Exit Counseling <School Name/Conference Name>
Dec 15, 2015
Exit Counseling<School Name/Conference Name>
Agenda
Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.
– Repayment Plans.– Consolidation.
Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.
Understand Your Commitment
Read all communication, forms and documents carefully.
Understand the terms of your student loan.
Manage your money. Ask for help.
Understand Your CommitmentNational Student Loan Data System
www.nslds.ed.gov.
Understand Your Commitment
Federal loans:– Federal Family Education Loan Program or Direct Loan
Programs. Subsidized or unsubsidized loans. Grad PLUS loan. Consolidation loan.
– Other federal loans. Perkins loan. Health-related program loan.
Non-federal education loans:– Also known as “private” or “alternative” loans.
Loan Types
Understand Your Commitment
Master Promissory Note:– Must be signed in order to receive loan funds.– Legally binding document.– Specifies your rights and responsibilities.
MPN multi-year feature:– Sign once. – You can “opt out” and sign a new MPN for each loan. – Some schools do not use this feature.– May expire in certain cases.
Borrower’s Rights and Responsibilities Statement.– Expect a “Plain Language Disclosure” for any subsequent loans.
Master Promissory Note
Understand Your Commitment
You promise to repay your loan, even if you:– Don’t complete your program of study at all or within the regular
time frame for completion.– Are unable to locate employment after completing your program.– Are dissatisfied with or don’t receive services purchased from the
school.– Don’t receive payment coupons or notifications from your loan
servicer.
Master Promissory Note
Agenda
Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.
– Repayment Plans.– Consolidation.
Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.
150 Percent Subsidized Loan Limit
Limits Direct Subsidized loans for “first-time borrowers.” – Limited to 150 percent of published length of student’s current
educational program.
Definition of first-time borrower:– No outstanding principal balance as of July 1, 2013.– Repaid all prior loans before July 1, 2013 before borrowing again.
150 Percent Subsidized Loan LimitEffect on Borrowers
– They no longer qualify for Direct Subsidized loans beyond 150 percent of the program length, unless entering a longer program.
– They no longer qualify for interest subsidy on previously obtained loans as of the date attendance begins after reaching the limit.
– Once interest subsidy is lost, it cannot be regained.
– Borrower becomes responsible for interest that accrues.
– Unpaid interest is capitalized.
Loss of subsidy on future loans
Loss of subsidyon prior loans
Affected borrowers who reach or exceed the 150 percent limit may experience:
Remaining Eligibility Period
Maximum Eligibility Period
– Subsidized Loan Eligibility Used
= Remaining Eligibility Period
150 Percent Subsidized Loan LimitDefinitions
3
Maximum Eligibility Period
Subsidized Usage Period
Department of Education calculates periods using information reported by schools.
Days in loan period
Days in academic year
Program length
x 150 percent
= Maximum Eligibility Period
Mark Ashley
Total borrowed $4,000 $4,000
Accrued interest (final nine months of program, plus six-month grace period)
$239.58 $0
Outstanding balance at repayment $4,239.58 $4,000
Loan payment amount $50 for 105 mos. $50 for 98 mos.
Cumulative payments $5,241.35 $4,875.74
Total interest paid $1,241.35 $875.74
Mark Ashley
Total borrowed $4,000 $4,000
Accrued interest (final nine months of program, plus six-month grace period)
$239.58 $0
Outstanding balance at repayment $4,239.58 $4,000
Loan payment amount $50 for 105 mos. $50 for 98 mos.
Cumulative payments $5,241.35 $4,875.74
Total interest paid $1,241.35 $875.74
Mark Ashley
Total borrowed $4,000 $4,000
Accrued interest (final nine months of program, plus six-month grace period)
$239.58 $0
Outstanding balance at repayment $4,239.58 $4,000
Loan payment amount $50 for 105 mos. $50 for 98 mos.
Cumulative payments $5,241.35 $4,875.74
Total interest paid $1,241.35 $875.74
Mark Ashley
Total borrowed $4,000 $4,000
Accrued interest (final nine months of program, plus six-month grace period)
$239.58 $0
Outstanding balance at repayment $4,239.58 $4,000
Loan payment amount $50 for 105 mos. $50 for 98 mos.
