Melisa Boutin:
I was born here in Saint Kitts, where I grew up, and I have individual roots. I had a career that started with the civil engineering sector.

Melisa Boutin:
Completed in the United States in 2020. I came back, to Saint Kitts and Nevis after learning about the low financial literacy rates and how that contributes to higher loan default rates across the Eastern Caribbean Currency Union. I founded Your money’s worth to provide a solution to those challenges. Next, I’ll talk about my own college finance journey.

Melisa Boutin:
So after high school, I went to the United States to study civil engineering, and I paid for college with loans from the development Bank here in Saint Kitts and United States federal government loans and private student loans in the US. So facing the college costs of tuition, housing, books and all those costs that go into investing in yourself and your higher education, of course, with the goal to benefit from that higher education.

Melisa Boutin:
Once you complete it, whether it’s financially or just to fulfill your own academic, goals. That was a goal for me to get a higher education and get on a path to an a career, a career in the engineering field. And of course, the salary and the compensation that we all want to get to, to increase and build, to, to build the type of life that we want with the finances that we get from earning a salary through our career.

Melisa Boutin:
So, once I completed my college education, adding up all those loans, at that point, that was my introduction to my own personal finance as an adult, and it was very important for me to tackle those loans head on. Once I went on my own journey to figure out what was the best way to tackle student loans, I first had to understand what came with the student loan.

Melisa Boutin:
So when you take out a student loan, you are going to borrow funds to pay for your education and then repay them once you graduate. Typically, the first monthly repayment is due six months after you graduate from your chosen education degree program, and the lender provides you with a monthly payment that you have to pay over a period of typically ten years.

Melisa Boutin:
Of course, when you took out, when you take out a student loan, you don’t make SAT paying on a student loan right away. Well, that’s not you’re not required to. That’s part of the agreement. However, interest is building up throughout your in school period when you are studying. So by the time I graduated, I had student loans from these three different, type of lenders.

Melisa Boutin:
So that’s the Caribbean lender in Saint Kitts, the US private loans and the US government loans. And all of them had different interest rates, different balances. But they all followed the same agreement where you would repay those student loans over ten years. The thing that I paid attention to was how the interest ended up on my loans.

Melisa Boutin:
The ten year repayment plan and how much interest I would be paying over the entire repayment period. Once I understood that I can create my own repayment plan for my student loans, I was able to pay off $100,000 of my student loan debt. I created a guide on student loan answers for other Caribbean students to learn how to make sense of their own student loans and pay it off.

Melisa Boutin:
But today, we are going to go through some of the steps that I already put together in terms of my journey in the book and, the steps outlined that college students and families can use when tackling, so that loans. So touching on financial wellness and how it ties into college students and families. Financial wellness is being able to meet your, you know, day-to-day, month to month obligations and still be able to plan for short-term and long-term goals.

Melisa Boutin:
So. How does financial wellness know tight end to college students and families? So college financial wellness for college when it comes to college and college students is students and families being able to cover the costs of the higher education, but still be able to plan to benefit from.

Melisa Boutin:
Getting a higher education not only in terms of personal achievement, but the actual financial rewards of a higher education bill being overburdened by student loan debt.

Melisa Boutin:
So what are the steps for college students and families to maintain or gain financial wellness while seeking a higher education, paying for college borrowing and managing finances during and after school? The first step is to prepare for college costs and understand what the expected starting salary is for the chosen field. So for example, if a college student is going to pursue a degree in education to make about $40,000 over one year, then the amount that they should be borrowing to pay for college should not be more than 80% of that 40,000.

Melisa Boutin:
The basis for this is that when you borrow more than 80% of what you can expect to earn after getting that degree, it becomes very difficult for you to have room to pay for your other life bills. To save, you know, for an emergency fund to save for short-term and long-term goals. If your if you borrow more than 80% of what your first year’s salary would be, of course, it’s not a hard and fast rule.

Melisa Boutin:
However, if you do borrow more than that 80%. So for example, for the example of the student of the student who studied education and has a starting salary of 40,000 as a teacher, if that’s college student instead borrowed 60,000, which is more than the starting salary of 40,000. It would just mean that in order to maintain some kind of balance in their finances with the student loan payments, that then there would be more trade offs.

