By Julia Toler

As students here at Umass Amherst go through their college career, many decide to move off campus as upperclassmen. In Fall of 2020, almost 40 percent of Umass students resided in off campus housing. That is a huge portion of Umass Students! It may seem like a daunting thing to lease your own apartment for the first time and there are many things to consider before making an important financial decision such as this. However for some, there are lots of benefits to living off campus. If you decide that this might be the right decision for you, finding an apartment or house can be much easier than you think! There are many resources and financial tips to help make this process easier, and help you to feel confident in making this big financial decision. In this blog, I have compiled what I think are the most important financial tips and knowledge to keep in mind when you are searching for off campus housing for the first time. 

Having Realistic Expectations: 

Off campus housing can turn out to be cheaper than living in the dorms, if you find the right place. But prices can vary and paying monthly rent to a realtor is different from lumping in campus living expenses with your tuition bill. Therefore, it is so important to keep realistic expectations when searching for off campus housing. Are you planning on sharing the cost of rent with your parents? If not, do you have a job or enough loans to cover the expenses of living off campus? These are the things you should think about before you start your search. How much rent can you afford to pay every month? Answering these questions will help set a realistic budget for what you can afford. If you still think moving off campus is the right decision after regarding your financial standing, don’t go for the first apartment available. Rent per person in the Amherst area usually ranges for around 600-900$ a month, give or take some. So shop around and compare rates! 

Starting Early! 

The housing market can get very competitive every fast, especially in the Amherst area with so many students searching for a place to live each year. From a financial standpoint, it’s so

important to begin your search for off campus housing early, so you can get the best for your buck! Ideally, you should start your search in September/October of the year before you plan to lease. Many real estate companies require all you and your intended roommates to be in attendance for tours, So you should also be planning who you will room with around this time as well. Keep in mind that most properties only allow up to four people per apartment. 

Will moving off campus affect my financial aid? 

Housing is not guaranteed to students after their first year of college. For this reason, it is unlikely that your financial aid would be majorly impacted by living off campus as opposed to in a dorm. However, everyone’s personal situation is different with financial aid, so you should always double check with Umass Financial Aid services about how this might affect you personally. 

What are utilities, and are they included? 

When you are comparing prices of different apartments or houses for rent, make sure to check if utilities/amenities are included in the monthly rent, and if so which ones. Many listings will show you the base cost of monthly rent but specify that amenities are not included in that. If that’s the case, expect to pay around a hundred dollars more than the specified rent each month. When you begin to tour houses and apartments, make sure you ask about every amenity you will need to live comfortably. Some apartments and houses may or may not offer certain utilities and have certain requirements, such as whether pets are allowed or not. All of this can affect your decisions when choosing housing, and whether it is worth it for you monetarily. Questions to ask about utilities and amenities: 

– Is Wifi included in the Rent? 

– What do you offer in terms of heat and air conditioning? 

– Does this place have a laundry? 

– How about a dishwasher? 

– Is electricity included in the rent? 

– What’s the story with snow removal? 

– Does this rental have enough parking? (How much?) 

– Is subletting allowed? 

Keep in mind that a Landlord/Landlady can’t charge you for water or trash if you live in a building with three or more apartments!!! 

Parking and Transportation: 

As a Umass Student, you have free unlimited access to the PVTA bus system. When looking for off campus transportation remember to check location. Is it possible to use the bus system to get to and from campus from my apartment? Using the buses is a great way to save money living off campus, but not all available rentals are in a location near a bus route. If you’re planning on using your car off campus, you won’t have to worry about bus routes, but keep in

mind that having a car is an added expense to living off campus. There’s gas, and you may have to purchase a parking pass to park on campus for your classes. 

Signing a lease: 

When you are signing a lease, you are signing a years worth of commitment to paying rent and utilities to your landlord. Therefore, there are some very important things to keep in mind that can help when making this big financial decision. Firstly, know that most landlords require you to pay a security deposit. On average, these are about $500, so make sure you budget for that extra out of pocket expense. If you are worried about being able to pay a security deposit, there are micro grants available to students in good standing that you can take out to help pay for the down payment. Most micro grants for students don’t have many requirements in order to receive them, so if you think a micro grant is the right option for you, contact Umass DOSO (Dean of Students Office) and they can help you access these resources as well as aid in financial crises and housing insecurities. 

