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The parts of a school’s cost

Jordan’s state university, one year

Jordan lives on campus. Sort the five costs: direct (on the school’s bill) or indirect.

Direct:   

Indirect:   

Jordan got into two schools

1. Which school has the lower sticker price? Which has the lower net price?
2. Why should the loan and work-study not count as a discount?
3. Name one question you would ask each school before deciding.

The 2 + 2 plan

Jordan could spend four years at School A, or spend two years at a community college and then transfer to School A for the last two. Use these net prices per year.

How much does the 2 + 2 plan save? $ 

Before you start, ask the four-year school which community college credits it accepts, so none are wasted.

Questions to ask any training program

Check each one you would ask before you sign up.

• Is it accredited, and can I use federal financial aid there?
• How many students finish the program?
• How many graduates get a job in the field?
• What is the total cost, including tools, uniforms and licensing exams?
• Is there an apprenticeship that pays me while I learn?

Which path fits you, and why?

Where the money comes from

Write grant, scholarship, work-study or loan

1. $3,000 from the government based on your family’s finances:  
2. $1,000 from a local business for the best essay:  
3. A library job paid through your financial aid:  
4. $5,000 you repay with interest after school:  

The FAFSA

The FAFSA (Free Application for Federal Student Aid) is the form that unlocks most grants, work-study and federal loans. Many states and schools use it for their own aid, too.

• It is free, at studentaid.gov. Never pay anyone to file it.
• File every year you are in school, as early as you can, even if you think you will not qualify.
• Check each school’s and your state’s deadline. They are often earlier than you expect.

Your time, in dollars

A $500 scholarship takes about 4 hours to apply for.

If you win, you earned $500 ÷ 4 hours = $  an hour.

At a $15-an-hour job, how many hours would it take to earn the same $500? Round to the nearest hour.   hours

Find three you could apply for

Ask your school counselor, search your library, and check with local groups. Ask Fort McClellan, too.

Real or scam?

If you have to pay to get free money, it is not free money.

Write the term next to its meaning

1. The amount you borrowed:  
2. What the lender charges you for borrowing:  
3. A loan where the government pays the interest while you are in school:  
4. A loan that builds interest from the day you get it:  
5. Time after you leave school before payments start:  
6. A person who promises to repay if you cannot:  

Federal vs. private student loans

The usual order: free money, then federal loans, and only then a private loan for any gap left. If you need one, compare lenders, including credit unions.

Interest while you are in school

Change the rate to a decimal (6% = 0.06), then multiply: interest per year = amount borrowed × rate

$5,000 unsubsidized × 0.06 = $300 a year

4 years of school plus a 6-month grace period: $300 × 4.5 = $  before your first payment.

The same $5,000 as a subsidized loan would build $  in interest while you are in school.

About $111 a month per $10,000 (6%, 10 years)

Does the payment fit the paycheck?

A common guideline: borrow no more in total than you expect to earn in your first year of work.

Riley’s 16-week semester

1. Money in − money out = $  left over
2. Riley keeps $300 of that as an emergency cushion. How much is left for fun and eating out? $ 
3. Spread over 16 weeks, that is about $  a week. (Round to the nearest dollar.)

Five ways to get the same textbook

A new copy costs $180. For each cheaper option, subtract its cost from $180 to find how much you save. The first one is done for you.

You take five classes, each with a book like this. How much could renting every book save over buying new? $ 

What does a meal really cost?

Kai’s meal plan costs $2,240 for a 16-week semester and covers 14 meals a week.

Meals in the plan: 16 × 14 =  

Cost per meal: $2,240 ÷ meals in the plan = $ 

Kai sleeps through breakfast and only eats 8 plan meals a week. Meals eaten: 16 × 8 =  

Cost per meal eaten: $2,240 ÷ meals eaten = $ 

Bank vs. credit union

Who can join Fort McClellan: Anyone who lives, works, worships, or attends school in Calhoun, Cleburne, Talladega, Clay, Randolph, Cherokee, Etowah, St. Clair, and Chambers Counties, Alabama, plus their family, can join.

What to look for in a college account

Check each one your account has. No account yet? Check the ones you will look for.