Melisa Boutin:
A higher amount of money being paid out of that salary and make it more difficult to to achieve other financial goals. My journey my student loans were actually more than my starting salary after graduation. So in order for me to meet those monthly payments and pay for my day to day expenses and other financial goals, there were many trade offs that would have to be done to maintain, financial wellness.

Melisa Boutin:
Because I didn’t have the information ahead of time. I wasn’t aware of how I should limit the amount of borrowing based on what the expected salary is, or even where to look for the expected salary before I decided how much I was going to borrow. So already being in that position, it meant that I had to keep my essential expenses low.

Melisa Boutin:
So whether that’s housing, when if when I purchase a car mixed by a used car that was much cheaper and that allowed me to have more, more of my income left over to make a plan to repay my student loans faster. So this leads us to step two. When it comes to, cutting college costs. So when you establish what the expected salary is for the education program that you have chosen and about where you should keep your borrowing, if you’re coming up against the student loan amount, that is more than what you can expect to expect to earn in your first year salary.

Melisa Boutin:
In step two, you can look at cutting college costs. One of the main ways to cut college costs is through scholarships. Using. Strategies like earning college credit at community college. If you’re in the United States and being able to transfer those credits so that you have less university level expenses in terms of tuition, when you transfer in college credits from a cheaper institution, it means that you have to pay less in the higher rates at the university to get your degree.

Melisa Boutin:
Other ways that you can cut costs is by using your own savings or your family’s savings, to pay for some of your college costs and expenses. Working while you’re on campus and one overlooked way of saving on college costs is actually paying for or paying down the interest that is building up on your student loans.

Melisa Boutin:
So when it comes to student loans, the interest builds up on the amount that is disbursed to you every single day and is applied to your student loan monthly while you’re in college. As a college student with student loans, you. Some lenders do require you to make the interest payments, but if you if you don’t make them, usually there’s not a penalty besides the interest adding up on your student loans, but the cost of your college education, borrowing is the highest when you don’t pay for your interest while you’re in school.

Melisa Boutin:
So that’s another way to cut down on your college course, is to pay your student loan interest while you’re in school. Before you graduate in step three. For college students and families, is managing finances during and after school. So during school, of course, managing finances for college students involves managing whatever student loans, scholarships, or money that you work for to meet the college expenses every semester.

Melisa Boutin:
So whether it’s your tuition that you have to pay before the semester starts, housing any other associated costs, travel. If you have to travel back home and you’re actually living outside the country and doing travel visits back home, managing finances is planning ahead every semester to cover those costs. And when you have student loans, include reviewing the different disbursements that you’ve made every semester, what your total outstanding loan balance is, and the interest that has built up on this student loan.

Melisa Boutin:
If you weren’t able to make the payments and for every payment that you make towards your interest while in school, being able to look at your student loan statements to make sure that they’re being applied appropriately, and that all the interest payments that you made actually paid off the interest under the select loan and is reflected on the student loan statement as you get closer to graduation.

Melisa Boutin:
Being prepared for managing your finances. After you complete school involves.

Melisa Boutin:
Of course, seeking employment in your chosen career field. Understanding, secure in employment and understanding the income that’s going to go with that. Preparing to move off campus if you are, if you relocated to go to study for college, the cost of moving, once you get to the employment and you have you understand what your salary is looking at, what your salary can cover in terms of housing.

Melisa Boutin:
So if you’re moving out on your own, what type of rent would you be able to support with your salary plus your other expenses? And if and when you have certain ones, you know, being sure that you can cover your student loan payments as well.

Melisa Boutin:
And specifically for student loans when you are graduating from college and you, expected to make a repayment in six months after graduation, it’s important for college students and families who usually have to be cosigners on student loans to contact this student loan servicer or lender to get a statement, an account statement of the student loan. Understand what the outstanding principal balance is, which is just the addition of all the money that was disbursed to the student to pay for the college course.

Melisa Boutin:
Also, review whether there’s outstanding interest at the time. Shortly after you graduate and how it would be handled on your student loan when there is outstanding interest on a student loan. When you graduate from college, it is usually handled by being added to the principal balance. So for example, if your principal balance on your student loan adds up to $100,000.

