How
Not To Set Up Your Financial Life For Filmmaking
The
first time a graduate animation student burst into tears about their
student loans during a chat with me over their thesis story I was
surprised. Then it happened again and again. Horror stories kept
unfolding about how once they started their college program, they
could not leave, even if they did not like it, or they would have
to start paying back huge student loans right away. Or they could
not get a job after graduation and had to cover thousands of dollars
of debt each month on credit cards, and student loans, just to keep
their financial heads above water.
Most
great filmmakers have natural talent and ability and just need a
few nudges in the right direction to bloom. Be very careful of filmmaking
programs that will leave you with a big pile of debt and no real
film to sell.
I
always tell people asking about film schools to just get my story
workshop, that covers the top 20 film and animation books, and
make a great film. Story is the one area you will fall down in and
need help developing if you are new to filmmaking. Digital films
are much easier and cheaper to make than 35mm ones.
Create
a film idea that you would stand out in the rain for hours just
to get a ticket to see! What film idea would that be for you?
Make
sure the film has a market and that you can sell it, then create
it for as little money as possible. Viewers will watch an indie
film with a great story and low budget looks, but they will not
watch one with a bad story.
Use
online social networking sites for marketing and sales (YouTube,
Twitter, Facebook, MySpace). CreateSpace
is great to manufacture and ship your film, CD, or novel.
Read
the article from CNN "Student
Loan Fugitives"
Read
the article from MyFlik "How To
Set Up Your Financial Life For Filmmaking"
Read
the new article from the WSJ "The
$555,000 Student-Loan Burden"
The
following is yet another recent article on the dangers of student
loans:
In
Grim Job Market, Student Loans Are a Costly Burden
By
TARA SIEGEL BERNARD
New
York Times
Published: April 17, 2009
They
bought into the notion that if they went to college — never
mind the debt — their degree would lead to a lucrative job.
And repaying their student loans would never be a problem.
Growing Burden of Student Debt
But
the economic crisis has turned those assumptions on their ear as
thousands of recent graduates have been unable to find jobs or are
earning too little to cover the payments for loans that are sometimes
as high as $50,000.
The result has been rising default rates for student loans. And
unlike other debts, student loans cannot easily be renegotiated.
“You often hear the quote that you can’t put a price
on ignorance,” said Ezra Kazee, who has $29,000 in student
debt and has been unable to find a job since graduating from Winona
State University in Minnesota last May. “But with the way
higher education is going, ignorance is looking more and more affordable
every day.”
About two-thirds of the students graduating from college next month,
or an estimated 1.8 million, have taken on student loans to pay
ever-rising tuition and room and board. The average cumulative debt
among graduating seniors is about $22,500, according to FinAid.org,
a Web site that specializes in financial aid.
Mark Kantrowitz, publisher of FastWeb.com and FinAid.org, recommends
that students follow a simple rule of thumb. “Do not borrow
more than your expected starting salary for your entire undergraduate
education,” he said. “If your starting salary is going
to be $40,000, then you should borrow no more than $10,000 a year
for a four-year degree.”
Gregory
Westby, a 27-year-old designer who graduated from the School of
Visual Arts in New York last May, is caught in the student loan
trap. He has $150,000 in debt. He hasn’t been able to find
a full-time job in graphic or set design, but is using his earnings
from low-paying freelance jobs and working weekends at a fitness
club to pay his rent. And he’s in the process of deferring
his loans, which, together, cost $1,500 a month.
“Right now I’m surviving, but who knows when I’ll
be able to start paying my loans back?” he said.
While Mr. Westby has found a temporary solution, many others are
in default. The most recent default rate on federal loans was 6.9
percent, the highest rate since 1998, according to preliminary data
from the Education Department. But this statistic illustrates only
a piece of the picture. It tracks only the students who started
to repay their loans between October 2006 and Sept. 30, 2007, but
who had defaulted by September 2008. And it doesn’t include
loans in deferment or forbearance even though those borrowers are
unable to make payments. Nor does it include loans not backed by
the government.
