PRACTICE FOR THE PERSONAL FINANCE CHALLENGE–2017

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STUDENT RESPONSIBILITIES EVERYDAY DURING THE SIMULATION:

  1. Login daily
  2. Pay bills on-time
  3. Adjust 401(k) contribution % and bank account type, as needed
  4. Read simulation communications via email, Dashboard Alert, and push notifications
  5. Maintain their CFS reconciled
  6. Take quizzes and surveys
  7. Review pay stubs and W-2
  8. Use the Student Quick Tips to help navigate the simulation and perform common tasks
  9. Use the Knowledge Base to answer questions about the game, scoring, website navigation, etc.

 

TAXES & FORMS

GOAL: Today’s lesson will provide general guidelines about the tax implications of earnings, types of taxes withheld from pay and what tax forms you receive and complete.

Navigation Tips:

  1. Understanding the W-4.  The amount of taxes withheld from an employee’s gross pay is determined by the personal information declared on the W-4.
    1. The W-4 form indicates an individual’s marital status and number of allowances.
    2. Individuals usually claim an allowance for themselves, one for their spouse (if married filing jointly), and one for each dependent that will be reported on their tax return.
    3. Based on the W-4, employers withhold the appropriate amount of money for federal income taxes.
    4. States will either use the Federal W-4 or a similar state form to determine the amount of state and, in some instances, local income taxes to withhold.
    5. In the simulation, it is assumed the W-4 is completed at the start of employment. To see the taxes withheld in Budget Challenge, view the Payroll Calculator at the bottom of Student Home>Vendor Selections or the payroll checks at Student Home>Employer
  2. Understanding the W-2. The employer is required to provide the employee with a W-2 showing how much they earned during the tax year, and the amount that was withheld for state and federal income taxes, the amount of wages subject to Social Security and Medicare taxes and the amount of those taxes that were paid.
    1. If tip income is reported, any taxes withheld on that income is also shown.
    2. This form is used by the employee to complete his or her annual tax return.
    3. In Budget Challenge, the W-2 form is available at Student Home>Employer. This W-2 is only an example based on the annualized gross income of the simulation character using the most recent paycheck.
    4. You will not need to use this form to file a tax return in the simulation.
  3. Understanding which form to file for the simulation character. (1040EZ vs 1040A). Most people who had earnings in a tax year should file a tax return, even if it is not required by law.
    1. The appropriate tax form is determined by your filing status, whether you have dependents, the type and amount of income earned, your eligibility for certain credits and /or deductions, and if you have to pay self-employment taxes.
    2. In Budget Challenge, you use the Tax Filing module (Student Home>Tax Filings) to answer questions about your simulation character to determine the appropriate tax form (1040EZ or 1040A) to file for your particular scenario.
    3. You can analyze both forms and compare the tax due/refund on each.
    4. The forms are auto-populated using the W-2 information for each student using annualized totals of their most recent paycheck and 401(k) contribution percentage.

TERMINOLOGY TIPS:

  1. W-4 – Form for collecting data for an individual employee used to determine tax withholdings.
  2. W-2 – Reports an employee’s annual wages and the amount of taxes withheld from his or her paycheck.
  3. 1040EZ – Income tax return for single and joint filers with no dependents and simple tax circumstances.
  4. 1040 – Standard form that individuals use to file their federal income taxes.
  5. 1040A – Income tax return that allows for more complexity than the 1040EZ but less than the longer 1040.
  6. 1099 – A tax form that reports the year-end summary of all nonemployee compensation.

DID YOU KNOW?

  • According to reports, 2011 taxpayers left over $1 billion in unclaimed funds.

RIGHT NOW:

You will play Tax Bingo to familiarize yourself with tax terms. Get your bingo card from your teacher. Follow the directions below to analyze sample tax forms for the H&R Block Budget Challenge simulation character.

  1. When the teacher reads the definition, identify the matching term on the bingo card.
  2. When all the terms diagonally, horizontally or vertically in a row are completed, call out “Bingo”

WHAT’S NEXT:

  1. Let’s take a look at the tax forms in the simulation.
  2. Login to your student account.
  3. Locate the W-2 form at Student Home>Employer.
  4. This is an example W-2 that has been auto-populated based on the annualized gross income using your most recent paycheck. There are differences between you and some of your classmates due to varying 401(k) contribution percentages.
  5. Locate the Tax Filing module at Student Home>Tax Filings. Answer the questions below about the simulation character to determine the appropriate tax form to file for his/her particular scenario.
    1. How much was the tax due/refund using the 1040EZ?____________________________
    2. How much was the tax due/refund using the 1040A? ____________________________
    3. Which form should this character use to file his/her taxes? ____________________________
    4. What makes the difference between the two forms? ____________________________
      1. The W-2, 1040EZ and 1040A are provided for informational purposes only. You will not need to file a tax return in the simulation.

