INTRO

Anyone know Bill Gates biggest regret in life? In January 2015, the worlds richest man said he regretted not learning a foreign
language. The Microsoft founder said he wished he spoke French, Arabic, or Chinese. He was impressed that Facebook founder
Mark Zuckerburg had learned Mandarin and did a Q&A with Chinese students.
What about you ... Whats YOUR biggest regret? Allow students to share a few stories of regrets. If it is more conducive, have
them share in pairs or small groups, then call on a few to share briefly with the group. Now that they have identified with the feeling
of having regrets, transition this feeling into understanding a potential future disappointment of student loan debt.
Hindsight is always 20/20 and many college students share one regret in common Lets watch this video from CNN Money to
hear what these 2 college graduates have to say: VIDEO : 2 Testimonials of Student Loan Headache (2:30)
http://money.cnn.com/video/news/2015/03/23/romans-millennial-what-student-debt-feels-like.cnnmoney/ V
IDEO SUMMARY : In the video, both discuss

their large student loan debt. One still has about $75,000 and expresses how she works a full time and part time job and has put plans on hold
to pursue her acting career for which she studied so she can work steady jobs and tackle her debt, which has a monthly payment of about
$800. The other is quite emotional as she talks about the large debt she has, the growing interest, and how her father co-signed one of her
loans and promised they would tackle the debt together. Afterward, he died fighting in Afghanistan, and now this 20-something-year-old
woman is facing her astronomical debt and cant get out from under it. She says to pay it off she would not be allowed to have any fun or
pursue the life she wants, and so she doesnt always pay, which has lead to loan balances far greater than she originally took out.

While we all have regrets as we mentioned before, those 2 women in the video shared their common regret that many other college
graduates share with them : the overwhelming debt they have from loans they took out to get their degree. Lets look at some facts
(on the Powerpoint):

Americans currently owe about $1.3 Trillion in outstanding student loans (more than credit cards)
43 millions Americans still owe on student loans
12% of borrowers
default (stop paying back) within 3 years
There are many high debt borrowers (those with $50,000, $100,000, $200,000 in student loan debt) and they are becoming more
common (Share story of the CA student you met this summer with over $100,000 in debt who wants to get married and serve as a
volunteer overseas)
Student loans require no credit check
You cant declare bankruptcy on student loans

Thats some of the BAD news. But today we want to talk about some GOOD news. Today we will talk about FIVE EASY RULES to
help you make some wise and informed decisions NOW, while you are still PLANNING for your future as a college student. And
these FIVE RULES can save you A LOT OF BAD SURPRISES and REGRETS for the future. You have a worksheet that goes
along with todays lesson, so you can fill in the blanks to answer the questions as we go and also complete the exercises to
demonstrate the skills you will learn. Can we get started?
RULE #1 - KNOW THE TOTAL COST OF GOING TO SCHOOL
Surprisingly, 75% of 16 and 17 year olds have NO CLUE what it is going to cost for them to go to college. And many students start
college without really figuring out HOW MUCH it will cost them in the end. Let me tell you a story. Story can be expanded or
dramatized
more, depending on time constraints. One day I went to the gas station once to fill up my tank. As I started pumping the
gas, I checked inside my wallet. I realized I had forgotten to go to the bank to get any cash as I intended. Id left my credit card at
home, and I didnt have my checkbook. I had started pumping my gas, the numbers were turning on the pump...but didnt have the
means to pay for it! Thankfully I lived nearby and the cashier was nice enough and understanding for me to run home and get my
credit card. Otherwise, who knows what I would have done. But the feeling I had partway through of was horrible when I realized I
had already committed to buy gas, but had no means to follow through with it and pay. I couldnt backtrack, could I? Many students
start college this way. They apply and go, but have never really looked into HOW MUCH it will actually cost them and whether
they can actually PAY FOR IT in the end!

