Staff are now available to assist over the phone from 10AM to 4PM (Monday-Friday) at (951) 827-3204. You can also email the office at sbsofc@ucr.edu for answers to your question. Click the link for more information on Campus Return and COVID-19.
Coronavirus (COVID-19) information and resources.

Student Business Services

Debt Management

Managing Debt

One of the first steps in managing your debt is to figure out how much debt you actually owe.

Starting on a positive note, you should determine your average monthly income. Gather three months of your paycheck stubs and any other monthly income. Add them and divide the total by three - this is your monthly income. Put this number at the top of a budget form or spreadsheet - here is a sample budget form.

Your budget form lists your monthly income and your monthly expenses. Using a simple two - column form, list your income and expense items in the first column and list your average monthly totals in the second column. Adding two additional columns will track the actual amount spent for the month and the balance of an expense account. This will help you fine tune your budget.

Next, you need to figure out how much you owe. Gather three months of your credit cards statements, monthly bills, and other personal debt. Add them and divide the total by three - this is your average monthly expense.

Make an overall assessment of your existing savings and investments, and set your savings goals for the future. You can now decide whether you are saving enough money to achieve your short, medium and long-term goals.

Finally, subtract your monthly expenses from your monthly income.

Evaluate Your Expenses

Now that you have completed a monthly budget its time to evaluate your expenses; look for opportunities to economize, and develop a plan to cut back spending in specific areas. Keep the following in mind:

  • Discern between luxury items and necessity items.
  • Cut back on credit card use for luxuries.
  • If you find that you are spending less than you had anticipated, you may want to put more money in your savings account to help out with unexpected expenses.
  • If you find that you are spending more than anticipated, try identifying the items you really don't need (new clothes, CDs, expensive dinners) and avoid purchasing them until you are back within your budget.

After a month or two, you'll be better able to identify where you can comfortably make additional cuts and adjustments. Consider this a process of self-discovery. Many people can't control their money until they know how much they have and where it goes. If you stick with the budgeting process past the first month or two, you'll begin to see a pattern in your spending, and you'll be able to identify areas where you can manage your debt. Following a budget can set you free from the burden of debt and the constant worry that you won't be able to obtain your financial goals.

Dealing With Credit Cards

Breaking the credit card habit is very difficult. You can do it, however, with a healthy dose of commitment and determination.

Here are a few tips to help break the credit card habit:

  • Shred credit card offers received in the mail.
  • Commit to paying bills in full each month or to not using credit cards at all.
  • Throw out one credit card a month until you're down to a few manageable ones.
  • Once you pay off the credit card, write to the card issuers and close the account.
  • Keep cards with the lowest interest rates.
  • Keep credit cards somewhere other than in your wallet.
  • Use cash or debit cards instead of credit cards.

Many of us have made the mistake of needlessly running up credit card debt. As it revolves for months or years, the big banks charge us around 18% interest per year. Too many people have found themselves in their mid-thirties, loaded down with high-rate debt on their credit card.

The general rule of thumb is to pay off a loan if its interest rate is higher than the rate you could earn on savings.

Consolidate your debt. Many credit card issuers offer introductory rates as low as 3.9% for six months. If you're really serious about getting out of debt in a hurry, transfer your largest, high-rate balances to a card with an extremely low rate and pay them down aggressively.

Financial Planning

The first step in your financial planning quest is determining your goals. The second step is to determine what resources you have. The third step is to decide your needs and wants for the future. Once you determine your goals, where you are financially, what you need, and what you want, the last step is to figure out how to get there.

To start you need to construct a financial profile. Your financial profile is not only how much you earn and what your net worth is, it includes your lifestyle, responsibilities, and all financial resources. This is where your emergency fund, insurance, investments, debt management, retirement planning, and estate planning, are all articulated.

Make an overall assessment of your existing savings and investments, and set your savings goals for the future. You can now decide whether you are saving enough money to achieve your short, medium and long-term goals.