DON’T BE THAT GIRL WHO LETS MONEY HOLD HER BACK FROM REACHING HER GOALS

  1. What goals could you accomplish if you had more money?
  2. Where do you save money?
  3. Why should you explore savings options beyond a traditional savings account?
  4. What are the advantages of each savings option?
  5. What are the risks?
  6. Create a savings plan for one of goals or responsibilities. Here are some questions you should address in the savings plan:
    1. How much money can I save now?
      1. How much money can I save next year?
      2. In five years?
    2. Which savings vehicles will I use to save?
      1. In one year?
      2. In five years?
    3. How can I make saving automatic?

DON’T BE THAT GUY WHO USES HIS MOM’S CREDIT CARD FOREVER

  1. What are the pros & cons for paying for things with a
    1. credit card
    2. debit card
    3. cash?
  2. What are the pros & cons associated with your credit score & establishing credit when paying for things in each of the following ways:
    1. credit card
    2. debit card
    3. cash?
  3. Go to www.google.com/compare/creditcard
    1. Analyze real-world credit card offers
    2. Explain why or why not you would be smart to take them
  4. Write a reflection on what could happen if you overcharged a credit card and weren’t able to pay it off. What are the consequences?

GOAL: You will learn proactive strategies for safeguarding personal, financial and confidential information to prevent financial mishaps in the future.

  1. Navigation Tip #1: Establish strong passwords using recommended strategies. Safeguard your Budget Challenge password and interact safely online. Recommended strategies include:
    1. Create a strong password: minimum of eight characters with at least one capital letter, one number and special character. Password should not contain user name, real name, company name or other easily discoverable information.
    2. Use mobile or online password protection software or keep passwords in a safe place at home.
    3. Use unique passwords for different accounts, using more difficult passwords for accounts with sensitive information like online banking or those that can affect your reputation like social media.
  2. Navigation Tip #2: Think before you click. It is important that all consumers take necessary precautions to prevent online fraud.
    1. Free Wi-Fi in public places is often not secure. Do not access financial information on unencrypted sites and avoid using mobile apps that require personal information.
    2. Be aware of Phishing/Spoofing emails attempting to obtain confidential information. It is highly unlikely financial institutions or government agencies would request confidential information through an email or on the phone.
    3. Be wary of downloading software from unknown sources as these may contain viruses, malware or spyware. While playing Budget Challenge, you only receive emails from Budget Challenge authorized accounts. A list of these email address can be found on the Quick Tips file located at Student Home>How to Play.
  3. Navigation Tip #3: Protect your identity. Do not share your SSN or full birthdate. Identity thieves need a combination of four pieces of information: name, address, SSN and birthdate. Protect your SSN and full birthdate to guard against identity theft as these are not easily found online.
  4. DID YOU KNOW: A recent study from Kaplan has found that 31 percent of college admission officers check social media to see if an applicant would make a good fit at their educational institution.
  5. TERMINOLOGY:
    1. Identity Theft – Fraudulently acquiring/ using another person’s identifying information for financial gain.
    2. Malware – Software that is intended to damage or disable computers and computer systems.
    3. Phishing – Activity of defrauding an online account holder of financial information by posing as a legitimate company.
    4. Secure Sockets Layer [SSL] – The standard security technology for establishing an encrypted link between a web server and a browser.
    5. Dumpster Diving – Strategy used by identity thieves to retrieve sensitive information about another that was discarded in the trash.
  6. Open this copy of the Test Drive, which includes tips.
    1. In the Google Doc for this class, type DEFENSIVE DRIVING TIPS & ACCIDENT WAITING TO HAPPEN
    2. Defensive Driving Tip – Type the tips (pages 3-6–you can copy & paste them) that are useful in protecting your personal information against identity theft. Explain the importance of the tip.
    3. Accident Waiting to Happen – Type the tips (pages 3-6–you can copy & paste them) that are not a good way to protect personal information against identity theft. Explain why the tip is not recommended and the possible consequences or ramifications if practiced.
    4. In the Google Doc, respond to the following (use the Internet to help you):
      1. Why should social security numbers never be given over the telephone?
      2. What are the alternatives to using public Wi-Fi when accessing sensitive information?
      3. What are the cues that a website is safe to use for exchanging sensitive information?
      4. What is the appropriate response for receiving an email phishing for personal information?
      5. Do you know anyone who has had their identity stolen?
      6. What were some ramifications for them?
  7. NOW WHAT:
    1. Do not share your Budget Challenge password with anyone. Treat this account information like you would your online banking or vendor online account password. If at any time you have any suspicions that your password has been breached, immediately use the Login Wizard on the login page to reset your password and contact the Help Desk.
    2. Commit to a strategy to safeguard passwords and regularly change them.
    3. Do not use mobile banking function while on an unsecured connection.
    4. Memorize your social security number and store your social security card in a safe deposit box or in a safe place at home.
    5. Shred all confidential/personal information before disposing.
    6. Never give out personal and confidential information on the phone, in an email or text message.