Melisa Boutin:
And there’s an outstanding interest of 5000 by the time you graduate, the lender would add that $5,000 to the principal balance. And then from that point forward, when you’re repayments that six months after you graduate, usually over a ten year period, that 5000 now will become part of the principal balance and you will be paying, interest on top of that interest over the ten year repayment period.

Melisa Boutin:
In my case, when I got to the point where I looked up my student loan statement and became aware that there was outstanding interest and interest added to my principal as part of managing my finances after school. That involved making my own repayment plan to pay paid all my loans as soon as I could. Of course, when it comes to your own personal finance situation as a college graduate, you can stick with the ten year repayment plan that is provided by your lender.

Melisa Boutin:
But based on your own financial goals, you can make your own repayment plan to pay off those loans sooner or explore other options like refinancing to a lower interest rate. Right now in Saint Kitts and Nevis, the development bank of Saint Kitts and Nevis does have does give the opportunity to borrowers who had a higher interest rate of 9% to lower their interest to 5%, which of course would give you savings on your not only your monthly payment, but on the total cost of your your loan.

Melisa Boutin:
In terms of the interest that you pay over the life of the loan. So managing your finances after college. Specifically for student loans, these are the things that you look at to maintain your financial wellness.

Melisa Boutin:
I just want to ask if there’s any questions at this point.

Melisa Boutin:
On what I’ve presented so far, can you clarify who exactly does depend on the interest initially works okay, yes, I can. So.

Melisa Boutin:
When you take out a student loan. And you start college, if you apply for $100,000, you’re not given the $100,000 upfront. So every semester when you have, your, your tuition bill, you requested this what is called a disbursement, which is just you’re requesting a certain amount of funds that you need for that semester. So.

Melisa Boutin:
At the point where the bank actually issues your funds from the student loans, the interest start building up every day and is is added to the student loan monthly. So.

Melisa Boutin:
Because you are not required to make payments while you’re in school. If you allow that interest to build up over four years, if you’re in school for four years, every two, every time you have a new disbursement, the amount of interest is going to be bigger because no, your balance is bigger every semester. So in order to avoid having this interest building up while you’re in school, you can pay the interest.

Melisa Boutin:
Every month while you’re in school so that by the time you’re finished over four years, if we’re assuming you’re in school for four years, you would just have the principal balance, meaning the total amount that they gave you to use to pay for your college expenses. That would be the balance when you graduate, if you pay off the interest every month.

Melisa Boutin:
Is that clear? Let me know.

Melisa Boutin:
Yes it is. Thank you. Another thing to keep in mind is that.

Melisa Boutin:
If you’re using student loans to pay for college, which 80% of college students do, according to the Caribbean Development Bank, then it’s important, yes, to understand that, you know, the interest is building up and you make payments to pay to pay that interest. Or if you have a cosigner who can assist in making those payments on the interest, that’s important.

Melisa Boutin:
It’s also important to every semester to request a student loan statement so that you can, so that you can be aware of exactly what is happening and how the payments are being applied to them or not, how the interest is building up, and how the payments are being applied. So at the end of every semester while you’re in school, you request to get a student loan statement.

Melisa Boutin:
Some student loan lenders have online access so you can view your account. Some don’t. But whether whether they have an online account access or not, making sure that you get a copy of your statement so that you can see exactly where your loan stands, is very important to in school and of course, schools after,

Melisa Boutin:
So the point where you need to stay on top of your student loan statements to stay aware of what is happening with your student loan is after every disbursement. So every time you ask for funds to be disbursed or issued to you so that you can pay your college expenses, you should get a statement that following months to make sure, you understand what your balance is now after each disbursement.

Melisa Boutin:
Secondly, at the end of every semester, before you request additional funds, you should get a statement just to again keep that documentation and be aware of what is happening with the student loans. So whether you’re making payments or not keeping that documentation so you can keep on top of it. Another thing to keep in mind is that even if you aren’t able to make payments on the interest when you’re in school every month or every semester, or you, you know, pay paid sometimes or your family pays it sometimes, and it continues to add up whenever you have extra money.

Melisa Boutin:
If you got an extra scholarship this month or you worked on campus or worked in the summer, you can always send a payment. Was interest while you’re in school. That’s not on a schedule to your student loan lender. It will help to pay on the interest even if you’re not able to do it every month. And when you graduate, you know, the six months during the six months period before your repayment period starts where you actually required no to make a payment every month over a ten year repayment period before the payment starts.

