Dollars & Sense Blog

There’s something for everyone. News, advice, scholarship information, curriculum – you’ll find it all here. Don’t forget to check back for the latest in personal finance content.

Expand Archives
Ideas & Info for:
Topics
Year

Education

5.26-blog

Your Teen Wants You to Cosign a Loan—Now What?

Let’s paint a quick picture of the college landscape: there is $1.2 trillion in outstanding student loan debt, and, if the current system remains, every graduating class from this point forward will become the most indebted class in history.

That may seem dreary, but it’s important not to paint college affordability with a broad stroke because a picture may still be worth 1,000 words, but a solid financial college plan is worth way more than $1,000.

Part of that plan may include student loans. Before you sign on the dotted line as a cosigner for your teen and send them on their merry way, consider these important facts:

  1. Consider ALL options

Federal loans never need a cosigner and have more favorable terms for students to pay back the money in a fair and timely manner. Look into these types of loans first, along with any and all scholarship or grant opportunities. Only then should you look into private loans, which require a cosigner.

  1. Know the implications of becoming a cosigner

If you’re thinking about making a big purchase like a car or a house, you may want to reconsider your choice to cosign a student loan. Becoming a cosigner makes it more difficult to take out other loans or credit cards. Plus, if you miss any payments, your credit score will suffer. And if you want to get out of the pact, think again. It’s next to impossible to relinquish your responsibility once your teen is 21 years old and your name is still on that paper. In extreme cases, cosigners sometimes remain responsible for payments even if the person who is receiving the loan passes away. That is why many experts recommend a life insurance policy in conjunction with a private student loan.

  1. Be sure your teen is on board with the plan

Every parent will differ in their approach to their teen’s financial contribution. If you expect your teen to contribute, ensure that they can do so responsibly. You can get your teen accustomed to this responsibility by setting up a chores-for-allowance system. A more extreme option is to have your teen sign a document that stipulates they will repay any missed payment and/or fees you cover over the life of the loan. In an ideal world, this will mostly serve as a real-life reminder of the loan and not a first step toward a date in daytime television family court.

  1. Be realistic with the loan

One of five things all students should know about loans is to only take out the amount of money they truly need. The general rule of thumb is to estimate the salary your teen could earn upon graduation and stay below that number. If you learn better through hard figures, The Wall Street Journal reported that between Oct. 1 and Dec. 31, 2015, private debt collection companies hired by the Department of Education garnished more than $176 million in wages from defaulted student loan borrowers in order to pay back their debts. You don’t want that for your teen, do you?

After poring over the reality of the situation, you may find it in the best interest of both you and your teen not to cosign a student loan. You may get a cold shoulder or two because of it, but you will be able to say, “I told you so,” when they graduated debt-free.

JosephBLOG

Meet H&R Block Budget Challenge Scholarship Winner: Joseph Cain

Joseph Cain, a student at Paxon School for Advanced Studies, was determined to win a scholarship through the H&R Block Budget Challenge. He had played last year, but this year Cain made sure he paid his bills, stuck to a budget and took the quizzes. The hard work paid off and this year, he won a $20,000 scholarship!

See what he said he learned from the H&R Block Budget Challenge simulation.

Do you think your peers are financially literate?

I definitely don’t think they are. I talk to my friends a lot about finances and they recognize they don’t really know a lot. Recently, my friend blew his car transmission and was talking to his dad about how he was going to pay for it; I asked if they had a certain type of insurance to cover it because it would help fix that. Turns out he’d have to pay a lot less if they did have it.

What kind of financial education or background did you have prior to taking the Budget Challenge?

I had a little because I’ve been participating in Ms. Loggie’s LifeSmarts club since I was a freshman. Also, my dad works in the financial industry so he keeps me knowledgeable on the subject.

Do you talk to your parents about money ever?

I do. My dad and I talk about it sometimes if the conversation comes up. My parents are really informative.