     

 

 

LESSON #9: DON’T BE THAT GUY WHO DOESN’T UNDERSTAND LOAN LINGO

  1. Write the phrases “go to college,” “buy a house” and “start a business” down and figure out what the words have in common.
  2. What could you do to get enough capital to reach one of these goals?
  3. What is a loan? What do you know about loans? Under what circumstances is taking out a loan a good (or bad) idea? Loans can be a healthy way to improve financial standing, but they also can cause financial strain and challenges if you reach above your means.
  4. Review key words associated with loans from the Student Glossary, such as interest, principal, variable interest rate loan, fixed interest rate loan and adjustable rate mortgage.
  5. Divide into small groups and rewrite the definitions into your own words.
  6. RIGHT NOW:
    1. You will role play with how credit history and credit scores impact the cost of a loan. Other considerations such as the borrower’s income and leverage are also included. You will know what impacts a credit score, what is on a credit report, and the process for borrowing money to buy a home. You will experience the mortgage lending process and learn how credit history and scores impact a home loan through role play.
    2. Characters Needed ():
      1. Borrowers (3): Borrowers approach lenders seeking a loan for a first home.
      2. Lender (2): Lenders work with borrowers to collect and submit mortgage documentation to underwriters.
      3. Underwriter (2): Underwriters review the mortgage documentation and assess risk, including pulling the credit report of the borrowers from the CRA. Underwriters approve or deny loans based on credit worthiness.
      4. Credit Reporting Agency [CRA] (3): CRA provides underwriters credit reports and scores.
    3. Role Play (the process):
      1. Borrowers approach lenders for a loan.
      2. Lenders apply for loan approval from the underwriter.
      3. Underwriters approach the credit bureau for borrowers’ credit scores.
      4. Underwriters assess credit and inform the lender of the decision and details.
      5. Lender informs the borrower of the decision and details.
      6. Borrower makes a decision to take the loan or approach a different lender.
    4. RIGHT NOW:
      1. What is listed on a credit report? Google it.
      2. What is the differences between each borrower’s credit histories and income levels from the role play above?
      3. What is the impact on the credit-worthiness of each borrower from the role play above?
      4. Login to your Budget Challenge account.
      5. On the Student Home page, find your name in the leaderboard table and click the “View” hyperlink. A new window will appear that includes a list of any transaction that has impacted your score positively or negatively.
      6. Count how many of each of the following fees you have accumulated.
        1. Late fees
        2. NSF
        3. Over credit limit
      7. Compare your total count of late fees, NSFs and Over Credit Limit fees with your classmates.
      8. How do these fees impact your credit score in the real world?
      9. How you can prevent future fees and penalties in both the simulation and real life?
      10. Pay any outstanding Budget Challenge bills.
      11. Consider scheduling time to check your credit report when you turn 18.
      12. Make a plan for building and maintaining good credit history.

GOAL: You begin formally developing a financial reputation at age 18. Each financial decision made from that point on will ripple through your financial lives and may haunt you on credit reports for the next seven years. Today you will learn general guidelines about building a positive credit history.

