Educational Debt Management Self-Empowerment for Financial - - PowerPoint PPT Presentation

Taking Charge! The Urgency of Educational Debt Management

Self-Empowerment for Financial Well-Being

Mike Matheny, M.Ed., AFC

Topics For Today

• How can we turn our past experience into growth opportunities?
• Regarding personal finances – What would you like to learn, and perhaps change?
• A Tale of Two Costs – A Case for Accelerating Your Loan Repayment
• Public Service Loan Forgiveness – Is It Even Possible?
• Identify Priorities: Leveraging Credit, Risk Management, Saving and Investing
• Proactive Intention – The Time Is Now
• Start to Navigate the Currents of Your Life

Self-Assessment #1

If there is one thing you would like to change in your relationship with money… what would it be?

Self-Assessment #2

Please take a moment to list, free-write, and/or illustrate your top personal strengths…

What prevents us from utilizing our known skill set to engage with specific objectives in pursuit of financial well-being? …Familiarity…

The Cost of Repayment

20 Year Repayment Timeline

Loan Balance: $180,000 Average Interest Rate: 6.5% Life of Loan: 20 Years Monthly Payment: $1,342.03 Total Cost of Loan: $322,087.59 Interest Cost: $142,087.59

10 Year Repayment Timeline

$180,000 Loan Balance 6.5% Average Interest Rate 10 Years Life of Loan $2,043.86 Monthly Payment: $245,263.63 Total Cost of Loan $65,263.63 Interest Cost SAVE $76,824

Public Service Loan Forgiveness

A Few Awful Truths

• The Federal Loan Servicing

Landscape is NASTY

• Significant Risk Comes with the

Potential for Reward

• A Profound Lack of Institutional

Accountability by the Dept. of Ed.

Known Hazards

• Poorly Timed Consolidation
• Late Payments
• Overpaying
• Non-compliance with Annual

Documentation Requirements

PSLF Cont. – Where is Reliable Support?

• PSLF Help Tool from Federal Student Aid
• https://studentloans.gov/myDirectLoan/pslfFlow.action#!/pslf/launch
• FedLoan Servicing – Official PSLF Instruction
• https://myfedloan.org/borrowers/special-programs/pslf
• Administrative Paperwork – The Employer Certification Form
• Additional electronic PDF document provided for you.
• PSLF Booklet from the Association of American Medical Colleges
• Additional electronic PDF document provided for you.

Opportunities Gained

vs.

Opportunities Lost What is Being Asked of You? …Engagement…

Ta Take ke Ch Charge arge of

• f Yo

Your ur Fi Financi nancial al We Well-Being! Being! Th The e Ti Time me Is Is No Now

Your Credit Report and What is “Says” About You

www.annualcreditreport.com Character, Capacity and Collateral A Major Indicator of your Financial Readiness The Horse In Front of Your Cart!

Time Value of Money

Working Against You with Debt Working For You with Investment

What is More Important to You?

Spending?

Finance $40K for a lightly used BMW $635 monthly payment at 4.5% APR $45,717 = Total Paid over 6 years Blue Book Value on Payoff Date: Future Value (FV) = $14,624

Saving and Investing?

Invest in Employer’s Retirement Plan $635 monthly contribution w/ 7% ROR $56,617 = Account Balance in 6 years Compounding Growth over 25 Years: Future Value (FV) = $287,182

Navigating Your River: What’s Around the Bend?

(find a partner for a quick discussion)

As you begin your career journey as a Physician’s Assistant, what major life events are you anticipating in the next 5 years? And which have financial implications?

What Are Your Top Priorities?

My Humble Thanks to All of You…

mathenym@ohsu.edu