So, RULE # 1 -- KNOW THE TOTAL COST OF SCHOOL. When you go into the store, you see a price tag, and know how much
the item will cost. Colleges dont exactly have price tags, but they do have what we call a STICKER PRICE. The STICKER PRICE
is how much youll end up paying with tuition, fees, books, housing, and other costs. How can we find out the STICKER PRICE of a
school you are interested in? Going to the website of the college you are interested in is a good place to start. Lets say I wanted to
go to USC in California. Use the Powerpoint with screenshots

of the schools website to illustrate the following material. How much

do you think it costs to go for a year? Anticipate student
responses. Most will be low, though a few will likely get close. Well, the
website says the STICKER PRICE for 1 year at USC is $62,595! Thats $250,380 for four years! This is for tuition and fees, room
and board, books and supplies, and other expenses. And remember, thats an ESTIMATE, based on last years costs. And each
year, the price usually goes up! What can you buy for this amount? Students respond.
ACTIVITY 1 Take a minute to find the STICKER PRICE of either OU or OSU. Go to the website of one of these two schools and fill
in the info on your worksheet. You will find the cost for ONE YEAR and then calculate for ALL FOUR YEARS. Direct the students
to the area on the worksheet where they can record this information. Once students are done, discuss as a class their findings on
the STICKER

PRICES of OU and OSU and their reactions to these amounts. But FEW college students WILL ACTUALLY PAY
THE STICKER PRICE you find online; instead you need to know the NET PRICE. Do you remember discussing GROSS PAY and
NET PAY? Gross pay is what youre TOLD youll make NET Pay is what you ACTUALLY take home. The STICKER PRICE of
college is RARELY paid; after some calculations, you will likely PAY LESS the NET PRICE.
How much less? The website of the college you are interested in is required to have a NET PRICE CALCULATOR. Refer to text on
the Powerpoint: In accordance with the Higher Education Act of 1965 (HEA) as of October 29, 2011, each postsecondary
institution that participates in the Title IV federal student aid programs is required to post a net price calculator on its Web site this
calculator should allow students to calculate an estimated net price of attendance at an institution (defined as cost of attendance
minus grant and scholarship aid) based on what similar students paid in a previous year. (SOURCE :
https://nces.ed.gov/ipeds/resource/net_price_calculator.asp#NPCRequirement).

Now, there are some things to note about the NET PRICE CALCULATORS (refer to the list on the Powerpoint): 1) They calculate an
ESTIMATE; they may not take into consideration all resources that may affect your eligibility for financial assistance at the school. 2)
The ACCURACY of the information you provide determines the accuracy of the results. 3) The results are estimates and NOT
OFFICIAL OFFERS of financial aid. 4) The exact cost to attend can be determined only after an OFFICIAL REVIEW has been
completed of your financial aid application materials. 5) They are meant to be used as a TOOL for prospective first time freshmen
who are U.S. citizens or permanent residents living in the United States.
We were looking at the STICKER PRICE earlier of attending USC. Lets locate the NET PRICE CALCULATOR on USCs website.
Guide students through the USC web page to locate the NET PRICE CALCULATOR. Let me show you how it works. Here is some
sample data for a potential student who would like to enroll. Pay attention to the type of information the NET PRICE CALCULATOR
will request for input -- things like family size, previous years income, assets, etc. Lets see how it works. Give sample data on the
Powerpoint and show students how to use the Net Price Calculator. This is an opportunity to remind students what they have
already learned about adjusted gross income, taxes, assets, etc., based on the data the students are asked to provide on a net price
calculator. Now, based on the sample data we input check out these results: After grants & scholarships, Ill still owe $18,657 a
year. I could possibly get $5,500 in FEDERAL LOANS EACH YEAR and could then borrow $10,657 each year in OTHER LOANS,
which means Ill borrow $16,157 borrowed EACH YEAR, plus earn $2,500 in work study. Not bad, compared to $62,000 a year!
ACTIVITY 2: Now, you try it. Locate the NET PRICE CALCULATOR on the website of either OU or OSU -- make sure its the same
one you just found the STICKER PRICE FOR a few minutes ago. Use the sample data on the slide, since you probably dont know
this information off the top of your head for your parents. Give sample data on the Powerpoint and let students use the Net Price
Calculator for either OU or OSU. Have them record their results. Then, they should consult with another student who researched
the same school using the same date to compare results to make sure they did it correctly.
RULE #2 - PROJECT POST-COLLEGE INCOME
Lets move on to RULE #2. Once you graduate, youll be making the BIG BUCKS, right?! Heres some data from an article about
the top earning celebrities under 30: (Show the data on the Powerpoint)
#3 TAYLOR SWIFT
#2 ONE DIRECTION

