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Preventing financial default University aims to help students better manage loans and personal finances

Communication senior Valentin Treviño owes $27,000 in student loans and will not graduate until Fall 2016. He is expected to obtain an additional $7,000 in loans before his graduation.

Immediately following his graduation, Treviño plans to work in construction with his father, so that he can quickly earn money to help pay for his loans. He has been granted both subsidized and unsubsidized loans.

“I want to pay them off as soon as possible so I can get ahead and not have to worry about that extra weight on my shoulders,” Treviño said. “If I didn’t owe as much in student loans, I would be looking for a career with my bachelor’s degree instead of construction.”

He is one of 9,057 undergraduates who have obtained student loans for the 2015-2016 academic year.

University of Texas Rio Grande Valley legacy institution UT Brownsville started a student money management center that helped students with their finances and loan debt. The program began the year before the consolidation with UT Pan American.

“We haven’t transferred, transitioned it over to UTRGV. It is something that’s in the works. It’s an idea we definitely
want to implement,” Financial Aid Coordinator Felipe Olivarez said. “As of right now, it doesn’t actually exist.”Olivarez said that UTRGV officials want to incorporate a similar program for students inquiring information about controlling their finances.

“We want to actually create a money management center … where students can actually visit to ask any questions they may have,” he said.The center would help students check their credit score, establish new lines of credit, manage debt and create a budget.

Terrance Martin, an assistant professor of finance in the College of Business and Entrepreneurship, helps students improve their credit score and personal finances. Martin used to offer a Life and Money course at UTPA.

“I’ve had students that take my classes, ask me personal questions about either [their] own finances or their family’s
finances. I make myself available for that,” Martin said by telephone from Lubbock, where he was attending a convention. “I would be happy to speak with them and give them advice, and it would be confidential. But, my goal is to start a program. I’m here at Texas Tech [University] to, hopefully, learn the best practices, so we could institute something like that at UTRGV.”

Martin and Olivarez are members of a committee known as the Default Prevention Task Force, whose prime focus is to implement ideas to help students borrow responsibly.

Financial aid comes in many forms. These include federal grants, subsidized loans, unsubsidized loans and parent plus loans. Students can also apply for scholarships, which do not affect their credit.The federal government pays for interest accrued on subsidized loans while a student is enrolled, but not for unsubsidized loans. There is a fixed interest rate of 4.9 percent for subsidized a n d unsubsidized student loans. These loans do not depend on creditworthiness but are dependent on the student’s eligibility after submitting their Free Application for Federal Student Aid (FAFSA).

Parent plus loans are set at a fixed rate of 6.84 percent and are to be paid 60 days after the aid has been disbursed. Interest on these loans accrues even if the student is enrolled. Repayments for parent plus loans are the responsibility of the parent. Failure to repay any federal student loans may result in default.

After not receiving repayment for nine months, the student’s account goes into default status. Students who have defaulted on a loan will not be eligible for financial aid. Income tax refunds will go toward repaying a student’s loan. The student will have no credit and will not be able to use services that require a good credit standing,and home.

“If a student does not make arrangements with the loan servicer, their wages will be garnished,” Olivarez said. “It is very important to make sure contact information is up to date. Your loan servicer won’t have your contact information they stop attending unless you let them know. It is technically the student’s responsibility to start making payments six months after school.”

Students with questions regarding personal finances and student loans may email Martin at terrance.martin@utrgv.edu.

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