  1. Four important tips to build and maintain a positive credit history are:
    1. Always pay all bills on time.
    2. Establish credit to build a credit history.
    3. Be conservative in borrowing from lenders. Limit use to roughly 30 percent of your available credit.
    4. Check credit report for accuracy and identity theft at least once a year.
  2. During the simulation, you are allowed to experiment with different ways of managing money to learn what works best for maintaining a good credit standing.Understanding this will help you to better prepare for building credit after high school. The simulation scenario allows for practicing
    1. Navigation Tip #1: Easy ways to encourage paying bills on time include:
      1. Setting reminders on a calendar/phone.
      2. Allocating a consistent day to review financial matters on a weekly basis.
      3. Tracking expected income and expenses on the Budget and Cash Flow Spreadsheet.
    2. Navigation Tip #2: Building a credit history requires using credit.
      1. The credit card in the simulation is used for day-to-day expenses. Do you think this is a responsible use of credit cards? What are potential pitfalls?
      2. Review the your credit card statement and be sure you know the difference between needs versus wants in the transaction history.
  3. DID YOU KNOW: 1 in 4 Americans have a mistake on their credit report.
  4. TERMINOLOGY:
    1. Credit Score: A number assigned to a person that indicates to lenders their capacity to repay a loan.
    2. Credit Report: A detailed report of an individual’s credit history prepared by a credit bureau (CRA)
    3. Underwriter: Evaluates the risks of a person to determine loan approval.
    4. Credit Reporting Agency (CRA): Maintain historical information pertaining to an individuals credit experience. Also known as credit bureaus.
  5. LESSON #8: DON’T BE THAT GIRL WHO DRIVES HER CREDIT SCORE
    1. Begin by drawing a pie chart representing how a FICO credit score is calculated:
      1. 10% credit in use
      2. 10% new credit
      3. 15% credit history
      4. 30% amounts owed
      5. 35% payment history.
    2. Working in pairs, brainstorm an example representing each category (e.g., payment history includes whether or not you paid your bills on time, credit history includes how long you have been using credit, and so on)
    3. The FICO credit score is the most commonly used score, and it ranges from 300 to 850. The higher the score you have, the less risk you are to lenders.
    4. Why should we care about checking our credit scores? How might credit scores impact borrowing money to buy a home or to pay for college?
    5. Checking your credit score can help prevent identity theft. Review the steps of identity theft protection found at https://www.identitytheft.gov.
    6. How do we check our credit score? We each have access to a credit report, which is a record of our credit history. Explore websites of each of the three main credit-reporting agencies:
      1. TransUnion – www.transunion.com
      2. Equifax – www.equifax.com
      3. Experian – www.experian.com
    7. Divide into small groups and brainstorm ways a credit score could go up or down. Present your ideas.
    8. DON’T BE THAT GIRL WHO DRIVES HER CREDIT SCORE DOWN
      1. Natalie is driving into her future, but she’s facing a few pit stops along the way. Read each of Natalie’s crossroads in life and decide if her actions will cause her credit score to go up and down.
        1. After graduating high school, Natalie opens a few credit cards. At first she is able to pay off each card in full, but over the course of a year, she falls behind and ends up maxing out each of her cards. Will her credit score go up or down? Why?
        2. Natalie moves into a nice apartment and is responsible for paying the rent, the cable bill and the water bill, all of which she pays on time each month. Will her credit score go up or down? Why?
        3. A debt collector calls Natalie about her maxed-out credit cards she hasn’t paid in months. Will her credit score go up or down? Why?
        4. A friend tells Natalie she should check out her credit report, especially if she’s behind on credit card payments. Natalie laughs it off and decides she’ll check it later, maybe when she’s ready to buy a house. Will her credit score go up or down? Why?
        5. Overall how do you think Natalie did? Did she manage her credit score successfully or drive it off the road?

LOANS

GOAL:  By the end of class today you will know the different types of credit and the costs associated with borrowing money.

During the simulation, you manage three different types of debt:

  1. credit card (unsecured debt)
  2. student loan (government subsidized debt)
  3. automobile loan (secured debt).

Navigation Tip #1: Borrowing money costs money. Different types of loans have different kinds of terms.