$64 million($7,306 an hour)

$75 million($145 per minute)

#1 JUSTIN BIEBER

$80 million($2.54 per second)

SOURCE : FORBES, Top Earning Celebrities Under 30 ; by Dorothy Pomerantz, November 24, 2014
http://www.forbes.com/sites/dorothypomerantz/2014/11/24/justin-bieber-tops-forbes-list-of-the-highest-earning-celebrities-under-30/

Well ALL make that kind of money in our early 20s and have NO PROBLEM paying back our student loans, right?! WRONG!
While you may expect to make TONS when you finally get that college degree that you paid so much for, you may be a bit
surprised. Listen to this article: A new poll by consulting firm Accenture shows some striking gaps between the expectations of
graduating seniors about the world of work and the experiences of recent grads who are already in the workforce...There is a gap
when it comes to salary expectations. Just 15% of this years graduating seniors expect to earn less than $25,000 a year. But a third
of recent grads report that they are making that amount or less.
SOURCE : FORBES, College Graduates Expectations Are Out of Line with Reality, Study Shows ; by Susan Adams, May 2, 2013
www.forbes.com/sites/susanadams/2013/05/02/college-graduates-expectations-are-out-of-line-with-reality-says-study/

So, will you ACTUALLY make ENOUGH to pay off those loans? Lets find out. The Bureau of Labor Statistics keeps data on how
much people earn in different states for different jobs. Watch as I research that data. Show on the screen how to navigate the BLS
website. Use the example of an Accountant in Oklahoma. Now, you can see from this the graduate in accounting can expect to
make a good living -- its about $65,940 median per year. BUT, do you think youll make that amount STARTING OUT? Anticipate
student responses -- theyll catch on quickly that you start out much lower than the median. You are right -- youll start out earning
less. So, if you notice in the table, there is a Bottom 10% on the left, and its quite a bit less per year. You guessed it -- that is the
number that we need to predict we will earn STARTING OUT if we even FIND a job. So, our accountant has to settle for $40,850
per year which still isnt so bad for a recent college graduate.
ACTIVITY 3: Now you try it. Use the Bureau of Labor Statistics website to research a career you are interested in. How much will
you make after college. Remember, look at the Bottom 10%! Assist students as they research a career choice.
RULE #3 - CALCULATE ROI ON EDUCATION INVESTMENT
Time for Rule #3. You need to calculate the Return on your Education Investment. If you remember, ROI, or Return on Investment,
basically means is it worth it? In this case, calculating the ROI means is it WORTH IT for me to borrow all that money to attend
school for the amount that Ill actually be making to do that job when I get out of school? The STUDENT LOAN RULE OF THUMB
is that you should never BORROW more than you will make your first year out of college. Lets use my USC findings as an
example. Show the calculations on the Powerpoint. Even with the grants and scholarships, Id need to borrow about $74,628 to pay
for the rest for four years. And as an accountant, Id be making $40,859 my first year. So, if I divide the loans by the salary, I get a
ratio of 1.83. Thats NOT GOOD! When evaluating the ROI, you want a ratio of LESS THAN ONE!
ACTIVITY 4: Now you try it. Use the amount youd need to borrow for your school choice and divide it by the amount youll make
out of college in the career you researched. What do you discover? Assist students with math. Survey responses at their results.
Many will be over the 1:1 ratio.
So, does that mean you should abandon your plans to go to USC and be an accountant, because RULE #3 says its not worth it?
RULE #4 - BORROW AS LITTLE AS POSSIBLE
Have no fear RULE #4 is here! We want to now figure ways we can CUT BACK so that we dont have to borrow so much. Let
me ask you what is your GO TO treat? Students will respond with things like Starbucks, fast food, energy drinks, etc. Okay, lets
go with Starbucks. How much does your Pumpkin Spice Latte cost? Students respond. Good. Would you buy it if it was $9?
Students will say no. Thats absurd, right?
Well, one mistake college students make is they dont just borrow loans for school expenses, but other expenses, including living
expenses. So, when I spend student loan money on my Pumpkin Spice Latte, by the time I pay that back in 10 years, that $4.65
drink actually cost me about $9. Why? Students will get it interest. Yes, interest! So, try to borrow as LITTLE as possible.
Lets go back to my USC example. Remember the STICKER PRICE? Did you notice it included things like ROOM & BOARD and
even BOOKS? Lets brainstorm. Do you think there is any way I could pay LESS in these areas, so I wouldnt have to borrow so

