Financial webinar: College Money 101 with Alex Erath – big takeaways

Recording of webinar:

Notes/big takeaways from our session:

  • there are tools and resources – we can help!!
  • amortization calculator:
  • subsidized vs unsubsidized loan: does the loan start accruing interest before you graduate?  Or can you wait to make payments till you’ve graduated?
    • subsidized:  NO interest until after you’ve graduated; usually between 6-10 months “deferred”; means you don’t have to pay
    • unsubsidized:  starts accruing interest as soon as you take out the loan
  • credit card repayment calculator:
  • what I can’t calculate on an amortization calculator – what happens if I make a payment that doesn’t cover the interest every month
  • compounding: if you don’t make your full payment, your base amount grows
    • how interest works!
  • ParentPLUS loans – your parents take the loans out, rather than you
  • make sure that you get a life insurance policy to take care of your loans if you die – so that your parents don’t have to pay for them:
    • when ParentPLUS loans are discharged/dismissed, the IRS treats it as income
    • get a 50K policy – term life – it’s a few dollars per month.  Will cover income tax, funeral expenses, etc
  • When do you buy insurance? For the risks you can’t afford to take
  • If you have a subsidized loan, and pay it off as soon as you’re done with school, the amount of loan still stays the same right? YES

Repaying loans:

  • 10-year pay-off term
  • 20-year pay-off term
  • income-based repayment <- avoid this!  almost never covers the principal – so the amount you owe isn’t getting smaller

inside 10- and 20-year options – either plan – you owe the same amount of money

  • fixed/level payment – never changes over the entire period of time you’re paying off the loan
  • graduated payment amount – predicated on the belief that your salary/income will increase

read through every single one of your loan contracts!!!

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