What’s the best piece of financial advice you’ve gotten from your dad?

He’s taught me that it’s really about trying to stay out of debt, but it’s also about managing the risk and reward when spending your money.

 

What did you think when your teacher introduced the H&R Block Budget Challenge simulation to your club?

Originally last year I thought it was interesting. I didn’t think we had any chance of winning a scholarship or grant this year so I wasn’t excited initially. In the end I’m glad we did it!

What was your motivation for participating in the simulation?

My whole class was actually in it together, helping and motivating each other along the way. It was a team effort.
What was the most important thing you learned from the Budget Challenge?

The most important thing I learned is that there’s going to be a lot of unexpected things that happen to you along the way so it’s important to be prepared for any circumstances.

How did you react when you found out you won a scholarship?

The day before I was in position 30 and so I accepted that it was a bit too far off for me to win. But the next morning Ms. Loggie called me and told me to look at the scores. I was really surprised. I kept checking it for the next couple days because I couldn’t believe it!

What are your plans for after high school?

I’m planning on going to University of Central Florida to study political science and then go to law school after that.

How has winning the scholarship impacted your post-grad plans?

It’s a large sum of money and since I plan on doing extra schooling after I get my bachelor’s degree, it’s really going to help me pay for it.

Do you think the skills you learned in the Budget Challenge will be beneficial to your real life?

Absolutely. The simulation is pretty similar to real life. No matter who you ask, they’ll say it’s pretty accurate and can teach you so many lessons.

What advice do you have to other students who might take the Budget Challenge?

You have to be prepared and just look ahead and figure out when you have to pay certain things so you’re never caught off guard with bills.

Tuffa-blog

Meet H&R Block Budget Challenge Scholarship Winner: Tuffa Said

Through the H&R Block Budget Challenge learning financial literacy is both fun and applicable to real life! If you don’t believe us, just ask Paxon School for Advanced Studies senior Tuffa Said.

By paying his bills on time and being financially savvy, Said climbed to the top of the ranks in the simulation and won a $20,000 college scholarship. He is also part of the Life Smarts club coached by Ms. Kathryn Loggie, which won a $5,000 classroom grant.

Read below to learn more about his experience.

Did you have any knowledge about managing money before participating in the Budget Challenge?

I had a very small amount of financial knowledge before the Budget Challenge. I mostly learned what I knew from the Life Smarts club and my teacher Ms. Loggie.

Do you ever talk to your parents about money? If so, what kind of things do you talk about?

I’ve started to do it more recently. Since I’m going to the university, we talk about tax returns, what forms are required and how to fill out the FAFSA correctly.

Was this your first year participating in the Budget Challenge?

No, I participated last year as well. This year I made sure I paid my auto insurance!

When you started the simulation, did you think you would win?

At first I was really determined to win. Then, in the middle I realized that the bills were starting to appear and that kind of threw me of. I really couldn’t believe it when I saw that I was winning toward the end of the simulation!

What would you say was the biggest thing you learned by participating in the Budget Challenge?

To pay my auto insurance on time! But fortunately, I don’t pay auto insurance in real life, my parents pay it for me.

How have you taken the financial skills you learned and applied them to your real life?

I’ve encouraged my parents to pay their bills on time! It also helped to ensure that I don’t go into credit card debt.

Where do you plan on continuing your education?

I plan on going to the University of North Florida to study electrical engineering.

How has the scholarship changed your financial outlook when it comes to college?

The scholarship will help me focus on my schoolwork rather than having to worry about how I’m going to pay for school.

Now that you’re a financial whiz, do you plan on passing along your wisdom to your friends?

No! I want to keep it all to myself (laughs).

loggie-blog

Meet H&R Block Budget Challenge Classroom Grant Winner: Ms. Kathryn Loggie

Teachers often work double-duty to make sure teens are well-equipped with the knowledge they need to succeed. One example is Paxon School for Advanced Studies teacher Kathryn Loggie.