Another thing to keep in mind when signing a lease is that there are some predatory landlords in the Amherst area. To ensure that there is nothing sketchy in the fine lines of your lease, you can get it reviewed for free by Student Legal Services. I recommend making an appointment to do this as early as possible, since it is a great resource to take advantage of when moving off campus. 

Finally, know that as far as late fees are concerned when paying your monthly rent, a landlord cannot charge you a late fee until thirty days after that month’s rent is due. This is good to know in case you are waiting on a paycheck to pay your rent. While it’s always good to stay on top of financial deadlines, sometimes unexpected things happen financially, and so it’s important to know your rights as a tenant! 

How Much Does Living Off Campus Cost Roughly?: 

Here is an average breakdown of living off campus: 

Rent: about $600/mo 

Security Deposit: $500 ? most rentals require them! 

Utilities, electricity, internet: $150/mo 

Food: $200/mo ? groceries/dining plan? 

Transportation: $150/mo ? gas/car 

Total: 1,100 (not including initial security deposit) ? so save money where you can! Ask for Help and Seek A Second Opinion!:

Know that you are not alone in your search for finding off campus housing. Many students go through this process each year, and so there’s many resources to help you make the right decision. Umass Amherst has an on campus organization called Off campus Student Center that is dedicated to help students with any questions about living off campus, and connecting students with resources to help them feel secure in their housing and off campus community. You can also go online to find reviews about the places you are considering renting. Using the internet to find reviews of housing in the area is a good way to address any questions you might have about the safety of the location, or what it’s “really” like to live there. 

Finally, your team of peer financial advisors here at SAM are always available to answer any questions you may have about the financial aspect of finding off campus housing. This process requires you to make many conscientious financial decisions, but taking the time to learn about financial planning, or even reading this blog post puts you in a better position to be smart about money when leasing an apartment/house! Good Luck 🙂 

Links to Resources for Students: 

Student Legal Services: https://www.umass.edu/slso/request-services\ 

Off Campus Student Center: https://www.umass.edu/offcampuslife/ 

Off Campus Housing Website: https://offcampushousing.umass.edu/ 

DOSO: https://www.umass.edu/dean_students/ 

SNAP: https://www.mass.gov/snap-benefits-formerly-food-stamps

By William Wright

Over the past year student loans have been at the forefront of discussion amongst major news outlets, family dinner tables, newspapers, academic research, and college students. Terms such as forbearance, deferment, zero percent interest, and loan forgiveness have all been circulating. In normal circumstances these terms can be confusing, never mind trying to make sense of it all during a pandemic. 

This post is aimed to make it easier and much simpler to understand the various terms and ideas being floated around the news. If you are a college student with federal or private student loans it is important to understand some of these terms so you can make choices about your finances with a concrete understanding of all the options. 

We are going to cover:

• Understanding the different types of loans 
• Student Loan Forgiveness
• Loan Forbearance and COVID-19

Breaking Down Foundational Terms

When students take out Federal Student Loans they take out two different types of loans. One of the types is called Federal Direct Stafford Subsidized Loans. While this name may feel cumbersome, these types of loans are commonly referred to as ‘Subsidized Loans’. A subsidized loan is one where the government pays the interest on the loan throughout the duration of your undergraduate career. 

The next type of loan is called Federal Direct Stafford Unsubsidized Loans. The unsubsidized loans are similar to the subsidized loans, but the key difference is the government does not pay the interest on the loan. This means that while you are enrolled in school the loan is earning interest. Interest accrues, meaning accumulates on the loan while you are enrolled. Additionally, students can defer payments on federal loans until they graduate so they do not have to make payments during their time in school. 

Another type of federal loan is a Parent PLUS loan, which is a loan taken out by a parent to help their student pay for school. When a parent applies for a PLUS loan they only apply with their credit score, in addition to meeting other general eligibility requirements. This is different from private loans which require credit checks and income verification. 