Allocate a portion of your income for savings and retirement. Retirement funds are best placed in your company's 401(k), if it has one, so that you are not tempted to tap into the money. You may want to set aside 10 to 20 percent of your take-home income for savings.

As you construct your financial profile you are detailing your financial plan to get to the goals that you have set. This is an evolving document where some of the goals may change. A well thought-out plan will have the ability to be modified and remain solid, and meaningful. Identify and write down your financial goals, whether they are saving to buy a new car, saving for a down payment on a house, going on vacation, paying off credit card debt, sending your kids to college, or planning for retirement.

  • Break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more) goals.
  • Educate yourself! Read investing magazines and books. With a little effort you can learn enough to make educated decisions that will increase your net worth. Then identify steps you can take to achieve these goals, and put this plan to work.
  • Evaluate your progress. Review your progress monthly, quarterly, or at any other interval you feel comfortable with to determine if your program is working. If you're not making satisfactory progress on a particular goal, re-evaluate your approach and make changes as necessary.

Student Loans: Borrowing Now to Pay Later

In recent years, more students have begun to rely on educational loans to help pay for college. Educational loans can be an excellent resource for students trying to pay educational costs, but the debt incurred should be considered carefully. Borrowing "now" to pay "later" for college has long-term implications. Like any debt, a student loan is a serious financial obligation that you must repay. The amount you borrow now can seriously affect your life after you leave school. Besides the principal amount you borrow, all student loan programs will charge you interest for the funds. Your ability or inability to repay will affect your credit rating and your ability to borrow for other purposes, such as a car or house. If you should find yourself unable to pay, you may be subject to additional late charges, collection costs, court costs and attorney fees.

You will also want to carefully consider the career choice you have made in relation to the amount you borrow. Some professions do not offer an attractive entry-level salary and may make it more difficult for you to pay sizable loan payments.

Alternatives

Before seeking a student loan, explore other ways to pay for your college education. Here are some ideas:

  • Check with your financial aid adviser about grants and scholarships. Look first for funds that you do not have to pay back. They award some based on need and some on academic merit, test scores, athletic skill, musical or artistic talent, community or volunteer activities, or other special abilities. 
  • Investigate awards offered by the university, religious groups, fraternities, sororities or civic groups. Check with employers and organizations connected with your field of interest. Visit the Financial Aid Office at 1156 Hinderaker Hall or call 951-827-3878. 
  • Consider student employment. Financial Aid may find you eligible for Federal Work-Study (FWS). The Financial Aid Office is located at 1156 Hinderaker Hall or call 951-827-3878. Career Services is another source for part-time jobs. They are found in the Veitch Student Center, NW Wing or call 951-827-3631. Also, plan to work summers and holidays to help pay tuition and expenses.
  • If you are interested in the military, investigate the educational benefits of ROTC programs.

Factors to Consider

After investigating alternatives, you may decide a loan is still necessary. First, consider the following:

  • Amount of Loan: Think about how much you need to borrow. You may not want to borrow the full amount for which you are eligible.
  • Number of Loans: Your plans for further study will affect your total indebtedness. For example, are you going to graduate school?
  • Loan Limits: Most loan programs specify minimum and maximum amounts you can borrow.
  • Repayment: You can avoid multiple monthly payments by, when possible, staying with one loan program.
  • Length of Repayment Period: You will save interest costs if you choose a shorter repayment period (although monthly payments will be higher). The William D. Ford Direct Stafford Loans offer a variety of repayment options.
  • Interest Rates: Rates are subject to change and vary with each program
     
    Loan Interest Information Lender Contact
    Federal Direct Stafford Loan See Current Rates Federal Government Direct Loan Servicing Center
    Federal Perkins Loan 5.00% Federal Government Student Business Services
  • Minimum Monthly Payments: Monthly payments will depend on the amount you borrow and the repayment plan you select. Perkins Loans require a minimum payment of $120 quarterly.
  • Borrowers Rights and Responsibilities: Be sure you understand your rights and responsibilities under each loan program. Keep all paperwork for future reference.