  1. Unsecured Debt – Credit Card
    1. Credit cards usually have a variable (or floating) interest rate in which the APR (annual percentage rate) can change.
    2. Typically the rate is tied to another rate called an index.
    3. In the U.S., most credit cards are pegged to the prime rate.
    4. The prime rate moves with the interest rate set by the Federal Reserve called the federal funds rate.
    5. When you hear “the Fed raised interest rates,” it means the cost of carrying a balance on your credit card most likely went up.
    6. In Budget Challenge, Surge Credit card offers two options with different fixed finance rates. You are not able to increase their credit or decrease the interest rate. Finance fees are assessed for carrying a balance and on cash advances. Surge has a minimum finance fee of $2 per month.
  2. Secured Debt – Consumer Asset Loans
    1. Most collateralized consumer loans have a fixed simple interest rate.
    2. A collateralized loan is backed by the value of the asset it finances.
    3. If the borrower defaults on the loan, it could result in a repossession, which has a significant negative impact on credit score.
    4. The bank owns the asset (holds the lien) until the loan is paid in full.
    5. Because the loan has collateral, the rate is usually lower than unsecured debt.
    6. In Budget Challenge, Zippy’s Auto Loan offers two different types of automobile loan options: credit union and a bank loan. You select an option during vendor selections and you must repay the loan you selected according to its terms. In real life, credit unions and banks are separate institutions.
  3. Subsidized Loans • Most subsidized (or government-backed) student loans offer deferral of interest during college and a six month non-payment period for up to six months after graduation.
    1. The rate on a subsidized loan is usually much lower than that of an unsubsidized loan.
    2. The interest on student loans is usually compounded monthly and added to the principal of the loan.
    3. Unlike most debt, student loans are not forgiven in bankruptcy.
    4. When the simulation starts, you have been employed for at least six months and your student loan from Riptide Student Loans is now in repayment.
    5. The student loan is a monthly bill

TERMINOLOGY:

  1. Principal: Amount of money borrowed.
  2. Interest rate: Money charged by the lender for the amount borrowed, expressed as an annual percentage.
  3. Term (Periods): Amount of time allotted for repayment of a loan.
  4. Secured Credit: Credit backed by collateral.
  5. Unsecured Credit: Credit not backed by collateral.
  6. Collateral: Asset assigned as security for a loan.
  7. Lien: Legal claim to the property of borrower to secure the payment of a debt or the satisfaction of an obligation.

DID YOU KNOW:

A high credit score can lead to a lower interest rate when borrowing money.

RIGHT NOW:

Play Budget Challenge Loan Trivia (a Jeopardy-style game) to demonstrate knowledge of loan and credit terminology.

  1. Open this copy of the Test Drive, read through the rules and track categories.
  2. Pick teams and assign roles for each member of the team.

AFTER THE GAME:

DON’T BE THAT GUY WHO DRIVES HIS CREDIT SCORE DOWN:

  1. Here is how your FICO credit score is calculated:
    1. 10% credit in use–what kinds? loans? student loans? credit cards? etc.
    2. 10% new credit–new debts that were added to a credit report in the last six to 12 months
    3. 15% credit history–how long have you been using credit
    4. 30% amounts owed–how much you currently owe
    5. 35%  payment history–whether or not you pay your bills on time
  2. The FICO credit score is the most commonly used score, and it ranges from 300 to 850. The higher the score you have, the less risk you are to lenders.
  3. Why should you check your credit score? Answer in the Google Doc. HINT: Check out this website: https://www.identitytheft.gov
  4. How do you check your credit score? Check out these websites (share this with your parents for extra credit!):
    1. www.transunion.com
    2. www.equifax.com
    3. www.experian.com
  5. Read and do the Don’t Be That Guy Who Drives His Credit Score Down

DON’T BE THAT GIRL WHO DOES’T UNDERSTAND LOAN LINGO

  1. What do the following have in common? “go to college” “buy a house” “start a business”? MONEY–right?!
  2. Respond to the following in a Google Doc:
    1. What could you do to get enough capital (money) to reach one of these goals?
    2. What do you know about loans?
    3. Under what circumstances is taking out a loan a good (or bad) idea?
    4. Do you understand the following terms? (If not, Google it!)
      1. interest
      2. principal
      3. variable interest rate loan
      4. fixed interest rate loan
      5. adjustable rate mortgage
  3. Read and do the Don’t Be That Girl Who Doesn’t Understand Loan Lingo–put your answers in the Google Doc

STUDENT LOANS

GOAL: This lesson will be about approaching college as an investment in yourself and evaluating financing options such as student loans.

Navigation Tips:

  1. In the U.S., there are two types of student loans: Federal loans (subsidized or unsubsidized) and Private loans.
    1. In the simulation you have already incurred federal student loan debt, graduated college and have been in the workforce for at least six months
  2. Subsidized Federal student loans do not accrue interest while students are in school.
    1. There is only one choice in the simulation for student loan, so costs are identical in this category. A federal subsidized loan is used for the scenario because it is less expensive, interest did not accrue while you were in school and the majority of U.S. students qualify for this type of loan as long as they are in school at least half-time.
  3. The six month deferment period for student loans starts the day after students graduate, leave school or drop below halftime enrollment.
    1. In the simulation, the student loan is in repayment. It is important to be aware that not completing a degree program does not remove the liability to repay the student loan
  4. Student loans are difficult to discharge even in bankruptcy.
    1. The student loan in the simulation is to open your eyes to the commitment made when obtaining a student loan and payment responsibility each month. The budget is tight in the simulation, but there is enough money to satisfy all the bills when managed properly. What are the consequences of defaulting on a collateralized loan (where the asset can be repossessed by the lender) and a student loan (where the asset is the knowledge/degree which can’t be taken away)? What are the differences in the case of bankruptcy?