In addition to teaching grades 9-12 journalism and computer science, Loggie is the supervisor for an after school club called LifeSmarts, where students learn about life skills, including finance. It was in this class that Loggie introduced her students to the H&R Block Budget Challenge. Because of her efforts three students walked away with $20,000 scholarships and Loggie won a classroom grant! See what she had to say about the program.

Do you think the students in your community are well-versed in money management?

Definitely not. Teens today need to know about credit, credit cards and how easy it is to get into debt. Students preparing for college need to know about student loans, how they’re going to pay them back, and the implications of not paying them back.

How did you find out about the H&R Block Budget Challenge?

I got an email last year about it that sounded intriguing. Finance is a subject we’ve been covering in the LifeSmarts club for a number of years. We thought we’d give it a try and we did OK the first year. I was disappointed none of my students last year won scholarships, but we made up for it this year!

How did your students enjoy the simulation?

They really enjoyed it. They liked having that persona in the simulation where they had to guess what they were going to do and spend their money on. A lot of students would say, “Can you believe my person spent that much on entertainment?!”

Have you found that your students have more financial-related conversations after taking the Budget Challenge?

Absolutely. The students can conduct an intelligent conversation on personal finance with anyone now. Sometimes we have guest speakers come in and I tell them that the students really understand it at a high level and don’t need to talk down to them.

As a teacher, what did you enjoy about the simulation?

The quizzes were great. Some of them were very difficult, but we worked through the quizzes and the students really learned from them.

How did you react when you found out your class had multiple winners?

I had students who participated both years, but as far as getting to the top, I don’t know if we even thought that was possible given the number of students who participated in the Budget Challenge. We were so pleasantly surprised when we had three individual scholarship winners!

Would you recommend the Budget Challenge to other teachers? Why?

Just look at the benefits in terms of the scholarships and grant money—that alone is enough to participate. We’ve gotten a lot of publicity at the district level about this too. I’ve even gotten emails from parents asking how they can get their son or daughter involved. It’s well worthwhile!

What do you plan to use the grant money on?

I would like to take the students on field trips, like to the Jacksonville branch of the Atlanta Federal Reserve Bank. I’ll probably also use it to buy additional resource materials for the students.

5.5blog

4 Things Teens Absolutely Must Know Before Taking Out a Student Loan

A college degree today is equivalent to a high school diploma 50 years ago. That is to say it’s an expected, if not necessary, level of education needed in order to secure a job in a number of professional fields.

The one major difference between high school and college is, of course, price. But given the importance placed on higher education, many families will do whatever it takes financially to ensure their child can earn that degree.

For most, that means taking out student loans. Before you and your teen go down that road, you should both be aware of the implications going forward.

These are four things you and your teens absolutely must know before taking out a student loan:

  1. Almost 71 percent of bachelor’s degree recipients will graduate with a student loan.

As a parent, you might think loans aren’t necessary since they weren’t when you were looking into college. According to a 2015 Wall Street Journal article, your memory doesn’t deceive you — less than half of students graduated with student loans two decades ago and about 64 percent did 10 years ago. These days, however, roughly 3 out of 4 students will need to borrow money to graduate.

  1. The average 2015 college graduate with student loan debt will have to pay back a little more that $35,000.

If your teen is one of those three students who will take out a loan, they can expect to be saddled with $35,000 upon graduating. That amount is more than double what borrowers had to pay back two decades ago, even after adjusting for inflation. So not only are more students taking out loans, they’re also paying more in loans.

  1. Only borrow what you need.

It’s generally thought the biggest loan you can get is the best. This is not true. A loan should strictly serve to cover the cost of college — this includes spending costs in addition to the basic costs of education, room and board. When taking out a loan, look at what the averages are and then apply yourself and your situation against those. This is one of several tips you should consider during the process.

