, students and their parents may as well fill out
an application to see if they qualify for aid. Finally, you never know when your family’s financial
circumstances will change. Loss of job or divorce can take a toll on income and assets. Wouldn’t it be
nice if your financial aid office had your FAFSA on hand to see how they could help you pay for college?
Myth #2: I can declare myself as an independent student.
You may be living on your own without any financial support, but does that make you an independent
student by financial aid standards? Hardly. The federal government has a very strict definition of what
makes a student independent: he or she must be older than 24, married, serving in the armed forces or
financially responsible for a dependent.
Unfortunately, the federal government dictates that if a student is less than 24, his or her parents are
responsible for paying for their education – whether or not your parents actually can is another matter.
Myth #3: I didn’t qualify for aid the first time, so I won’t qualify again.
Just as circumstances change, so does financial aid. As stated earlier, a job loss or divorce can have an
impact on whether or not a student is determined eligible for aid. And in most cases, this new state of
eligibility is determined through less drastic circumstances. For instance, if a family has two students
enrolled in college at the same time, both of those students may then be eligible for financial aid. With
that in mind, students and their families should apply for financial aid with the FAFSA every day.
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Myth #4: I shouldn’t accept a financial aid package with any self-help.
Many families hear “student loans” and automatically reject the financial aid package – as well as the
school. The truth is that student loans have the lowest interest rates of any type of loan, and while you
hear horror stories of students graduating with hundreds of thousands of dollars in debt, that’s not
necessarily the reality.
Financial aid experts will instruct borrowers not to acquire an amount of student debt that is more than
their expected starting salary after graduation. Also, borrowers should attempt to pay the interest while
they’re in school, which will save hundreds if not thousands of dollars after graduation. The trick to
tackling a financial aid package with student loans is to borrow smartly.
Also, keep in mind that self-help comes in the form of work study jobs too. These on-campus work
opportunities enable students to work to pay down their tuition bill during school, making the task of
paying off any debt after school a lot simpler.
Myth #5: I can’t appeal my financial aid package.
When you get your very official looking financial aid package, it may seem as if there is no compromise
or ability to appeal. Fortunately, that’s not true either. While you can’t make changes to the FAFSA at
that point, financial aid officers are always willing to work with students and their parents to make
paying for their dream school possible.
Oftentimes, financial aid officers can find ways to add to the financial aid package. Plus, a little known
secret to the outside world is what is referred to by professionals in the space as “summer melt.” As
students decide during the summer months that they really don’t want to go to a particular college – or
to college at all – their financial aid at that school becomes available. Some families are able to benefit
from this sudden allowance of financial aid if they contact the school and ask about any further
available financial aid opportunities in July.
Yes, applying for financial aid can be baffling, but that doesn’t mean you should fall for the myths that
we so often hear. If you do, your ability to pay for the school you really want to attend could be in
jeopardy. So before you make any hard decisions, make sure you’re working with the truth about
financial aid and paying for school. Consider the following graphic:
The college’s published
cost of attendance
Gift aid (free money you don’t
have to work for or pay back)
awarded by the college
The difference between the
two—the real amount your
family pays (typically with
loans, savings and income)
Note: Figures shown are averages for four-year public colleges and their full-time, first-time students for the 2012-13 school year. Real amounts will vary.
Submitted by: Eleanor Lynn Martin, Director of EOC
Source: http://www.fastweb.com/financial-aid/articles/4388-5-myths-about-financial-aid
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Submitted by: Jamie McGarvey, Missoula Site Coordinator
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Source: https://studentaid.ed.gov/sites/default/files/2014-15-do-you-need-money.pdf
Are you an adult considering college?
Do you need financial help?
Whether you are enrolling in college for the first time or returning to school after a break, apply for
federal student aid. Federal student aid can help you cover your education expenses. This fact sheet
provides information about the types of federal student aid available, how to apply, important
deadlines, recommended do’s and don’ts, important tips, and resources for more information.
Myths and Facts About Federal Student Aid
MYTH: Adult students don’t meet the age requirements to receive federal student aid.
FACT: There is no age limit. Almost everyone is eligible for some type of federal student aid.
MYTH: You need to pass a credit check to receive federal student aid.
FACT: No credit check is required to receive federal student aid, including most federal student loans.
MYTH: It costs money to apply for federal student aid.
FACT: Applying is free. It costs nothing to apply for federal student aid and therefore you should avoid
companies charging a fee to complete the application.
A Brief Lo ok at Federa l Studen t Aid
Federal student aid from the U.S. Department of Education is money to help you pay your education
expenses at a college, career school, university, or graduate school. We have over
$150 billion in federal aid available for those who qualify.
There are three categories of federal student aid:
Grants—Student aid funds that do not have to be repaid.* Most federal grants are based on
financial need.
Work-study—Money earned through a job on or near campus while attending school.
Loans—Borrowed money that must be repaid with interest.
For more information about federal student aid, including eligibility requirements, visit
www.studentaid.ed.gov/funding.
A p p ly f o r F e d e r a l S t u d e n t A i d
The quickest way to apply for federal student aid is online at www.fafsa.gov. The application is
called the Free Application for Federal Student Aid or FAFSASM. A paper version of the FAFSA is
also available. To file a paper application or to check out alternatives to filing online, click on
“FAFSA Filing Options” at www.fafsa.gov.
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*Grants do not have to be repaid unless, for example, you are awarded funds incorrectly or you
withdraw from school prior to the planned end of a term or, if you have a TEACH Grant, you do not
meet the terms of accepting it.
I m p o rta n t De a d l i n e s
Know the deadlines. If you miss a financial aid deadline (federal, state, or school), you may miss out
on aid.
FA F S A d e a d l i n e s
Remember this date—January 1. It’s the first day you can submit your FAFSA, and it’s the same
every year (you will need to apply for federal aid every year). For example, for the 2012–13 school
year, you can submit a FAFSA starting Jan. 1, 2012, but cannot submit it later than June 30, 2013
(no exceptions to either date). Don’t worry if you haven’t filed your tax returns or received your
income information by the application deadline, as you can estimate your information and make
corrections later.
State and school financial aid deadlines
Many schools and states use your FAFSA
information to award state and college aid,
which have deadlines as early as February
for the following school year. Search for a
state’s deadline at www.fafsa.gov, then
select “Deadlines.” Note: Schools may use
your FAFSA information to determine your
eligibility for scholarships.
Did you know…
In addition to using federal aid
to pay for the usual expenses
such as housing, transportation,
books, tuition, and fees, you can
use it to help pay for dependent
care, costs related to a
disability, the purchase of a
personal computer, and more.
Note: If you file a federal tax return and you are using the online application or making corrections
online, you have the option to have your income and tax information electronically transferred
from the Internal Revenue Service (IRS) to your FAFSA.
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Reducing Education Expenses
Here are a few ways to reduce your education expenses.