much? Let students brainstorm ways of saving on room and board and books. Some areas include being a Resident Adviser and
living for free, living off campus with roommates, and living at home. For books, some areas to save are buying used books, buying
early on Amazon, buying and sharing by making a schedule with friends, and borrowing from the library.
Great job on budgeting better. Now, with all budgeting, I can either cut my expenses, or do what else? Students will respond with
increasing their income. Yes, we can increase our income while in college. The more we are making, the less we have to borrow.
So, brainstorm for me what are some ways to increase income while in college? Anticipate answers like work during the
summers and winter break, save money from high school and graduation, do work-study or work part-time during the school year.
Now, lets do some more math. Remember when I calculated my ROI back in Rule #3 for USC? I was hoping to get a ratio of 1,
and my ratio was too high at a 1.83? To get my ROI to be 1, I would need to decrease my loans by $33,769 to equal my first year
pay of $40,859 as an accountant. Can I do that? Well, based on what you just brainstormed, lets try it. Say I was an RA my last 2
years at USC and got free room and board. That just saved me $25,854 in loans (two years of room and board at USC). And if I
saved 50% on books with some of the cost-saving tips you offered, I could cut another $3000. And, if I worked each summer and
earned $1750 each summer to put towards college, thats another $7000 I would not need to borrow in loans. How much is that
saved? $35,854! And guess what, now my ROI is a ratio of less than 1 -- Im borrowing less than Ill make my first year. So I can
STILL go to USC!!! If time allows, guide them through the same exercise of cutting costs from the STICKER PRICE of their school
choice.
RULE #5 - PROJECT YOUR MONTHLY PAYMENT
Finally, we come to RULE #5 -- we need to PROJECT OUR MONTHLY PAYMENT. Before we get to that, lets take a quick video
break Do you ever wish you could see into the future? Do you remember BACK TO THE FUTURE II? Marty McFly went 30
years into the futureto the year 2015. Thats this year! What do you think? Did the filmmakers accurately predict the future?
Watch this video from ABC News! IN the video the reporter reflects on some of the predictions made about 2015 in the 1980s
movie Back to the Future II. The report cuts between scenes from the movie and real-life technologies of today that are not too far
off the imaginations of the films writers.
http://abcnews.go.com/US/back-future-part-ii-scored-2015-predictions/story?id=27946920

So lets get back to OUR future. While our desire to see into the future may not always be 100% accurate, we should try to at
least get a reasonable glimpse, especially when it comes to our finances. How much will you be paying EACH MONTH once you
start paying those student loans back in the future? And will you be able to afford that payment? Can you believe 80% of college
students with loans have never looked at what their FUTURE payments will be? And many students end up having TOO MUCH to
pay each month, even though financial planners recommend that monthly payments toward debt should be no more than 8% to
10% of income in a year.
Lets look at TWO EXAMPLES, so you know what Im talking about. Refer to each example on the Powerpoint. EXAMPLE A : A
career in special education has an average starting salary of about $31,000. If you borrow $60,000 to graduate, youd pay about
$690 a month for the next ten years. This salary equals about $1940 in net earnings each month after taxes. A $690 payment
would account for about 36% of monthly earnings, leaving only $1,250 each month to manage ALL other living expenses. What do
you think? Is that reasonable? Allow students to discuss and come to the conclusion that this is more than 10% of the students
monthly income in Example A, and the student should rethink their plans. Now, lets look at EXAMPLE B. Refer to the example on
Powerpoint. EXAMPLE B : A career in Biotechnology has an average starting salary of about $47,500. If you borrow $20,000 in
student loans to complete a degree for that, youd pay about $230 every month for the next 10 years. A yearly income of $47,500
would produce a net monthly paycheck of about $2900. Your loan payments would be 8% of net income and would cost about
$7,600 in interest to repay. What do you think about this example? Let the students discuss and come to their conclusion that this
would be a reasonable school choice based on career goals and debt used. SOURCE for EXAMPLE A & B:
http://www.lendkey.com/studentloans/2011/02/24/new-rules-for-college-loans-matching-a-career-to-debt-repayment-2/