Cumulative payments $5,241.35 $4,875.74
Total interest paid $1,241.35 $875.74
Mark Ashley
Total borrowed $4,000 $4,000
Accrued interest (final nine months of program, plus six-month grace period)
$239.58 $0
Outstanding balance at repayment $4,239.58 $4,000
Loan payment amount $50 for 105 mos. $50 for 98 mos.
Cumulative payments $5,241.35 $4,875.74
Total interest paid $1,241.35 $875.74
Mark Ashley
Total borrowed $4,000 $4,000
Accrued interest (final nine months of program, plus six-month grace period)
$239.58 $0
Outstanding balance at repayment $4,239.58 $4,000
Loan payment amount $50 for 105 mos. $50 for 98 mos.
Cumulative payments $5,241.35 $4,875.74
Total interest paid $1,241.35 $875.74
Mark Ashley
Total borrowed $4,000 $4,000
Accrued interest (final nine months of program, plus six-month grace period)
$239.58 $0
Outstanding balance at repayment $4,239.58 $4,000
Loan payment amount $50 for 105 mos. $50 for 98 mos.
Cumulative payments $5,241.35 $4,875.74
Total interest paid $1,241.35 $875.74
150 Percent Subsidized Loan Limit
Repayment Comparison
Example: Losing Interest Subsidy
13
Loss of interest subsidy cost Mark $365.
Agenda
Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.
– Repayment Plans.– Consolidation.
Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.
Repayment
Grace Period
Subsidized and Unsubsidized Loans
Single six-month period in which no payment is expected.
Grace and Post-Enrollment Deferment Periods
No penalty for early repayment.
Post-Enrollment Deferment
Grad PLUS Loans Renewable six-month period after borrower ceases to be enrolled at least half time.
First loan payment due within 30-45 days after grace period ends.
Interest subsidy applies.
RepaymentMethod of Payment
Online payments. Auto-debit.
– 0.25 percent interest rate reduction.
Coupon books.
Repayment
Use a loan calculator to compare repayment options: – calculator.usafunds.org.
As a student loan borrower you may:– Prepay your student loans without penalty.
– Use an accelerated repayment option resulting in less interest.
– Change repayment plans to accommodate your situation.
Plans
RepaymentPlans
Standard. Graduated. Extended. Income-related plans:
– Income-based repayment.– Income-sensitive (FFELP
only).– Income-contingent (DL
only).– Pay As You Earn (DL only).
Repayment
Default repayment option. Payments of equal, monthly installments. Repayment period cannot exceed 10 years. Minimum payment of $50.
Plans
Standard Repayment
Repayment
Example of a standard repayment schedule:
Plans
Unsubsidized Loan (6.8 percent)
Loan Amount Payment Amount Number of Months
$10,000 $115 120
$50,000 $575 120
Grad PLUS Loan (7.9 percent)
Loan Amount Payment Amount Number of Months
$10,000 $121 120
$50,000 $604 120
Source: http://calculator.usafunds.org.
Repayment
Payments increase over time. Repayment term cannot exceed 10 years. Monthly payment amount:
– Must cover accruing interest.– Will not have a single payment more than three times the amount
of another.
Plans
Graduated Repayment
Repayment
Example of a graduated repayment schedule:
Plans
Unsubsidized Loan (6.8 percent)
Loan Amount Payment Amount Number of Months
$10,000 $79 24
$96 24
$117 24
$142 24
$173 24
Source: http://calculator.usafunds.org.
Repayment
Example of a graduated repayment schedule:
Plans
Unsubsidized Loan (6.8 percent)
Loan Amount Payment Amount Number of Months
$50,000 $395 24
$480 24
$584 24
$710 24
$863 24
Source: http://calculator.usafunds.org.
Repayment
Example of a graduated repayment schedule:
Plans
Grad PLUS Loan (7.9 percent)
Loan Amount Payment Amount Number of Months
$10,000 $84 24
$102 24
$124 24
$150 24
$181 24
Source: http://calculator.usafunds.org.
Repayment Plans
Example of a graduated repayment schedule:
Graduated Repayment
Grad PLUS Loan (7.9 percent)
Loan Amount Payment Amount Number of Months
$50,000 $422 24
$511 24
$618 24
$749 24
$906 24
Source: http://calculator.usafunds.org.