TERMINOLOGY

  1. Payback period – Amount of time for an investment to break even
  2. ROI – A measure that compares the benefits to the costs of an investment. ROI = (Gains – Costs) / Costs Cost of Living
  3. Adjusted Salary– Adjusting salary to reflect how much more or less expensive it is to live in a given city
  4. Mid-Career Salary – Expected salary of a career after 10-15 years of experience
  5. Opportunity Cost – Cost of not choosing an option

DID YOU KNOW:

Before students finish college, they estimate it will take 10 years to pay-off their student loans. The actual average bachelor’s degree holder takes 21 years.

RIGHT NOW:

You will calculate the return on investment for various college majors and anticipated career fields using an ROI calculator. You will use the tool to calculate the ROI of at least one college you are interested in attending. Then, you can use the second tab in that same Excel file to plan for Paying for College, comparing the cost of Federally Subsidized studentloans and Private loans.

The cost of college includes tuition, books, fees and housing.

Use the Paying for college and ROI calculator to explore and compare the cost of common student loans. DISCLAIMER: The data and calculations within the Paying for College and ROI calculator are meant for demonstration purposes only. Please be aware that interest rates, compensation and long-term impacts of a particular school, major or career choice vary on an individual basis.

  1. Step 1: • Download the

    Download (XLSX, 474KB)

    and save it to YOUR Google Drive on your machine.
  2. Step 2: • Review the details of the College ROI tab.
    1. Data entry cells are green. These are cells that you can manipulate to match your particular situation. Click the cell you want to enter information in. Then, use the drop-down arrow in the bottom right corner of each data entry field to select the value. – Select a Major. – Select a School. – Select a Financial Aid Category.
    2. Once you have selected values for all three fields, the graphs for Payback Period and 30-Year ROI will automatically calculate.
    3. Look at the findings on the graphs.
      1. What is the payback period (in years) for the selections entered?
      2. What is the estimated 30-year Return on Investment (ROI) for the selections you entered?
  3. Step 3: • Next, within the same Excel file, click on the worksheet tab labeled Paying for College. The tabs are located in the bottom left of the Excel window.
    1. The Cost of four-year College and Financial Aid fields are populated from your selections on the prior tab.
    2. Complete the data collection questions by entering amounts for: (Estimates or best guesses are OK.)
      1. Scholarships
      2. Grants
      3. Amount Saved Already
      4. Amount you will Save
      5. Parental contribution
      6. Anticipated Part-Time Earnings while at college
    3. Once all these fields are completed:
      1. Locate the “Amount needed to borrow” in cell L14. Enter this same number into cell L17 for the Loan Amount.
      2. Select the Term (in years) for the loan and Age at the start of the loan.
      3. Compare the Payment amounts for the Private Loan on the left which has an interest rate of 8.5% and the Federal Loan on the right which has an interest rate of 4.66%. (Note, you can enter a different interest rate if you have specific loan information at your disposal.)
      4. Notice the amortization tables for each loan. Within each table, you will find columns for:
        1. Starting Balance
        2. Payment
        3. Interest
        4. Principle Reduction
        5. Additional Pmts
        6. Ending Balance
        7. Cumulative Interest
        8. Cumulative Principle Pmt
        9. Cumulative Total Payments
  4. Step 4: Review the results of your calculations:
    1. Scroll down through the amortization tables to locate when each loan is paid-off. Scroll all the way to the left (Column B) to find the age at which you would pay-off each of the loans.
      1. What age is it for the private loan?
      2. What age is it for the federal loan?
      3. What is the overall best student loan in this case?
      4. How much is saved over the life of the loan by choosing one loan over another?
      5. Name three ways you can reduce the “Amount needed to borrow” to pay for college?
      6. What are some ways you could save for college?
    2. Change the amount to show how much you think you could save for college.
      1. How does this affect your “total Cumulative Interest” paid over the life of the private loan?
      2. How does this affect your Total Cumulative Interest paid over the life of the federal loan?

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