Campaign Launched to Educate Students and Families About Responsible Debt Management
25 October 2006 - 2:52AM
PR Newswire (US)
NATICK, Mass., Oct. 24 /PRNewswire/ -- With the cost of higher
education on the rise, it is more important than ever that college
students and their families make smart choices about paying for
college, budgeting, managing their money, using credit and
borrowing to finance their education. To address this growing
concern, The Better Business Bureau, Inc. Serving Eastern
Massachusetts, Maine & Vermont has teamed up with the
Massachusetts Educational Financing Authority (MEFA) and Sallie
Mae(R) to increase public awareness of smart money management and
dealing with debt, through a three- month public education
campaign. The "Debt Management for Undergraduates" campaign
emphasizes how to budget and borrow wisely, and provides crucial
tools and resources for young people, their families, and
educators. "College students often have little disposable income,
but are surrounded by the temptation to obtain credit cards and
spend money they do not have," said Paula Fleming, vice president
of communications and marketing of the Better Business Bureau, Inc.
Serving Eastern MA, ME & VT. "Poor decisions made in college,
such as accruing credit card debt for non-essential expenses -- or
even worse, paying for college with a credit card -- can do
long-term financial damage, unnecessarily increase the cost of
their higher education, and launch students into a spiral of debt
that can follow them well beyond graduation." Over the next three
months the BBB, MEFA, and Sallie Mae will disseminate information
and tips on money management, responsible borrowing and proper use
of credit through the media, educators, seminars, and on the BBB's
Web site, http://www.bbb.org/. Using credit cards wisely is one
significant step young people can take to avoid getting mired in
debt. The BBB offers the following tips to help students manage
their money and make sound financial decisions: * Understand your
financial aid choices and go for the most cost-effective options.
The College Board reported that more than $53 billion in state,
federal, and institutional grants were made in 2005-06, but
millions of students miss out on free money through grants and
scholarships simply because they do not apply. According to a
report from the American Council on Education, 50 percent of
undergraduates--approximately 8 million students--failed to
complete a Free Application for Federal Student Aid (FAFSA), the
standard application used to award federal grants and loans.
Students and parents should also be aware of low-cost student loans
available regardless of financial need or academic merit. The
interest rate on the most common type of federal loan is roughly
half that of the average credit card rate. Borrowing wisely really
does pay off. * Set a realistic budget and keep track of spending.
First, conduct an honest self-assessment of your needs, spending
habits and lifestyle and set a practical budget. Save receipts and
check your account balances regularly, either by phone or online.
You should also screen your statements, online or in print, to
check for unauthorized charges. It is relatively easy to steal
credit information, and if you don't monitor your account and
billing cycle, you may miss unauthorized charges. Contact your
creditor immediately if you notice a discrepancy. * Be
credit-savvy. Take your time when considering a card, compare
rates, benefits, and fees, and don't let a prize at a campus kiosk
tempt you into opening a credit account. Be sure to limit the
number of cards in your wallet. According to a study by Nellie Mae,
college seniors have five credit cards on average, but more cards
do not mean better credit. If a student decides to open a credit
account, one or two major credit cards (one exclusively for secure
online transactions, for example) -- as opposed to higher interest
store cards-should suffice. Lastly, the best rule of thumb is to
only charge what you can afford to pay off completely each month.
The Federal Trade Commission estimates that a $2,000 charge paid on
the minimum monthly balance at 18.5 percent interest will take 11
years to pay off, and will cost almost double the original charge
in interest. It is best to pay off a credit card in full rather
than pay the minimum. * Track your credit score vigilantly. By
ordering a credit report annually you can ensure that no
unauthorized credit charges, or even loans or mortgages, are
reflected in your history. If you find unauthorized credit in your
name, contact the creditor immediately. As part of the Fair and
Accurate Credit Transactions Act of 2003, you are entitled to one
free credit report per national credit bureau per year (a total of
three free reports). To order your free credit reports call (877)
322- 8228 or visit http://www.annualcreditreport.com/. It takes
seven years for accurate, negative information to be deleted from
your credit report. Keeping your credit clean in college will help
you in the future. About the BBB Founded in 1920, the Better
Business Bureau, Inc. is a non-profit, public service organization
serving Eastern Massachusetts, Maine, and Vermont. The BBB provides
free business Reliability Reports, Charity Reports, and other
invaluable consumer information to the public. All BBB services are
readily available on the Internet at http://www.bosbbb.org/. About
MEFA The Massachusetts Educational Financing Authority is a
not-for-profit, public State Authority dedicated to helping
families financing higher education through low-cost financing
alternatives, structured college savings programs, and by providing
college financing expertise to students, families, colleges and
universities. For more than twenty-four years, MEFA has helped more
than 200,000 students and families finance education costs. MEFA's
programs include the U.Plan Prepaid Tuition Program and the U.Fund
College Investing Plan and numerous low-cost Federal and Private
loan programs. For more information on responsible borrowing and to
download MEFA's free guide "Managing Your Student Life and Loans"
visit http://www.mefa.org/. About Sallie Mae Sallie Mae(R) is the
nation's leading provider of saving- and paying-for- college
programs. The company manages more than $130 billion in education
loans and serves nearly 10 million student and parent customers.
Through its Upromise(R) affiliate, the company also manages more
than $11 billion in 529 college-savings plans, and assists more
than 7 million members with automatic savings through rebates on
everyday purchases. Sallie Mae and its subsidiaries offer debt
management services as well as business and technical products to a
range of business clients, including higher education institutions,
student loan guarantors and state and federal agencies. More
information is available at http://www.salliemae.com/. SLM
Corporation and its subsidiaries are not sponsored by or agencies
of the United States of America. DATASOURCE: Better Business
Bureau, Inc. CONTACT: Paula Fleming, VP of Communications of Better
Business Bureau, +1-508-652-4855; or Thomas Murphy, Director of
Programs, Massachusetts Educational Financing Authority,
+1-617-224-4810; or Beth Guerard, Manager, Corporate
Communications, of Sallie Mae +1-703-984-5621 Web site:
http://www.bbb.org/ http://www.mefa.org/
http://www.annualcreditreport.com/ http://www.salliemae.com/
Copyright