Repayment
Borrowers with $30,000 or more in FFELP or DL student loans.
– Totals from FFELP and DL may not be combined to equal $30,000.
Maximum repayment period of 25 years. Length of repayment is tied to the amount borrowed.
Plans
Extended Repayment
Repayment
Example of an extended repayment schedule:
Plans
Unsubsidized Loan (6.8 percent)
Loan Amount Payment Amount Number of Months
$35,000 $243 300
$50,000 $347 300
Grad PLUS Loan (7.9 percent)
Loan Amount Payment Amount Number of Months
$35,000 $268 300
$50,000 $383 300
Source: http://calculator.usafunds.org.
Repayment
Partial financial hardship exists if annual payments exceed discretionary income:
– Borrowers prior to July 1, 2014: 15 percent.– New borrowers on or after July 1, 2014: 10 percent.
Payment amount may be reduced or eliminated. Remaining amounts may be forgiven after:
– Borrowers prior to July 1, 2014: 300 qualifying payments over 25 years.
– New borrowers on or after July 1, 2014: 240 qualifying payments over 20 years.
Plans
Income-Based Repayment
Repayment
Example of an income-based repayment schedule:– Annual pretax adjusted gross income: $36,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.
Plans
Unsubsidized Loan (6.8 percent)
Loan Amount
Pretax Monthly Income Amount
Payment Amount
Number of Months
Rem. Balance
$30,000 $3,000 $231 187 $0
$50,000 $3,000 $231 300 $45,756
Source: http://calculator.usafunds.org.
Repayment
Example of an income-based repayment schedule:– Annual pretax adjusted gross income: $36,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.
Plans
Grad PLUS Loan (7.9 percent)
Loan Amount
Pretax Monthly Income Amount
Payment Amount
Number of Months
Rem. Balance
$30,000 $3,000 $231 212 $0
$50,000 $3,000 $231 300 $60,031
Source: http://calculator.usafunds.org.
Repayment
Payments relate to FFELP borrower’s annual income. Repayment period may exceed 10 years, depending on
borrower’s income and amount borrowed. Borrowers must re-apply each year.
Plans
Income-Sensitive Repayment – FFELP Loans
Repayment
Example of an income-sensitive repayment schedule:– Annual pretax adjusted gross income: $24,000.– Residence: continental U.S.– Desired income percentage: 4 percent.
Assumes interest-only payment for first five years then standard repayment for the remaining term.
Plans
Unsubsidized Stafford (6.8 percent)
Loan Amount
Minimum Payment
Maximum Payment
Number of Months
Rem. Balance
$20,000 $113 $230 180 $0
$50,000 $283 $575 180 $0
Source: USA Funds finance department.
Repayment
Example of an income-sensitive repayment schedule:– Annual pretax adjusted gross income: $24,000.– Residence: continental U.S.– Desired income percentage: 4 percent.
Assumes interest-only payment for first five years then standard repayment for the remaining term.
Plans
Grad PLUS (8.5 percent)
Loan Amount
Minimum Payment
Maximum Payment
Number of Months
Rem. Balance
$20,000 $142 $248 180 $0
$50,000 $354 $620 180 $0
Source: USA Funds finance department.
Repayment
Payments relate to DL borrower’s annual income and family size.
Minimum payment of $5. Any remaining balance due after 25 years will be forgiven. Borrowers must re-apply each year.
Plans
Income-Contingent Repayment – Direct Loans
Repayment
Example of an income-contingent repayment schedule:– Annual pretax adjusted gross income: $30,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.
Plans
Unsubsidized Loan (6.8 percent)
Loan Amount
Pretax Monthly Income Amount
Payment Amount
Number of Months
Rem. Balance
$20,000 $2,500 $153 250 $0
$50,000 $2,500 $306 300 $725
Source: http://calculator.usafunds.org.
Repayment
Example of an income-contingent repayment schedule:– Annual pretax adjusted gross income: $30,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.
Plans
Grad PLUS Loan (7.9 percent)
Loan Amount
Pretax Monthly Income Amount
Payment Amount
Number of Months
Rem. Balance
$20,000 $2,500 $162 271 $0
$50,000 $2,500 $306 300 $28,642
Source: http://calculator.usafunds.org.