Perhaps
seduced by the idea of graduating from a well-respected university,
many students tend to overlook the consequences of graduating with
debts that are likely to far exceed their starting salaries. And
as many borrowers have learned, student loans are among the most
ironclad debts, on par with child support, alimony and overdue taxes.
They stick with you no matter what.
Bankruptcy usually doesn’t provide relief, except in the most
dire of circumstances. Even death isn’t a good enough excuse
for discharging some private loan debts. And the government can
wield a heavy hand to collect what it is due: If you fail to repay
your federal loans, it can garnish up to 15 percent of your wages
or take your tax refund or part of your Social Security benefits.
But if you are having trouble paying back what you owe because you’ve
lost your job or have some other financial difficulty, you have
options. Of course, it’s always best to take corrective action
before you’re officially in default. For federal loans, it
generally takes about nine months of missed payments. But you can
go into default on a private loan as soon as one payment is missed,
though the rules vary by lender. And collection charges are usually
steep.
“The good news on the federal loan side is that there are
a lot of options for borrowers, particularly those who are in shorter-term
financial trouble now,” said Deanne Loonin, director of the
National Consumer Law Center’s Student Loan Borrower Assistance
Project. “The private loan side is where we don’t have
or are unable to give a lot of general information because there
just aren’t as many rights.”
You first need to figure out what types of loansyou have: federal,
private or a combination of both. You can find out by calling the
lender, accessing the National Student Loan Data System of federal
loans, or FinAid.org’s Web site. Below are several options
for both loan types.
Federal Loans
Defer or Forbearance
All
federal loans have a grace period of six months after graduation.
But an unemployment or economic hardship deferment and forbearance
can each buy up to three years, for a total of six years of relief.
Deferments are preferred because the government generally pays interest
on subsidized federal loans, though you’re still responsible
for interest on unsubsidized and PLUS loans. With a forbearance,
you are responsible for all interest (even on subsidized loans),
which is added to the loan balance.
“Students may not fully appreciate just how much that increases
the size of the loan,” Mr. Kantrowitz said. “That’s
why deferments and forbearances should mainly be used as a method
to solve a temporary problem.”
A six-month deferment is reasonable: it would add $345 to the balance
of a $10,000 loan with a 6.8 percent interest rate.
Extend Term
If
you have taken a lower-paying job but expect to find a more lucrative
one later, you may simply extend your loan’s term from, say,
10 to 20 years, though doing that may double your interest costs.
You can go back to your original term the next year and there’s
never a penalty for paying off principal early.
Alternate Repayment
If
you have taken a low-paying job and don’t expect your salary
to jump significantly, experts suggest one of the alternate repayment
plans. Starting on July 1, all federal loan borrowers will be able
to consider the “income-based repayment” program, which
limits your monthly payment to 15 percent of discretionary income
(or income above 150 percent of the poverty line) and forgives the
remainder after 25 years of payments. For government or nonprofit
employees, any remaining debt will be forgiven after 10 years. And
if you earn less than 150 percent of the poverty level, you won’t
owe any money — and it will count as a repayment, said Lauren
Asher, acting president of Project on Student Debt. To qualify,
your debt needs to be high enough relative to your income.
The income-contingent repayment plan is a similar program, but the
payments are usually a bit higher.
There is a major caveat for both plans. If you do find a higher-paying
job, and your payments didn’t cover all of your interest,
those costs are tacked onto the loan amount.
For
help in figuring out your best options, start by calling your lender.
The Education Department’s Student Loan Ombudsman can also
assist.
Private Loans
There are fewer options with private loans, and borrowers are generally
at the mercy of their lender and the loan contract.
Ms. Loonin said that some lenders might offer flexible repayment
plans if you’ve encountered hard times and you’re not
too far into trouble. Most private loans will also provide forbearances,
but with a one-year limit. Many lenders will charge about $50 for
each loan for the privilege.
Private lenders don’t have as much power as the federal government
to collect, but your credit will be damaged.
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