Planning for Your Financial Future

Many students who graduate from Hofstra Law School seek high-paying positions, but others choose to pursue the personal fulfillment of a public service career, despite lower financial benefits. Only you can decide which is appropriate for you, but as with most things in life, the choices you make will affect your future.

Establish and Keep Good Credit

The first step to determine your financial well being is to examine your credit report. Everyone should be aware of the information contained on their credit report. You may obtain a free annual credit report from www.annualcreditreport.com. You may also be able to receive one for free if you have been recently denied credit or you are a resident of certain states. The three major credit agencies are Experian (formerly TRW)Trans Union and Equifax.

Most students finance their legal education through the use of education loans. As long as you know the costs of these loans, it is appropriate to use them. In order to determine your financial well-being you need to know the terms of the education debt which you presently have. The debt calculators on www.finaid.org provide a good way to analyze your debt burden. They are available at www.finaid.org/calculators.

You should also know who holds your loans. Some lenders sell the loans on a secondary market so the company you borrow from may not be the same company you will send your payment to. Other lenders will still own the loan, but will contract with other companies to service the loan by processing payments, billing and correspondence. Your lender is required to inform you of any of these arrangements and remember to keep copies of all documents which you receive in a safe place.

If you have a Federal Perkins Loan from Hofstra Law School and/or your undergraduate institution, the school acts as the lender, but may have another company servicing the loan. Hofstra University uses ACS to service Federal Perkins Loans as well as the Hofstra Law School Loan.

Once you know your long-term education debt, the next step to determine your financial well-being is to analyze your short term debt. Short term debt usually consists of credit card debt. Ideally you should reduce the outstanding balance(s) on your credit cards to no more than 30% of your available credit and have no more than three open credit cards.

Be a smart consumer. Sales are not a reason to charge your cards to the limit. Purchase items that you can pay off within a short period of time so interest charges do not eliminate the sale savings. Save your credit line for emergency use. If you must use credit cards, reduce your credit expenses as much as possible. You can start by eliminating cards which have an annual fee and offer no other benefits. Compare interest rates, and eliminate your cards with the highest interest rates, especially if you revolve, you balance from month to month. Don't stop there; compare all terms, including grace periods. There are some cards that have an annual fee, but low interest rates. These may actually be better for you if you revolve a balance from month to month. If you want to force yourself into paying the balance in-full each month, you may wish to consider a charge card such as American Express instead of a credit card. Know your own credit usage pattern and choose the best card for you. Don't use department store cards since they often have interest rates in excess of 20% per year. To get information about low rate/low APR cards you can visit the following site: www.bankrate.com.

Another step on your road to financial well being is to know when you need help. Some people are fortunate enough to bypass this step throughout their lives, however if you do not, know that help is available to you. If you are not sure where to turn, you may want to consider visiting The Consumer Credit Counseling Service website. The CCC is a non-profit organization which can help you avoid even greater difficulties with your debts by possibly reducing your monthly payments and restructuring your consumer debt to allow you to pay it more quickly. Through arrangements with many creditors, they may be able to lower your interest rates and bring your accounts back into a current status. If you need assistance, don't delay. Consumer Credit Counseling can be found online at www.consumercredit.com.

In addition to regular credit assistance, the Department of Education has information pertaining to federal education loans on their website: www.ed.gov/finaid/loans/repay/edpicks.jhtml?src=ln. You can find out more about the options available to students who are facing difficulties. If your loans have already gone into a default status, you can also obtain information on how to bring the loans current through loan rehabilitation and consolidation.

After you figure out where you are financially and how you got there, it is time to determine where you are going. The final step to determine your financial well-being is to create a financial plan and stick to it. Determine what your income and your expenses for necessities (food, clothing, housing, insurance, etc.) are per month and go from there. Remember, the key word is necessities! Do the same to project your post-graduation budget. Make a conscious effort to determine your luxuries allowance and try to reduce it as much as possible. For example, if you have to borrow a commercial loan to pay for living expenses above your necessities, a $7.50 ticket to the movies is actually going to cost you $17.75 later. Avoid borrowing for lifestyle augmentation at all costs; it is too easy and too costly. If eligible, use Work-Study or other part-time employment to pay for your luxury purchases. For additional information about personal finance, check out The Motley Fool Web site or you may make an appointment to see someone in the Financial Aid Office.

Calculating Loan Payments

Your monthly payment for your Federal Subsidized Stafford loan is approximately $125 for every $10,000 borrowed and approximately $145 per $10,000 borrowed for the Unsubsidized Stafford. If needed, various loan consolidation plans would allow monthly payments to be reduced by extending the repayment period. The longer the repayment period, the greater the total amount paid to the lender. To more accurately calculate your loan payments you can use the calculators at: www.finaid.org/calculators/ or contact your lender for more information.

For information about short-term health insurance, purchasing a home, saving for retirement /investing, or buying or leasing a car, the web sites listed below are a good source of additional information on these topics! Remember to investigate all your options since an informed consumer is a wise consumer...

Review and Understand Your Credit

The links below are great resources on understanding credit.

  • AnnualCreditReport.com: This is a centralized service for consumers to request free annual credit reports. It was created by the three nationwide consumer credit reporting companies: Equifax, Experian, and TransUnion. AnnualCreditReport.com is the only service authorized by these companies for this purpose. Please note that, as a security precaution, consumers should never provide their personal information to any other company or person in connection with requesting free annual credit reports under the FACT Act. AnnualCreditReport.com will not approach consumers via email, telemarketing or direct mail solicitations.
  • Managing Credit Cards - Planning to Prosper: This video and text presentation provides valuable information about credit cards and credit reports.
  • WiseBorrowersm Curriculum Credit Series: This Access Group website provides you with tutorials on credit basics, credit reporting, credit scoring basics, maximize your credit score, good credit, credit cards and credit repair.
  • Credit Education Center: This section of the myfico.com website provides information on credit scoring and credit reporting.
  • Understanding Credit Scoring: Learn about the five areas of credit scoring and what you can do to improve your credit score with this free booklet.
  • Credit Score Estimator: F.I.C.O. and bankrate.com jointly developed this credit score estimator. Your credit score range is estimated based on answers to ten questions about credit use and payment behavior.
  • Your credit report only (not your credit score) can be obtained once a year free of charge by residents of certain states (including New York) from the three credit bureaus: EquifaxExperian and Trans Union.
    • National Foundation for Credit Counseling: NFCC, through its Consumer Credit Counseling Service member agencies, provides credit counseling, debt reduction services and education for financial wellness.
    • National Resource for Identity Theft: This is the Federal Trade Commission's (FTC) home page for ID theft. Links include a course of action if your identity has been stolen, consumer information and ID theft statistics.
    • Misused: The Department of Education has created this website to help college students avoid credit card fraud and other forms of identity theft.
    • Privacy Rights Clearinghouse: Find out about this nonprofit organization which fosters consumer education, research and advocacy for the enforcement of privacy rights.
    • Identity Theft Resource Center: This is a national non-profit organization which focuses exclusively on identity theft.