How Much Will You Be Able to Pay Later?

To decide how much indebtedness you can probably manage when you graduate, consider your expected starting salary, earnings prospects and your lifestyle. Then, estimate your anticipated level of debt and monthly payments and see if the two are in the same range. If you cannot afford your projected payments, then try to borrow less. Try to be realistic when projecting your future earnings and the amount you will need to pay living expenses after graduation. Remember, starting a new job and setting up living arrangements will require extra resources and create a heavy initial demand on your new income. Check the Starting Salaries table and the Sample Monthly Repayment Schedule below. Then use the Student Budget Worksheet to project your future income and debts.

Loan Amt Borrowed Interest Rate Monthly Pmt Total Interest Total Paid # of Months
Federal Perkins $3,000.00 5.00% $40.00 $604.55 $3,604.55 90
Direct Stafford $3,000.00 8.25% $50.00 $874.00 $3,874.00 76
Direct Stafford $5,000.00 8.25% $61.00 $2,359.00 $7,359.00 120
Direct Stafford $15,000.00 8.25% $184.00 $7,078.00 $22,078.00 120

Exit Counseling

During your last quarter at UCR, you will need to complete the required loan exit materials at www.sbs.ucr.edu if you have received a William D. Ford Direct Stafford Loan, Federal Perkins Loan or a University Loan. By completing these loan exit materials, you will receive information about repaying your loans. Most loans have a "grace" period of six or nine months. You do not have to start repayment for this length of time after you graduate, withdraw or enroll for less than half time. Refer to your promissory note copy for this length of time. If you can make payments on your loan during your grace period, do so. Grace period payments are interest-free and greatly reduce the overall amount of interest you pay.

Loan Repayment

When is your loan due:

  • William D. Ford Federal Direct Stafford Loans: The Direct Loan Servicing Center will mail you a payment schedule listing your monthly payment on principal and interest and the unpaid balances for each month of the period it takes to repay your total debt. If you are not contacted, you are responsible for contacting them at:
    Borrower Services Department
    Direct Loan Servicing Center
    P.O. Box 4609
    Utica, NY 13504-4609
    1-800-848-0979
  • Federal Perkins Loan: You will hear from our current billing service, Affiliated Computer Services (ACS), within 90 days of leaving UCR. If you do not hear from them, please contact:

    University of California
    Student Business Services
    900 University Ave.
    Riverside, CA 92521-0103
    951-827-3205

Good Credit Records

For most students, a student loan is the first experience with credit. Student loans can be an excellent way to establish a good credit rating. Pay your student loan promptly each month. Frequent late payments constitute delinquency and may harm your credit history. Here are some tips on establishing good credit:

  • Notify the necessary parties regarding change of address or name change. William D. Ford Federal Direct Stafford loan changes should be referred to the Direct Loan Servicing Center at 1-800-848-0979. Federal Perkins loan changes should be directed to Student Business Services at 951-827-3205.
  • Send the payment due each month, even if you haven't received a bill. When you can, send extra payments to reduce your total interest.
  • Always call the appropriate entity (lender, servicing agent, secondary market, Direct Loan Servicing Center or Student Business Services) if you have a question or problem.
  • Never ignore correspondence or a payment request.

Cash Management Tips

  • Create a budget and stick to it. No matter how you do it, budgeting is the first real step toward taking control of your finances. You'll find out where your money is going and you can identify ways to trim your spending without much suffering. Your goal should be to spend less than you earn so that you can save money.
  • Open a checking account. A checking account will help you track your expenses.
  • Balance your checkbook after each transaction. It will help stick to your budget and avoid overdraft fees.
  • Don't go overboard at the ATM. ATMs can be your fast track to financial problems because it's so easy to withdraw money.
  • Include and balance all your ATM withdrawals in your checkbook register.
  • Get a job. Working will give you more income to pay on your loans while you are in school. Try to work only 15 to 25 hours a week and do not let it affect your studies. Working a part-time job or work-study job may give you enough money to borrow less and not create more debt.
  • Pay cash for items. Do not use your student loan or credit card to pay for a toothbrush you will be financing for several years.
  • Check if you are eligible for tuition waivers or monthly tuition plans that will allow more flexibility with your cash flow.
  • Carry less cash. Remove the temptation of making impulse purchases by carrying less cash and leaving the credit card or checkbook at home.
  • Plan your cash withdrawals. You can avoid multiple ATM fees by withdrawing what you need directly from your bank. You can also switch to a bank that will not charge you a fee.
  • Check your bank statement to determine the administrative fees your bank is charging. Change financial institutions if the fees are too much. There may be banks and other financial institutions that have fewer fees.

