...have difficulty obtaining mortgages. Because of student loan debt and mortgage regulations, many young adults are unable to qualify for a mortgage. They cannot meet debt to income ratio or they are not able to save the required down payment. (Valenti, et al.). In the past, carrying student loan debt was not quite as burdensome as it is today. It used to help a young person obtain a mortgage and improve their credit score. However, following the recession this changed. Regulations are stricter when a person goes to finance a house and many do not qualify (Norris B1). Overall, fewer young adults have purchased homes since...
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...The Progressive Path: A New Approach for the Modern Student Mitchell M Rodgers Western Governors University The Progressive Path: A New Approach for the Modern Student Recent college graduate…in debt. Early to mid-twenties…in debt. No retirement or emergency savings…in debt. Minimal work experience…in debt. Too many Americans are subject to this common denominator…in debt. For far too long we have become accustomed to the monotony and strenuous financial burden of at least four years of college immediately following four years of high school. At times, this may be a wise path for a student to follow but we as a society need to take a step back to analyze whether or not this truly is the best path in the long run. According to Barbara King (2015), an assistant professor of mathematics at Florida International University, when she collected data pertaining to 1,947 students majoring in Life Science, Business, Social Science, Education, Humanities, and Physical Science/Engineering, she found that 37% of them switched their major, thus delaying their graduation and increasing their debt obligation. Any student planning on taking full responsibility for their tuition should consider delaying enrollment in higher education after high school to make way for an entry-level position because they are more likely to graduate with a lower debt obligation, they will enjoy a more bountiful retirement, and they will most likely be both financially literate and free. By delaying enrollment...
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...2014 Student Loans Rising An Overview of Causes, Consequences, and Policy Options William Gale, Director, Retirement Security Project, The Brookings Institution, and Co-Director, Urban-Brookings Tax Policy Center Benjamin Harris, Deputy Director, Retirement Security, The Brookings Institution, and Fellow, Urban-Brookings Tax Policy Center Bryant Renaud, Research Assistant, Economic Studies, The Brookings Institution Katherine Rodihan, Claremont McKenna College The authors thank Elizabeth Akers, Matthew Chingos, Donald Marron, and Russ Whitehurst for helpful comments. The authors also acknowledge generous research support from the Ford Foundation. Introduction As of 2013, outstanding student loan balances in the US exceeded $1.2 trillion, more than any other type of household debt with the exception of mortgages.1 Following several years of rapid growth in outstanding loan volumes, student debt burdens have attracted increased attention in recent years. This policy brief reviews trends, issues, and policy options related to student loans. Federal student loans offer several important benefits. They help students attend institutions of higher education and help families cover or defer the costs of attendance. However, like other loans, student loans need to be repaid, which can strain borrowers’ income and affect other economic choices. From the outset, we note that isolating the impacts of student loan debt is a difficult exercise. Student loan debt represents debt undertaken...
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...PERSONAL FINANCE WITH SUZE ORMAN Debt Mistakes to Never Make Again We all make mistakes. What’s important is learning from them. This section teaches you strategies for dealing with debt problems you may already have, and how to steer clear of common debt mistakes in the future. 1 Never borrow more than you absolutely need. There are some good reasons to take on debt: your education, for example, or to buy a home. But even if you are borrowing for a good reason, make it your goal to borrow the least amount possible. The less you owe, the more flexibility you have to focus on other money goals. Don’t be seduced by a lender who tells you how big a loan he can get for you. For example, let’s say you know you can buy a terrific home in a neighborhood you like, and your mortgage will be $800 a month. A mortgage lender says you can qualify for a larger mortgage, for which the monthly payment will be $1,000 a month. “Great!” you think. “We can afford a house with an extra bedroom and a renovated kitchen!” Not so fast. By opting for the less-expensive mortgage, you free up $200 a month to put toward another goal. That’s $2,400 a year you could invest in a Roth IRA for your retirement, for example. In 30 years—the typical time it takes to pay off a mortgage—the $200 a month you managed to save in your Roth IRA could be worth nearly $170,000 at an average annual rate of return of 5%! Debt Mistakes to Never Make Again (cont.) pg. 1 Debt Mistakes Never to Make Again ...