Melisa Boutin:
That’s another point. We should get a statement from the lender just to review. Make sure that any payments that you did make during the the the time that you were in school were applied to the loan, or if you didn’t make payments doing while you were in school with you sitting on a statement so you can understand how much interest is outstanding at that point before it’s capitalized.

Melisa Boutin:
And capitalized just means being added to the loan. And then from that point onwards, you’re paying interest and up of interest because you that might you might have an opportunity to pay down some of that interest or all of it before it’s capitalized on your student loan. But having the knowledge about what is actually outstanding on a student loan would help you make those decisions and plan your finances.

Melisa Boutin:
As you go out into the workforce.

Melisa Boutin:
In addition to having this routine of checking in on your student loan and finances in general, while you’re in school, you should also come up with a routine for applying for scholarships that may be available through your university. And also recognizing that there aren’t only scholarships that come for the university, but you can also have up to two scholarships, other organizations that are not associated with your university.

Melisa Boutin:
Some of them can include the organization of American States. Also for clubs, or based on your major. So they might have an accounting club or a flood investigation club, depending on the, the major that your pursuing. In my case in engineering, it was an engineering club or society of profession of, of that engineers, National Society of Black Engineers or Society of Women Engineers, by participating in these type of clubs can give you access to scholarships that come through these organizations that have nothing to do with the university.

Melisa Boutin:
I just let us pause here and see if there’s any questions you can unmute. You can, Put questions in the Q&A. So the question was do we pay principal? So first I’ll talk about by saying,

Melisa Boutin:
Your student loan is made up of principal and interest. And what is a principal? The principal is the total amount that the bank actually handed over to you to pay for, for school. So if you if I took $20,000, if I were the pool for $20,000 and over four years, the the bank gave me, $5,000 for each year to pay my college expenses, then that’s what I receive to pay, you know, in my hand.

Melisa Boutin:
Let’s say, that is a principal amount. You know, every time the principal increases, the interest that builds up on it increases during the in-school period, which is typically, four years. If you don’t pay the interest, during that time when you graduate, all the interest that builds up over four years will be added to the principal, and your principal will become larger by the total extended interest.

Melisa Boutin:
But let’s first start by assuming that you have paid the interest during the in-school period, and you graduate and know you just have the principal left before you set your payments. If you follow the repayment schedule, which is usually a monthly payment every month for ten years, then every payment you make is just like a mortgage. A portion of it will go towards the interest that builds up for that month, and then do a meeting with the principal, and then it’s a reduced imbalance.

Melisa Boutin:
It’s a reduced in balance loan. So that means as you get closer to the end of the loan, more of your payment goes towards the principal. Now, the key to paying off student loans faster and saving yourself, what would the total cost of the student loan is making principal payments in addition to your regular monthly payments?

Melisa Boutin:
So the key thing is, if you make you can’t make a principal payment without meeting the regular monthly payment or interest payment. So for example, if you have a student loan and you are in school, but you’re not required to make any sense at all, just interest, but you don’t make the interest. You don’t make any interest payments or you don’t.

00:28:03:22 – 00:28:17:25
Melisa Boutin:
You don’t. And then you decide that, hey, you know, I want to save some money. So let me put the principal, let me put $500 with the principal. Even though not paying the interest, the interest has to be satisfied first before any principal payments can be made.

Melisa Boutin:
so principal payments only can be made when the interest and your regular payment is satisfied.

Melisa Boutin:
However, you can make a plan to pay extra for everything you pay extra beyond your regular monthly payment equals towards the principal balance automatically or should be automatically. However, the development bank loan is usually set up is that if you make. If you want your principal payment to the principal alone, you would have to make. But in the example that we are using your thousand dollar payment today, July 3rd, and say you want another thousand dollars, go to the principal.

Melisa Boutin:
You’d have to make that payment the same day for you to go to principal only once. It goes over into the next day, then you would have one day of interest that added up to on your student loan, and then you make that extra thousand dollar principal payment and everything, which would go to principal except that one day of interest.

Melisa Boutin:
Also, you have to double check to make sure it’s being applied properly when you make extra payments.

End
This transcript was computer-generated and edited for grammar and clarity.