Repayment
Partial financial hardship exists if annual payments exceed discretionary income by 10 percent.
– Consistent with “new borrowers” under IBR.
Payment amount may be reduced or eliminated. Remaining amounts may be forgiven after 240 qualifying
payments over 20 years.– Consistent with “new borrowers” under IBR.
Plans
Pay As You Earn
Repayment
Example of an Pay As You Earn repayment schedule:– Annual pretax adjusted gross income: $36,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.
Plans
Unsubsidized Loan (6.8 percent)
Loan Amount
Pretax Monthly Income Amount
Payment Amount
Number of Months
Rem. Balance
$30,000 $3,000 $154 240 $24,561
$50,000 $3,000 $154 240 $73,076
Source: http://calculator.usafunds.org.
Repayment
Example of an Pay As You Earn repayment schedule:– Annual pretax adjusted gross income: $36,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.
Plans
Grad PLUS Loan (7.9 percent)
Loan Amount
Pretax Monthly Income Amount
Payment Amount
Number of Months
Rem. Balance
$30,000 $3,000 $271 161 $0
$50,000 $3,000 $271 240 $48,196
Source: http://calculator.usafunds.org.
Repayment Plans
Total unsubsidized loan amount = $50,000.
Comparison
Initial Monthly Payment
Highest Monthly Payment
Interest PaidTotal
Amount Paid
Years in Repayment
Standard $575 $575 $19,044 $69,048 10
Graduated $395 $863 $22,778 $72,778 10
Extended $347 $347 $54,112 $104,111 25
IBR $154 $224 $44,924 $44.924 20
ICR $406 $422 $34,150 $84,150 17
ISR $283 $575 $36,048 $86,048 15
Pay As You Earn $154 $224 $44,924 $44,924 20
Agenda
Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.
– Repayment Plans.– Consolidation.
Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.
Repayment
Eligible loans:– FFELP and Direct Subsidized and Unsubsidized loans.– FFELP and Direct PLUS loans.– Consolidation loans.– Federal Perkins loans.– Federal Nursing Student Loans.– Health Professions Student Loans.– Health Education Assistance Loans.– Certain other education loans.
Consolidation
A new loan that pays off existing loans and carries new terms.
RepaymentConsolidation
Advantages Disadvantages Combines several loans into
one new loan. One lower monthly payment. Interest rate is fixed. Interest subsidy still applies,
but only to subsidized loans. No fees or prepayment
penalties.
Increases interest charges due to longer repayment period.
Reduced options for cancellation and forgiveness.
May lose benefits; varies by lender.
May lose remainder of grace period.
Repayment
Sum of Consolidation Loans and Other Education Debt Maximum Term
Less than $7,500 10 years
$7,500 - $9,999.99 12 years
$10,000 - $19,999.99 15 years
$20,000 - $29,999.99 20 years
$40,000 - $59,999.99 25 years
$60,000 or more 30 years
Consolidation: Maximum Repayment Periods
Repayment
Fixed interest rate based on loans being consolidated.– Weighted average, rounded up to nearest one-eighth of one
percent.– No longer capped at 8.25 percent, for new applications filed on or
after July 1, 2013.
Consolidation: Interest Rates
17
Agenda
Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.
– Repayment Plans.– Consolidation.
Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.
Repayment Relief
Deferment. Forbearance. Cancellation. Forgiveness.
Direct Loans have repayment options to assist borrowers who need help:
Repayment Relief
Postpone repayment for borrowers who qualify. Entitlement for eligible borrowers. Suspend payment of principal and interest:
– Interest subsidy resumes.
– Interest accrues on unsubsidized portion.
Some deferments must be updated at least annually. Can apply retroactively. Borrowers must request deferment. Once repayment resumes, first payment usually due
within 60 days.
Deferment
Repayment ReliefDeferment Types
Half-time enrollment. Time limit: none.In-School
Not working at least 30 hours per week in work that will last at least three moths.
Actively seeking employment. Time limit: 36 months.
Unemployment
Financial difficulty making loan payments. Time limit: 36 months.
Economic Hardship
Repayment ReliefDeferment Types
Participating in a qualifying vocational or health-related rehabilitation program.