The last common type of loan for students are Private Student Loans. A private student loan is taken out at a local or national bank/credit union. The primary difference between private and federal loans is that private loans usually come with higher interest rates and do not offer the same level of flexibility as federal student loans. 

Now that you have an understanding of the types of student loans, we can dive into understanding some more specific information about them.

Understanding the Term: ‘Student Loan Forgiveness’ 

To begin the conversation of Student Loan Forgiveness it is important to look at what is being said by lawmakers. There have been multiple lawmakers that suggest anywhere between $10,000-$50,000 in loan forgiveness. Currently it is hard to prepare for hypothetical situations that do not have guaranteed certainty of coming to fruition. The fact of the matter is that lawmakers stand divided on the issue and the process is complicated. The legislation, if passed, would require specifics that look to address all types of loans. There is also discussion about income-driven repayment plans, bigger Pell Grants, and free tuition at some universities. 

The biggest take away from all the noise about debt cancellation and free college is that it is all conjecture at the moment! It is too early to definitively say that any loans are going to be cancelled. If you are a student with private student loans that are not eligible for COVID-19 forbearance, then it is best to start working to understand your loans and look at making payments to keep them manageable–if able. Even if you have federal student loans it is a great time to start working towards repayment or just understanding who the loan service provider is. 

While student loan forgiveness would be helpful to millions of students and sounds like a great idea, it has not been passed and is still awaiting further discussion among lawmakers. While everyone waits to see what happens it is best to see what options are available. 

COVID- 19 Federal Forbearance

As previously written in a prior SAM Blog post regarding COVID-19 forbearance:

“ Forbearance means that for government loans you do not need to make loan payments. The interest rate on those loans is now at 0%!’ 

Forbearance has been extended until September 31, 2021 which will keep interest rates at 0%. 

According to the Department of Education: 

“From March 13, 2020, through the end of the COVID emergency relief period, the interest rate is 0% on the following types of federal student loans, but only if they are loans owned by ED:

• Defaulted and non defaulted Direct Loans
• Defaulted and non defaulted FFEL Program loans
• Defaulted and non defaulted Federal Perkins Loans
• Defaulted HEAL loans” 

This is great information and a great time to get on top of making payments to your loans, if possible. Forbearance is a great tool to utilize and has already passed which can help you start making plans for the future.

Conclusion

This was certainly a lot of information! If at any point you feel confused, please reach out to Smart About Money and set up a 1:1 appointment with a peer-financial-coach to discuss this information. After reading over all this information, here are the key takeaways:

• There are four main types of student loans:
  • Federal Subsidized 
  • Federal Unsubsidized
  • Parent PLUS
  • Private 
• COVID-19 Forbearance has set the interest rates on all federal student loans to 0% until September 30, 2021. 
  • This means it is a great time to get ahead of paying your student loans, if you are able, so when the interest rate does get higher you are paying less in interest on the principal amount. 
• Student loan forgiveness is very uncertain and you should not wait for Congress to make a decision about forgiving student loans. It is best to start understanding and making payments to your student loans, if you are able, so when you graduate it is all familiar. 

By Hallie Martin

For many of us college students, retirement might seem like a long way off, but the reality is that it’s important to start saving as soon as you can. Just a little bit of money can go a long way with time and interest. Before we get into all the different retirement plans, let’s talk a little about how saving for retirement works. 

So, What’s A Retirement Plan?

With any retirement plan, once you deposit money into the account, it will most likely stay there until you reach the age of 60 (59 ½ to be exact). This means that any money you put into these accounts needs to be funds you can afford to live without until then. In other words, make sure you have enough money to cover all your regular expenses, plus an emergency fund (about 3-6 months of income), before you contribute to your retirement plan. But a retirement account isn’t a simple lockbox for your money; these plans help grow your savings so that you can retire comfortably. 

What Next?