Now, you can PREDICT THE FUTURE not by using a Delorean from Back to the Future, but by using a Student Loan Repayment
Estimator on the internet. Heres the address for one we will be using in our exercise. Show the address and/or provide a link to
http://studentaid.ed.gov/repay-loans/understand/plans/standard/comparison-calculator

Lets go back to my example from USC and the results we got from the NET PRICE CALCULATOR. Show the following numbers
and definitions on the Powerpoint. Based on those findings, over 4 years I would receive $22,000 in FEDERAL DIRECT
(STAFFORD) LOANS. These are SUBSIDIZED loans meaning the government is behind them. These loans are :
-Need based (so you need to fill out your FAFSA)
-No interest while you are in school in school; you start paying 6 months after you graduate
-Right now they are at 4.29% interest
-You can take out a max of $5,500 per year
-Stafford (from the government) or Perkins (from school)

If you took out loans to pay the rest, that would be $42,628 in other loans. Lets say these are UNSUBSIDIZED loans. These loans
are:
-Not based on need (though you still fill out FAFSA; the government will loan to you as a student)
-The interest starts accumulating while you are in school; though you can pay after graduation
-Right now they are also at 4.29% interest
-The max you can take out is $31,000; after that you can take out private loans for the rest

Lets use the REPAYMENT ESTIMATOR to predict what my future payment might look like using our USC examples. Use the data
to put in the numbers on the Powerpoint. Assume $22,000 in direct subsidized at 4.29% interest and enter the rests as direct
unsubsidized for $42,628 at 4.29% interest just to get a general picture. After I put in my loans, notice at the bottom I have
repayment options. Explain the difference between Standard and Graduated for 120 months, Extended Fixed and Graduated at 300
months, Income Based Repayment, Pay as You Earn, etc. Notice the amount paid in interest for each of these options. Which one
would you choose? Let them discuss. Point out the pros and cons in each of their answer choices so they see there may be
multiple factors influencing their repayment options.
ACTIVITY 5: Now, try and use the REPAYMENT ESTIMATOR with the numbers you got in your example of OU and OSU. Write
down at least TWO repayment options, and choose one you think would be the best. Assist students in using the REPAYMENT
ESTIMATOR, if needed. Lets do our LAST BIT OF MATH today, I promise. Remember, my monthly payment should not be more
than 8 to 10% of my income. So, in my example of USC -- if I choose the STANDARD repayment of $664 a month for 120 months,
that is 20% of my monthly pay FAR MORE than 10%. Demonstrate how you found this percentage. If I chose the EXTENDED
FIXED repayment of $352 a month for 300 months, that is 11% of my new accountants monthly paycheck. A bit more reasonable.
Lets see what your calculations show -- use your numbers from OU or OSU and figure out what your monthly payment would be.
Assist those who need it.
CONCLUSION
We have covered A LOT of material today, so lets review before I give you a take-away assignment. Who can tell me one of the
FIVE RULES? Lead students in an oral review of the 5 Rules and other follow-up questions to test for comprehension. Great job. It
sounds like you have learned this well and like you have some tools to keep you from having some BIG REGRETS in the future
regarding financing for college.
So prove it to me. Im giving you a take-home worksheet. Its almost identical to the one we did together in class today. But,
remember, the numbers we used were just sample numbers. We didnt use YOUR familys numbers on the NET PRICE
CALCULATOR and we didnt use a school you may ACTUALLY INTEND on ATTENDING (unless you DO want to go to USC, OU,
or OSU). So, youll redo the assignment, but THIS TIME youll use YOUR FAMILYS NUMBERS to get your results on the NET
PRICE CALCULATOR. Youll choose a SCHOOL YOU ARE INTERESTED IN. Youll project post-college income for a CAREER
YOU ARE LIKELY TO PURSUE. And the results you get will be a RELATIVELY GOOD GLIMPSE of YOUR FINANCIAL FUTURE.
Good luck! Hand out the worksheet and answer any questions students may have.