Time limit: none.
Participation in a full-time graduate fellowship for at least six months.
Time limit: none.
Serving on active duty for other than training purposes.
Time limit: none.
Students enrolled at least half time within six months of activation.
Time limit: 13 months.
Rehabilitation Training
Graduate Fellowship
Military Service
Post Active-Duty Student
Repayment Relief
Generally granted at the discretion of the lender. Forbearance may include any of following changes to
repayment agreement:– No monthly payment.
– Interest-only payments.
– Lower payment.
– Other arrangements.
Can be applied retroactively for up to 12 months. Interest subsidy is not available.
– Any unpaid interest may be capitalized.
Lender required to inform borrower of status, obligations and associated costs.
Forbearance
Repayment ReliefForbearance Types
Lender believes borrower is willing but unable to make payments.
Time limit: up to 12 months.
Internship/Residency. National service. Loan forgiveness.
DoD repayment. High debt. Active duty.
Overdue payments under certain circumstances.
Disaster, national emergency or military mobilization.
Processing periods.
Discretionary
Mandatory
Administrative
Mandatory Administrative
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
If the borrower dies, the government discharges the remaining loan amount.
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
The government discharges loans when a student cannot complete a program due to the school closing.
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
Loan discharge is available if the school improperly certified a loan for the borrower.
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
If the borrower can prove in court that he or she was the victim of identity theft, the loan may be cancelled.
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
Available when the borrower is unable to earn sufficient income due to illness or injury expected to continue indefinitely or result in death.
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
If court finds that repayment of student loan will cause undue hardship to the borrower, cancellation may be available.
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
Failure to receive a student loan refund may qualify the borrower for discharge.
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
Forgiveness available for up to $17,500, depending on type of teaching position.
Repayment ReliefCancellation, Discharge and Forgiveness
Death of borrower. School closure. False certification. Identity theft. Total and permanent
disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan
forgiveness.
Discharge remaining debt after 10 years of qualifying payments.
Agenda
Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.
– Repayment Plans.– Consolidation.
Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.
Consequences
Delinquency
Delinquency
Lender has not received payment by the stated due date.
Late charges may be assessed.
Negative mark on your credit record.
Consequences
Lose eligibility for future federal financial aid. Lose eligibility for flexible loan repayment options. Adverse credit reports. State-issued licenses can be withdrawn or denied. Income tax refunds can be withheld. Wages can be garnished. Federal benefit payments can be confiscated. Interest continues to accumulate. Federal debt collection procedures, including fees and
fines. Legal action.
Default
No loan payments for 270 consecutive days or more
Agenda
Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.
– Repayment Plans.– Consolidation.
Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.
Money Management
Identify your financial goals. Develop a realistic monthly
budget. Pay your bills prior to the
due date. Keep accurate and
well-organized records. Save for the future.
https://www.mint.com.
Money Management
Latte $3.00 Loan balance $20,000
What would you do with $780?
Days per week x 5
Weekly cost $15.00
x 52
Yearly cost $780
Cost over 10 years $7,800
Repayment term 10 years
Regular payment amount $230.16
Extra monthly payment $65.00
x 52
Savings over 10 years $2,543.59
Reduction in term 2.8 years
Yearly cost $780
Source: www.finaid.org.
Agenda
Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.
– Repayment Plans.– Consolidation.
Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.
Tax Benefits
There are a variety of tax credits, deductions and savings plans available to assist with higher education expenses:
– American Opportunity Tax Credit.– Hope and Lifetime Tax Credit.– College Tuition and Fees Deduction.– Student Loan Interest Deduction.
See www.irs.gov for more information.
Getting Help
If you cannot make a student loan payment:– Your loan holder.– Your school.– Department of Education.
If you have an unresolved issue:– Department of Education
Ombudsman: Phone: (877) 557-2575 E-mail: [email protected]. www.ombudsman.ed.gov.
Difficult Situations
Questions and Answers
Resources
http://calculator.usafunds.org. www.nslds.ed.gov. www.mint.com. www.finaid.org. www.studentaid.ed.gov. www.ombudsman.ed.gov.
A nonprofit corporation, USA Funds® works to enhance
postsecondary education preparedness, access and success
by providing and supporting financial and other valued services.