• No monthly fee, or an easy way to avoid it
• Free ATMs near campus. Many credit unions share branches and ATMs across the country
• Overdraft coverage you can say no to, so a purchase you cannot cover is declined instead of charged a fee
• An app with mobile deposit, low-balance alerts and direct deposit

Why overdraft matters: you have $2, buy a $4 coffee, and pay a $30 overdraft fee. That coffee cost $ 

Offered an account tied to your student ID? You can usually send your refund to your own account instead. Compare fees first.

You owe $1,000 on a card with a 24% APR

The APR is the interest rate for a whole year. To find one month’s interest:

1. Interest for a year: $1,000 × 0.24 = $240
2. Interest for a month: $240 ÷ 12 = $20

The card’s minimum payment is $25. The first $20 of it pays the interest. How much lowers what you owe? $ 

Paying off that same $1,000:

Interest saved by paying $100 a month instead of $25: $ 

“Your financial aid is on hold”

You get a text: “Your financial aid is on hold. Log in here within 24 hours to keep it.” Write two things you would do instead of tapping the link.

Your loan list

Federal loans are listed in your account at studentaid.gov. A loan servicer is the company that sends your bill. Private loans are on your credit report. No loans yet? Practice with these: federal $5,500 at 6%, federal $3,500 at 6%, private $4,000 at 9%. Under Servicer, write “look up at studentaid.gov” for federal loans and “the lender” for the private one.

Same loan, two lengths

How long you take to repay depends on how much you owe and the repayment plan you choose, and the plans change over time. A lower monthly payment usually means paying for longer. Here is $30,000 at 6%, over a shorter and a longer term. Interest paid = total paid − $30,000. (Payments are rounded, so totals differ slightly from payment × months.)

How much more does the longer term cost in total? $ 

Give one good reason someone might still choose the lower payment.

Add $50 a month

1. How many months sooner is the loan paid off?  
2. How much interest does the extra $50 save? $ 

Tell your servicer to put extra payments toward the balance, not toward next month’s bill.

Do this, not that

Your first year after school: three money goals

Write one goal per line, with a dollar amount or a date.

Compound interest

Compound interest means you earn a return on the money you put in and on the growth it already earned. Here is $500 left alone at 5% a year.

Each slice stacked on the $500 is interest. Each new slice is a little bigger than the last (compare +$25 with +$39), because it is 5% of a bigger pile. Year 1 earns $500 × 0.05 = $25. Year 2 starts at $525. What does it earn, to the nearest dollar? $525 × 0.05 = $ 

The Rule of 72

Divide 72 by the yearly rate to find about how many years it takes money to double. At 8% a year (72 ÷ 8), money doubles in about   years.

From age 20 to 65 is 45 years, or 5 doubles. Fill in how $1,000 grows:

8% is an example rate. Stock investments go up and down from year to year, and some years they lose money.

Sam and Taylor, at an example 8% a year

Fill in both totals ($50 × 12 × years). Why does Sam end with more?

Before you invest, and where

1. A small emergency fund in a savings account, so a surprise bill does not go on a card.
2. No credit card balance. A card charging 24% grows faster than investments usually do.
3. A Roth IRA, a retirement account you can open once you earn a paycheck, including from work-study.
4. Index funds inside it, which spread your money across hundreds of companies. They are not insured and can lose value.

Money you need for next semester’s rent or tuition is savings, not investing. Keep it in savings or a certificate. Fort McClellan offers Certificates.

You earn $2,000 at a summer job

Split it up. Make it add to $2,000.

Show what you know

1. Cost of attendance is $30,000, with $12,000 in grants and scholarships. What is the net price? $ 
2. Name one difference between a subsidized and an unsubsidized loan.
3. Your offer includes $2,500 in work-study. Is that free money? Why or why not?
4. A scholarship website asks for a $40 fee before you can apply. What should you do?
5. You carry a $2,000 credit card balance at 18% APR. About how much interest is that in one month? $ 
6. You expect a $45,000 first-year salary. By this book’s guideline, what is the most to borrow in total? $ 
7. Using the Rule of 72, about how many years does money take to double at 6% a year?   years