Student Success Center

After college graduation many students will get their first career job and begin earning real money for the first time. They upgrade their apartment, wardrobe, get a new car and generally start spending more money. One thing you may want to consider before you adjust your lifestyle is starting your retirement plan. It may not be exciting, but once you understand the time value of money you see it’s definitely a smart thing to do.

If you put away $400 per month from age 22 until age 32 you will put away a total of $48,000 over that 10 year period. Over time the stock market averages about 7% per year so if we use that for your baseline you can have roughly $672,000 by the time you reach age 65.

Now consider the cost of waiting: If you don’t start putting away money until age 32 and put away the same $400 per month you would have to continue putting it away until age 65 and still you will only have about $658,000 over the same time period. You end up with less money despite the fact that you contributed $163,000 instead of only $48,000.

Another thing to consider is the type of IRA or Retirement Account you want to setup. The most important thing to review is the IRA Rules and the Roth IRA Rules so you have an understanding of the differences between them. The traditional IRA or 401k allows you to write off the contributions you make therefore reducing your taxes. The Roth IRA contributions are made with after tax money so they do not reduce your tax burden but then the money is taken out tax free at retirement. All money that is withdrawn from a traditional IRA or 401k is considered taxable income so you pay taxes based on your current tax bracket. Most people decide to use a combination of the two types of accounts so they have some tax benefit now and some benefits later. If you don’t need the tax break now, it’s best to do as much in a Roth account as possible.

Regardless of which type of plan you choose to use, the main thing is to start young. That way you take full advantage of the compounding effect over time. As you can see from the example above it’s very costly to wait until you are in your 30′s.

The Federal Work Study program is another source for students to look for when researching different sources of Financial Aid for College. Many States also provide a Sate funded work study program. Schools may include a work study job as part of a student’s Financial Aid package. However, even if you do not have it included, be sure and check with your school when you get there. Many schools do not have enough workers to fulfill the job’s needed to be done on campus, therefore, once all of the Financial aid Works Study has been assigned, they will open it up to any students wanting to work. This usually happens about the second week of school, once all Financial Aid money has been disbursed.

If work study is part of your Financial Aid package, the actual amount will be determined by your financial need. Students that participate in this program can work up to 15 hrs a work and earn up to $3,000 a year that is not counted as income for determining financial need for next year. Your Financial Aid administrator will consider your award amount, your class schedule, job skills and academic program to determine the hors you will work. Be sure and contact your Financial Aid office about this program, this is money that you will not need to ever pay back!!

Many people that are doing research on Financial Aid for College, think that loans and scholarships are their only resources. However, there are many grants available for students that meet the eligibility requirements. One of such grants is the TEACH Grant. This is a grant designed for Aspiring Teachers. This grant will provide up to $4,000 a year for students who are education majors and intending to to teach in an elementary or secondary school that serves students from low-income families.

To receive a TEACH Grant a student must agree to teach as a fulltime teacher in a public or private school serving low-income students for at least four academic years within their first eight calendar years of completing the program of study for which they received a TEACH Grant. Each year that a student receives a TEACH Grant, they must sign a TEACH Grant Agreement to serve with the U.S. Department of Education. Students that fail to complete the four year service obligation will have the total amount of their TEACH Grant converted to a Federal Unsubsidized Stafford Loan. A student then must repay this loan to the U.S. Department of Education and will be charged interest from the dates of the grant disbursement. Many people do not realize how good of a deal this is. The Stafford Loan rates are the best and lowest the government has to offer, if you do not fulfill, there is not a better loan you can get. Not all schools offer the TEACH Grant program, so it is important that you contact the schools you are interested in and see if the have this program and when should you apply for the grant.