Expense Cutting Tips

  • Create a budget and stick to it. No matter how you do it, budgeting is the first real step toward taking control of your finances. You'll find out where your money is going and you can identify ways to trim your spending without much suffering. Your goal should be to spend less than you earn so that you can save money.
  • Open a checking account. A checking account will help you track your expenses.
  • Balance your checkbook after each transaction. It will help stick to your budget and avoid overdraft fees.
  • Don't go overboard at the ATM. ATMs can be your fast track to financial problems because it's so easy to withdraw money.
  • Include and balance all your ATM withdrawals in your checkbook register.
  • Get a job. Working will give you more income to pay on your loans while you are in school. Try to work only 15 to 25 hours a week and do not let it affect your studies. Working a part-time job or work-study job may give you enough money to borrow less and not create more debt.
  • Pay cash for items. Do not use your student loan or credit card to pay for a toothbrush you will be financing for several years.
  • Check if you are eligible for tuition waivers or monthly tuition plans that will allow more flexibility with your cash flow.
  • Carry less cash. Remove the temptation of making impulse purchases by carrying less cash and leaving the credit card or checkbook at home.
  • Plan your cash withdrawals. You can avoid multiple ATM fees by withdrawing what you need directly from your bank. You can also switch to a bank that will not charge you a fee.
  • Check your bank statement to determine the administrative fees your bank is charging. Change financial institutions if the fees are too much. There may be banks and other financial institutions that have fewer fees.

Credit Cards: Not As Cool As They Sound

Now that you're in college, financing your education is now your top priority. Credit cards may appear to be the answer to all your problems...and the free merchandise you receive by simply completing a credit card application is tempting. But you might regret those free t-shirts and calling cards once faced with the reality of credit card debt.

What seems like free money is actually the same as taking out a loan. That means paying back what you borrowed, plus interest. Let's say you just got a credit card and charged $1,000 for tuition and $400 for books and supplies for your first college term. That brings your balance to $1,400, with an average interest rate of 18 percent. If you make the minimum monthly payment of approximately $28 (standard two percent), it will take you 93 months - that's almost eight years - to pay off your debt. You will have paid $1,207 in interest charges, bringing your total to $2,607. And that's just part of your first year of school!!

Student Loans vs. Credit Cards

Credit cards definitely are not the way to pay your college and everyday living expenses. They're much better reserved for emergency situations. If you're short on other forms of financial aid and still need to pay for school, low-interest student loans are a much better alternative. Applying for a loan takes some planning and some time, but it's worth it in the end.

Remember that $1,400 debt on your credit card that ended up costing $2,607 over eight years? If that were a student loan, it would take you less than three years and cost you only $157 (at 8%) in interest charges.

The Multiple-Card Trap

It's not that having a credit card is an entirely bad idea. In fact, having one card with a low balance, that you make regular payments on can help establish a good credit history, which makes it easier to get loans for other things like a car or home later in life.

But once you have your first credit card, it gets easier and easier to rack up a stack of them. As offers for "pre-approved" cards arrive in the mail, many students can't resist the opportunity to increase their debt load. But study after study has shown that people with more credit cards have not only higher debt, but more difficulty paying more than just a minimum monthly payment, which maximizes the amount of interest the pay - sometimes doubling their original balance!!