When you open a retirement account, you will be investing your money in securities like stocks, bonds, mutual funds, and exchange traded funds (ETFs). It’s important to diversify your portfolio, which means investing in multiple different stocks and sectors so that if one falls, you don’t lose all of your savings. You should also understand the trade off between risk and return on your assets. Typically, stocks are more volatile (unpredictable and likely to fluctuate) but provide higher average returns than bonds over a long period of time. When choosing your securities, ensure that you have time to recover from potential losses in your portfolio given your mix of assets. 

Now that we have some of the basics out of the way, let’s explore common options for retirement plans. The two main categories are Individual Retirement Accounts (IRAs) and Employer Sponsored Retirement Accounts. You might already be familiar with some of these plans, which include Traditional IRAs, Roth IRAs, and 401(k)s. Below, we will delve into the tax benefits, contribution limits, and decision factors for each account.

Traditional IRA

A Traditional IRA is a retirement plan that allows your money to grow tax-deferred. This means that you are not taxed on any funds while they remain in the account, and you only pay taxes when the funds are withdrawn. Contributions to Traditional IRAs are made with pre-tax dollars, so you may be able to deduct your contribution from your taxable income. The amount of this deduction is dependent on your income, tax-filing status, and workplace plan. The maximum contribution to a Traditional IRA is $6,000 per year for those younger than 50, and withdrawals before the age of 59 ½ will incur a 10% penalty on top of taxes (except for certain qualified expenses). 

Roth IRA

A Roth IRA differs from a Traditional IRA in a few key ways. First, Roth IRAs are funded with post-tax dollars, so contributions are not tax-deductible. Once deposited, savings grow tax-free and distributions, also known as withdrawals, are not taxed when taken out. This makes Roth IRAs beneficial if you believe you will be in a higher marginal tax bracket when you retire than when you are contributing to the account. Like Traditional IRAs, the maximum yearly contribution is $6,000, but Roth IRAs impose further contribution limits based on income and tax-filing status. People filing as single and making less than $124,000 can make the full contribution. You may withdraw amounts less than or equal to your contributions to a Roth IRA at any time tax-free and without penalties. However, any withdrawals of earnings greater than your contributions will incur a 10% penalty and taxes unless you have held the account for 5 years and are either 59 ½ or have a qualified expense. 

401(k)

A 401(k) is an Employer Sponsored Retirement Account that, similar to a Traditional IRA, grows tax-deferred. These plans are provided by an employer, and employees have the option to make contributions through payroll withholding. The maximum contribution limit for persons under the age of 50 is $19,500, with any additional contributions (if allowed by the plan) funded through after-tax dollars. A common benefit of 401(k)s is the employer match program whereby your employer may contribute additional funds to your account. For example, an employer might match 50 cents for every dollar you contribute up to a specified percentage of your salary. Thus, whenever possible, employees should try to contribute enough to get their full employer match to take advantage of these free contributions. As with the other IRA accounts, withdrawals made before 59 ½ will incur a 10% penalty and taxes unless you meet specific eligibility requirements set by the IRS, and at age 72, you must begin taking at least the required minimum distributions. Some employers also offer Roth 401(k)s, which, like Roth IRAs, are funded with post-tax dollars and distributions can be withdrawn tax-free. Be sure to check with your employer to find out what kind of retirement plans they offer, and if you have a work study or on-campus job at UMass, log into Fidelity NetBenefits to check if you are eligible for a UMass-sponsored plan.

How Can SAM Help?

Our role at Smart About Money is to empower students through peer financial education and encourage informed autonomy in personal finance decisions. It is important to note that many Americans live paycheck-to-paycheck and nearly 70% have less than $1,000 in savings, making retirement seem virtually inaccessible. We understand if this is the experience you and/or your family is facing. The hope is that this article catches students early and encourages young people to start investing towards their goals now, if possible. The S&P 500 Index historically provides returns of about 8% annually. At that rate, investing $5 a month from age 20 until 65 could grow your savings to over $26,000. There is power in time and knowledge, and we encourage everyone to use the tools at their disposal to their advantage. If you have any questions, comments, or concerns, please feel free to reach out to me at hnmartin@umass.edu or book an appointment with me or another one of our Peer Financial Coaches on Navigate.