Scholarships—Check with the college to find out if it offers scholarships. You can also search for
scholarships for free at www.studentaid.ed.gov/scholarship.

t ax breaks—Read IRS Publication 970, Tax Benefits for Education, to see how you might benefit from
federal income tax credits for education expenses.

Your employer—Ask your employer if they offer a tuition assistance program; some employers will
help pay for your education.

Community college—Check into attending a community college. Tuition at community
colleges can be significantly lower than at four- year colleges, especially for in-state students.

Choosing a program—Assess your needs before you apply for admission or register for courses. Make
sure your classes fit your goals or count toward your degree or certificate.

Part-time enrollment—Consider part-time enrollment if you are having difficulty paying for a full-time
program, or if you have other work or family obligations that limit the time you have to attend class and
study.
I m p o r ta n t T i p s

Military. If you are a member of the armed forces or have a family member in the service, go to
www.studentaid.ed.gov/military or find out more about grants and loan repayment options for
military personnel.

Transferring credits from one school to another. Before you pay for classes you plan to transfer to another
school later, check with the registrar’s office at that school to make sure the credits are transferable.

Returning to school after a break. If you have previous college credits, check with the registrar’s office
at the school you plan to attend about transferring your credits.

In need of admissions testing. Most colleges in the U.S. require that you submit scores from
standardized tests as part of your application package. For information about which test(s) you
should take, talk to the admissions office(s) at the college(s).
You also may want to read “Take the Tests” at www.studentaid.ed.gov/preparing.

Expecting to receive federal student aid. Make sure the school you plan to attend participates in
the federal student aid programs if you want to use federal student aid to pay for your education.

Planning to receive credit for life experience. Many schools offer credit for life and work experiences.
Check with the school to find out if this option is available.
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Recommended Do’s & Don’ts
Do:
Talk to an admissions counselor, and get to know the staff at the financial aid office at the school
you plan to attend; they can help you with aid applications and explain the types of aid available.

Look into getting a General Educational Development (GED) certificate if you don’t have a high
school diploma; try searching online for “GED certificate” and your state’s name.

Ask employers to recommend trade schools that provide training in the skills you will need for the
career you choose.

Be an informed consumer. Make sure the school you are planning to attend is accredited and
learn how to avoid being scammed. To get a basic understanding of accreditation in the
United States and to learn more about diploma mills, go to www2.ed.gov/students/prep/
college/ diplomamills.

Know the difference between federal student loans and private loans. Federal student loans offer low
fixed interest rates and flexible repayment options, including deferment
after you graduate or if you take a break and
then return to school. Generally, repayment of a federal loan does not begin until after you leave school.
To read more about the differences between federal and private loans, go to www.studentaid.ed.gov/
aidinfo.
Don’t:

Use all your retirement and emergency savings or risk losing your home with multiple equity loans.

Assume the answer to your question is “no.” Ask questions.