The Facts on Credit Card Debt

  • Approximately 495 million credit cards are held in the United States
  • Nearly 60 percent of undergraduate students have credit cards.
  • Teens spend approximately $140 billion a year, a majority of which is paid for with credit cards.
  • Students who pay only the minimum payment on their credit card(s) can end up owing more than they make their first year out of college.
  • A standard minimum monthly payment consists of 90 percent interest and 10 percent principal.

Credit Card Terminology

Annual Fee: A flat yearly, charge, usually $25 to $50.
Annual Percentage Rate: A measure of the cost of credit expressed as a yearly rate.
Finance Charge: The dollar amount you pay to use credit that includes interest costs and all charges associated with the transaction.
Grace Period: The number of days you have before interest is charged on new purchases. Not all credit cards have a grace period.
Transaction Fee: A charge incurred for a cash advance, late payment, or exceeding your credit limit.

Spending Guidelines

Below are suggested budget limits for each category, in percentages of total budget remaining after taxes. The range of values is due to income levels, family size and personal choices.

School 15 - 20%

  • Registration Fees
  • Books & Supplies

Housing 20% - 30%

  • Rent
  • Mortgage Payments
  • Repairs & Improvements
  • Property Insurance & Taxes

Utilities 4% - 7%

  • Gas, Electricity & Water
  • Waste Disposal
  • Telephone

Food 15% - 30%

  • Groceries
  • Meals Eaten Out
  • Pet Food

Necessities 2% - 4%

  • Laundry & Dry Cleaning
  • Toiletries & Cosmetics
  • Barber & Hairdresser
  • Postage & Stationary

Transportation 2% - 6%

  • Gas & Oil
  • Auto Insurance
  • Maintenance & Repairs
  • Public Transportation

Medical 2% - 4%

  • Health Insurance
  • Medical Prescriptions
  • Medical/Dental Bills

Clothing 3% - 10%

  • Clothing
  • Shoes
  • Alterations & Repairs

Debt Repayment 3% - 10%

  • Car Payment
  • Student Loan Payment
  • Credit Card Payment

Retirement & Investment 5% - 9%

  • Long Term Financial Goal
  • Life Insurance

Recreation and Entertainment 2% - 6%

  • Movies/Concerts/Sporting Events
  • Hobbies
  • Club Dues

Mad Money 1% - 4%

  • Personal Improvement
  • Cable TV
  • Vacations
  • Gifts
  • Church & Charity

Starting Salaries

The following National Compensation Survey1 and industry salary data is provided complements of WageAccessTM.
Click on a link below to view the salary data for the following functional areas:

1Source: National Compensation Survey, Bureau of Labor Statistics, US Department of Labor.

You can also find salary information at the The United States Office of Personnel Management and at www.salary.com.

Financial Literacy Web Sites

www.studentdebthelp.org
Student Debt Help
Great credit card info and calculators to help budget

www.collegeispossible.org
College Is Possible
Info on scholarships and how to finance college

www.jumpstartcoalition.org
Jump $tart Coalition
Program designed to improve personal financial literacy for young adults

www.lowermybills.com
LowerMyBills.com
Tips and resources to save $$$

www.nefe.org
National Endowment for Financial Education
Programs for developing money-management skills

www.nela.net
Northwest Education Loan Association (NELA)
Interactive budgeting tool with credit tips

www.pueblo.gsa.gov
Federal Consumer Information Center
Government site with help for credit research and budgeting

www.stretcher.com
The Dollar Stretcher
Ways to make the most of your money

www.studentcredit.com
StudentCredit.com
Credit tips for budgeting and credit

Career & Salary Planning Web Sites

CollegeGrad.com: www.collegegrad.com

U.S. Department of Labor Occupational Outlook Handbook: www.bls.gov/oco/

U.S. Department of Labor: www.bls.gov/ncs/ocs/compub.htm

United States Office of Personnel Management: www.opm.gov

Salary.com: www.salary.com

Sallie Mae's Online Career Site: www.truecareers.com

Wageweb: www.wageweb.com