  1. Know what types of loans are out there

When applying for financial aid, loans are normally included in the school’s offer. Some student loans are made through the federal government, while others come from private sources like banks for financial institutions. Generally speaking, federal loans offer borrowers more ways to pay the money back along with a lower interest rate.

Make sure your teen has a basic idea of what they’d like to study and what they hope to achieve while in college. They can figure it out while already there, but that’s a costly deliberation period. Getting some real world experience first either through a job, volunteering, or even traveling can help hone their interests and formulate a plan for a worthwhile college experience.

Remember to remind your teen to speak to someone in his or her desired college’s financial aid office. They’re there as resources to help you!

4.19-blog

Can You Pass This Financial Literacy Quiz?

Think you know everything about how to manage money successfully? For example, do you know the difference between different types of bank accounts? What about the fees associated with a credit card? Take this financial literacy quiz and prove it!

Q1: Uh oh, you forget to pay your cell phone bill and get a late notice. What kind of repercussions can you likely expect?

  • A. Your phone will be shut off
  • B. You’ll be charged a late fee
  • C. Your next bill will be double the price

Q2: Which type of account allows you to make an unlimited number of withdrawals without a fee?

  • A. Certificate of deposit
  • B. Checking account
  • C. Savings account

Q3: Your auto insurance plan has a $600 deductible. Driving home from work, you get into an accident and cause $800 worth of damage to your car and $1,500 to the other person’s car. How much of the cost do you have to cover?

  • A. $200
  • B. $1,700
  • C. $600

Q4: Which of the following is incorrect about using an ATM?

  • A. ATMs are usually open 24 hours a day.
  • B. You can get information about your account at an ATM machine.
  • C. You can get cash anywhere in the world without a fee.

Q5: What does APR stand for?

  • A. Annual Perpetual Rate
  • B. Annual Percentage Rate
  • C. Annuity Per Refund

Q6: How much should be in your emergency fund?

  • A. $1,000
  • B. Two months worth of rent or mortgage payments
  • C. Six months worth of living expenses

Q7: What is the recommended max percentage of your take-home income you should spend on monthly housing expenses?

  • A. 30 percent
  • B. 45 percent
  • C. 50 percent

Q8: You earn $8 an hour at your job at the mall and worked 11 hours this pay period. When you get your check, you notice it’s less than the $88 you expected. Why is that?

  • A. Your employer has the right to withhold money from your paycheck at will.
  • B. The store you work at is allowed to take money out at will.
  • C. State and federal taxes have been taken out of your paycheck.

Q9: Student loan borrowing is at an all-time high, and so is the default rate on making student loan payments. What kind of relief should you expect on your student loans if you file for bankruptcy?

  • A. Significant relief—all debts are wiped clean so you can have a fresh start.
  • B. Moderate relief—usually payments and amount owed are adjusted to match your ability to pay.
  • C. No relief—it’s extremely rare to get any relief for student loans from bankruptcy

Q10: What does a FICO score determine?

  • A. Your credit rating
  • B. Your interest rate
  • C. The fee you will be charged when taking out a loan

Check your answers below! How’d you do? Do you need to brush up on your financial literacy knowledge or do you have what it takes to have a successful financial future? Let us know in the comments section.

 

 

 

Answers:

  1. B
  2. B
  3. C
  4. C
  5. B
  6. C
  7. A
  8. C
  9. C
  10. A
4.14-blog

Financial Literacy Across the World

The United States is considered a global leader on numerous fronts, but when it comes to teenage financial literacy, we’re simply middle of the pack.

In fact, on a 2014 international financial literacy test, the mean score for American 15-year-old test takers was roughly 490. For context, that places us between Latvia on the upper end and Russia on the lower end. Shanghai teens performed the best with a mean score around 600.

So why doesn’t America’s greatness translate to teenage financial literacy? Well, the answer is simple: we aren’t teaching enough teens the basics.