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...Worth: $20,400 Student Answer: Instructor Explanation: Total Assets $46,400 Less: Total Liabilities 26,000 Equal: Net Worth $20,400 Points Received: Comments: 10 of 10 Question 2. Question : (TCO A) Construct a balance sheet from the following information. Be sure the format is correct. (Show all work.) Cash on hand 1,000 Bank credit card balance 1,200 Auto loan balance 13,500 Mortgage 175,000 Primary residence 205,000 Jewelry 2,000 Stocks 17,500 Coin collection 2,500 2009 Honda 20,000 Cash on hand $1,000 Stocks $17,500 Honda $20,000 Home $205,000 Jewelry $2,000 Coin Collection $2,500 Total Assets $248,000 Credit Cards $1,200 Auto Loan $13,500 Mortgage $175,000 Total Liabilities $189,700 Net Worth $58,300 Student Answer: Instructor Explanation: Assets: Cash on hand 1,000 Primary residence 205,000 2009 Honda 20,000 Jewelry 2,000 Stocks 17,500 Coin Collection 2,500 Total Assets $248,000 Net Worth $58,300 Liabilities: Bank credit cards 1,200 Auto loan 13,500 Mortgage 175,000 Total Liabilities $189,700 Points Received: Comments: 20 of 20 Question 3. Question : (TCO A) The following questions are worth 5 points each. Please show all work. a. Inflation is expected to average 4% for the long term and Mr. Smith earned $74,000 this year, how much must he earn in 20 years just to keep up with inflation and maintain the balance between his income and his increasing expenditures? b. Jamie wants to have $2,000,000 for her retirement in 25 years....
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...The student loan debt crisis is a major issue in the United States. Every day, students are dropping out of college because they cannot afford college. Ever since college tuition went up in the 1960s, the student loan debt has risen. Student loan debt takes a major effect of student’s lives after college is over and they must start paying their loans off. On average, students take out as much as $28,000 to $30,000 of student loans (Holland). Taking out these large amounts of loans cause students to dig a hole of financial debt for themselves. From the history of student loan debt to the current solutions that could solve the debt issue, student loan debt will always be a constant issue in students’ lives unless drastic measures are taken to...
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...understanding and paying taxes, working with financial institutions, wise use of credit cards and consumer loans, financing automobiles and homes, and the use of insurance for protecting one’s family and property. WEEK 1 - TOPIC 1: PERSONAL FINANCIAL PLANNING Objectives List the five steps in the personal financial planning process. Summarize what influences personal financial planning. Identify parts of a financial plan. Materials READING: Read Ch. 1 of Personal finance - Personal Financial Planning in Action: Developing a Personal Financial Plan. SUPPLEMENT: Appendix A: How to Install Quick Time Movie Player SUPPLEMENT: Appendix B: Personal Financial Planning Worksheet WEB LINK: Decision to Own a Home vs. Rent Video SUPPLEMENT: Video Transcript - Decision to Own a Home vs. Rent Assessment Please see instructor's syllabus for details on assignments. Participation/Discussion Questions WEEK 2 - TOPIC 1: MONEY MANAGEMENT Objectives Describe how to organize and prepare personal financial statements. Identify cash management products and services. Complete a personal cash flow statement. Materials READING: Read Ch. 2 of Personal finance - Money Management Strategy and Skills: Putting Your Financial House in Order. READING: Read Ch. 4 of Personal finance - Managing Your Cash and Savings: Cash Management Strategies. WEB LINK: Toolwire® Student Resources Page TOOLWIRE: Toolwire® Learnscape: Understanding Effective Money Management SUPPLEMENT:...
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...How many times have you heard that debt is something everyone has and that it’s okay for you to have it too? Well, this is certainly not the case. Just because everyone else has student loan debt, doesn’t mean that you are required to make high payments every month for the next decade. Many students believe that student loans are necessary in order to attend college, but they really aren’t. Student loans can cause you a lot of trouble in the future, such as massive amounts of debt, and the fact that student loans are debt, and debt is not good. Like any form of debt, student loan debt can pile up high very quickly and can cause many problems in your future. There are so many stories out there about people who have not been able to afford paying both their grocery/utility bills and their student loan payments....
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...FP101 Final Exam 1. When you have serious credit card debt, where is the best place to seek help? a. From a debt consolidation company b. From an independent consumer credit counseling agency, such as AICCCA or the National Foundation for Credit Counseling c. From a credit deferral service d. From a private loan organization, such as a bank or credit union. 2. Which of the following is considered secured debt? a. Student Loan b. Credit card c. Auto loan d. Debt consolidation loan 3. Students should aim to keep their total student loan debt to a. less than the salary they are likely to make their first year out of school b. less than 200% of their first-year salary c. about the total cost of 4 years of their education d. less than 150% of their first-year salary 4. Which of the following is considered a very good credit score? a. 500-559 b. 600-659 c. 700-759 d. 760-859 5. What is a credit utilization rate? a. How many open credit accounts you have b. The percentage of all your reported credit accounts that are open accounts c. Your total outstanding balance as a percentage of total credit limit d. How often you use credit to make purchases 6. What is the main disadvantage of using only a debit card? a. Debit card purchases are not reported to credit reporting agencies and therefore will not help you build your credit score. b. Not...