Borrow more than you need.

Miss important deadlines.
Resources
If you are searching for a career or a school, or would just like more information about careers and
training, see the following websites:

Find a career that fits your goals and your life; use the free Career Finder tool at
www.studentaid.ed.gov/myfsa.

Find out about the training you will need for a particular job at www.careeronestop.org.

Research careers and the demand for jobs in the Occupational Outlook Handbook at
www.bls.gov/oco.

Use the free College Matching Wizard at www.studentaid.ed.gov/myfsa to find potential schools
that meet your career needs.
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If you have been convicted for the possession or sale of illegal
drugs:
If the offense occurred while you were receiving federal student aid, you will be ineligible for a period of time based on
the type and number of convictions. If you have been convicted
of a drug-related offense, it is very important that you complete
and submit the FAFSA to determine your eligibility.
If you are incarcerated:
You have limited eligibility for federal student aid while you’re
incarcerated. Generally, you’re eligible only for a Pell Grant and
then only if you’re NOT incarcerated in a federal or state penal
institution. Check with the financial aid office at the school you
plan on attending. Contact the Federal Student Aid Information
Center (see the “Contacts” section of this fact sheet).

Learn more about the types of schools and the kinds of degrees and credentials they offer (associate
degree, bachelor’s degree, master’s degree, etc.); select “Choosing a School,” then “Types of Schools”
at www.studentaid.ed.gov.

Find information about tuition and net prices at postsecondary institutions at
www.collegecost.ed.gov.

For details about education costs covered by federal aid, select “Choosing a School,” then
“Understanding the Costs” at www.studentaid.ed.gov.

For information about accreditation, crime statistics, enrollment, tuition, fees, and more about a school,
visit the U.S. Department of Education’s College Navigator at www.nces.ed.gov/collegenavigator.
Additional information to explore
Read the following publications, fact sheets, and more on our website at www.studentaid.ed.gov/pubs.

Get your money’s worth from your education by following the tips in these fact sheets:
“Choose a Career School Carefully”
“Be an Informed Consumer ... when it comes to federal student aid”

To get more information about money for college and to help you determine which loans to accept and how
much to borrow, you may want to read the following:
- Funding Your Education: The Guide to Federal Student Aid
-Your Federal Student Loans: Learn the Basics and Manage Your Debt
You can order print copies of many of our publications at www.edpubs.gov.
You can order print copies of many of our publications at www.edpubs.gov.
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Submitted by: Jamie McGarvey, Missoula Site Coordinator
Source: https://studentaid.ed.gov/sites/default/files/federal-student-aid-for-adult-students.pdf
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Why Go Federal?
Students are often advised to utilize all of the federal loan options available to them before they even
consider taking out a private student loan. Loan forgiveness plans play a big part in the advice to
choose federal loans over private, as this is a benefit only available through federal loans.
No outstanding loan balance forgiveness
Loan forgiveness if the borrower dies
Forgiveness for public service workers
Repayment plans can be tied to income
In a recent Wall street Journal article, Mark Kantrowitz, publisher of Edvisors.com states that student
loan interest rates range from 2.75% to 9.3%.
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Interest rates on federal loans are set by the federal government, but private loan rates are often
dependent on a student’s credit score, or the credit score of the borrower’s cosigner. Since students
often have a very short or nonexistent credit history, private lenders will generally offer loans with
very high interest rates to these students, if their applications are approved at all. Additionally, if a
student applies with a credit-worthy cosigner, private lenders are more likely to approve the
application, and the loan will likely have a lower interest rate than if the borrower did not have a
cosigner.
Federal loans, however, do not require a cosigner, and the interest rate of a federal loan is not
determined based on the borrower’s credit score.
Tips for young people on finding money for college
FAFSA is the easiest, best place to start! Even if you don't think you'll qualify for federal financial aid, it's
always worth applying. Second, don't overlook the little, local scholarships in your town or city. Those tend to
be less competitive, and every dollar matters when it comes to paying for college. Finally, don't forget to
keep applying for scholarships and grants once you're already in college. Lots of students forget to keep
looking for funding sources after freshman year, and that's where the student debt monster can start to
sneakily creep in.
Submitted by: Therese Kunz Hinshaw, Butte Site Coordinator
Source: http://www.simpletuition.com/federal-loans/
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PAID
HAVRE, MT
PERMIT NO. 75
Montana State University Northern
Educational Opportunity Center
P.O. Box 7751
Havre, MT 59501
Phone: 406-265-4141
Check us out!!
www.msun.edu/grants/eoc
Call EOC at the following locations:
Billings:
Butte:
281-5109
496-3720
Great Falls: 771-4326
Havre:
265-4141
Missoula:
Helena:
496-3720
Pablo:
Kalispell:
756-3916
243-7917
275-4774
The Educational Opportunity Center is a Federally funded TRIO program administered through Montana State University-Northern
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