According to the Council for Economic Education, the number of states that require high school students to take a course in personal finance has remained unchanged at 17 since 2014. To put it another way, less than half the American states are preparing their teens for real world money management.

Meanwhile, other countries across the globe are implementing mandates to require financial literacy coursework be taught in schools. The United Kingdom joined Australia and Singapore in 2014 as countries that include personal finance classes in official curriculum, and other countries like Canada and New Zealand are poised to make similar requirements in the near future.

Among the states that have mandated personal finance education courses, the students exhibit meaningful improvements. Three years following the course implementation in Georgia, Idaho and Texas, credit scores increased by 2 percent, 3 percent and 5 percent respectively.

Additionally, students who have received personal finance education are more likely to display financially responsibly behaviors like saving, budgeting and investing. The Council for Economic Education reports 93 percent of those who have taken a class save money vs. 84 percent of those who have not; 60 percent of those who have taken a class have a budget vs. 46 percent of those who have not; 32 percent of those who have taken a class have invested money vs. 17 percent of those who have not.

But perhaps an even more significant obstacle for teens to hurdle in the quest to obtain lifelong financial skills is that most parents don’t feel equipped to pass on sound financial knowledge, according to PBS.

4.12-blog

What Does Financial Literacy Mean To You?

Whether you’re 14 or 44, being financially literate is crucial at any age. We asked a group of parents and teens what being financially literate means to them and how they use this knowledge in their everyday lives!

I’ve heard of financial literacy, but I don’t know what it is. I don’t personally know much about finances, but I’d like to learn how to spend money wisely so I’m prepared for when I’m adult. — Brenna K., 14

I want to be educated on how to manage my money because I don’t think I’m quite there yet. I sometimes talk to my parents about money, but not enough. — Juliana C., 14

I had one personal finance class in high school, but it was optional. Being financially literate to me means that I’m able to understand my bills and exactly what I’m looking at when I get those bills. — Amanda O., 20

Being financially literate definitely means staying on top of my bills and making sure I have enough money to cover those, but also that I have enough money to go out and have a good time. — Ryan S., 20 

Overall, being financially literate helps you not incur credit card debt, knowing where to invest and save, and creating a budget. I talk to my kids about money, and they each have a credit card so they’re able to budget what they want to spend, and then pay it off at the end of the month to create credit. — Leslie G., 43 

I think budgeting is definitely the most important part of being financially literate. I like to save rather than spend my money. — Kaileigh E., 18 

It’s so important to be financially literate, and I personally need to get better at it. It’s important to make sure you know what you’re spending and if you’re spending it well. — Courtney E., 20

I need to make sure I keep my bank account in check and my checkbook balanced. My dad helps me out a lot and helps me understand my finances. — Emily D., 19 

My parents help me out a lot with my finances, but being financial literate means everything to me because you have to save your money. Being a student is hard and you have to pay for school and all that, but I think my parents help me out a lot. — Colleen O., 19

I’m not financially literate. I don’t take any personal finance classes, but I wish I did because I’d learn to spend my money better. Right now I spend it on crazy stuff that I probably shouldn’t, like toys. — Jacob F., 14 

I like to be aware of how I’m spending and saving my money. I check my bank account frequently and have certain apps that help me make sure I budget wisely. In the future, I want to make sure that I’m putting away 10 percent of my paycheck and saving for an emergency fund. — Charlotte H., 22 

In order to make sure I’ve got a grip on my finances, I make sure I save enough. That’s the point of financial literacy. — Johanna H., 31

I don’t think teens are very financially literate. There often isn’t any education in high school so we as teens aren’t as smart with our money as we should be. — Eric H., 12 

I think I’ve talked about it with my parents, but not at school. I’ve talked about money and how you should spend it in a smart way. — Katharina F., 16

What does being financially literate mean to YOU? How do you make sure you’re keeping track of your money? Let us know in the comments below.