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...In discussing and evaluating Alice’s goals, I will use the SMART planning model in the form of answering and evaluating her goals to see how achievable the goals are. a) Pay off student loan Specific: Alice has to pay off her student loan of $ 53,000. She is paying $7,720 annually. Measurable: At the end of the year she has to make a total payment of $7,720. Achievable: It is possible for her to make this payment since she does this from her income. Results: She has to pay back this loan in order that she will have sufficient disposable income that can be saved to acquire assets Time: Paying $7,720 annually will mean she will complete the student loan in a little after 6 years. b) Buy a house and save for children’s education Specific: Alice needs to buy a house and save for her children’s education Measurable: Presently she saves $400 annually. Saving this amount annually cannot enable her to buy a house and save money for her children’s education. It will be difficult to accomplish this goal. She will have to have more income to accomplish this goal. Achievable: It will be possible for her to buy a house and save for the education of her children if she increases her income. Alice is already paying her student loan, and when she finishes payment, she will have more income to save for education and buy a house. Saving enough money for her children’s education will what Alice has to look into seriously as she will need more income to do that. Results:...
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...A Nontraditional Opinion on Alice’s Financial Goals University of the People Personal Financial Planning Unit One Alice listed her goals as the following: To pay off her student loans, buy a house, save for children’s education, accumulation of assets, retirement and world circumnavigation via sailboat. As I examine these goals, I am struck by the clearly contrary goal of living on a sailboat to all of the previously stated goals. If this is a real goal and not a whimsical fantasy, then elimination of debt should be the first priority followed by becoming a live aboard. Sailboats are very small spaces and there is no room for a consumer lifestyle. Sailing may seem leisurely at first glance, but is a very physically demanding activity, unless...
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...A recent report by the College Board called “Education Pays,” confirmed that attending college will lower smoking rates and increase civic participation, such as volunteering, donating blood, and voting (Is College Worth It?). Gasper Caperton, college board president said, “The report shows that students who attend college obtain a wide range of personal, financial, and other lifelong benefits" (Caperton). Also, young people with college degrees are also more likely to be married, less likely to live at their parents' home and more likely to be satisfied with their jobs. Another lifestyle benefit is health insurance and a retirement plan. Only 50% of non-college graduates had access to employer-provided health insurance compared to 70% of college graduates. As for retirement plans, 70% of college graduates had access to retirement plans, whereas only 55% of high school graduates had access, and 30% for those who did not complete high school. Showing all of the lifestyle benefits and how it increases benefit by going to college is another reason that attending college is a wise...
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...affect you or the business in which you are working? If so, how? Submit a copy of the proposed regulation along with your responses to these five questions. The proposed regulation can be submitted as either a separate Word document (.doc) or Adobe file (.pdf). This means you will submit two attachments to the Week 2 Dropbox: (a) a Word document with the questions and your answers and (b) a copy of the proposed regulation you used for this assignment. (10 points) 1A: Department of Education. This interests me because I am a Graduate student with extremely high student loan debt. This regulation was made official this past week. This regulation does not affect the business field I work in (accounting), but it DOES affect me, the student with the student loan debt. 2Q: Describe the proposal/change. (10 points) 2A: This proposal updates the regulations and details in implementing a new Income-Contingent Repayment (ICR) plan in the Direct Loan program. This proposal is based on President Obama’s “Pay As You Earn” initiative. 3Q: Write the public comment that you would submit to this proposal. If the proposed regulation deadline has already passed, write the comment you would have submitted. Explain briefly what you wish to accomplish with your comment. (10 points) 3A: As mother of three children, my educational pursuits were delayed while I put boyfriends and a husband through college and also during my childbearing years. As I restarted my education, I found myself...
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...Current Financial Situation 2 Discovery 2 Financial Planning Goals 2 Assumptions 3 Assets assumptions 3 Liability assumptions 3 Timing to reach Goals 4 Personal questions 4 Tolerance for risk 4 Ethical issues to advise: Mr & Mrs Peters 5 Tax Computation - Frank 5 Net Worth Statements 6 Cash Flow Statement 10 Advice and recommendations 10 Retirement Planning – Lauren Crossley 10 SIPP Calculator 11 Claim back even more via your tax return 12 Investment Portfolio at a glance - Laura Darcy 13 Portfolio Analysis and recommendations 13 Educational Funding for University- Keenan Shaw 14 Estate Planning 14 Analysis of the death of the client 15 Financial Analysis 16 Appendix 16 References 18 Current Financial Situation This confidential report was created for the use of Mr & Mrs Peters use only. Each section is designed to give a comprehensive understanding of the financial circumstances and also includes forecasting for the future. The report reflects your current financial position and where you are likely to stand in the event of disability, death or retirement. There is a legal disclaimer written by our legal team contained in the Appendix (see extract 1) The goal of this wealth management plan is to make the greatest possible use of your present and expected financial resources. The plan assumes your expressed willingness and ability to take on an appropriate level of risk and also to make the necessary cash and investment...
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...manage their finances. I believe young adults (including Dalat students)...
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