Student Loans The Comics of a Debt Revolution
Feb 25, 2016
Student LoansThe Comics of a Debt Revolution
LOAN AGENDA
1. What are Student Loans?
2. Loan Terminology3. Types of Loan4. FAFSA5. Student Loan
Database6. Repayment
Options
Student Loans: Simply Stated
• Student loans are monies borrowed from the government and other entities to pay for educational expenses which include:
1)Tuition2) Room & Board3) Books & Supplies 4) Fees (parking, online charges)5) Equipment and Room Materials (laptop)6) Travel and Miscellaneous Expenses (clothing and phone)
Loan Terminology:
Term Definition
Capitalization Adding unpaid interest to the amount borrowed
Consolidation Combining multiple loans into one
Credit Summary of your financial strength
Default Failure to repay a loan
Deferment Postponement of loan payments under authorized conditions . Interest does not accrue for subsidized loans.
Expected Family Contribution (EFC) Index that determines eligibility for federal student aid
Forbearance Period in which loan payments are temporarily suspended or reduced. Based off certain financial hardships.
Grace Period Time period between last day of enrollment and repayment begins
Interest Loan expense charged by lender at a rate.
WOW!
Types of Loans
Loan Program Loan DescriptionFederal Perkins • University is lender
• 9 month grace period• Interest doesn’t accrue until repayment• Need based
Subsidized Stafford • Government is lender• Interest doesn’t accrue until repayment• Need based
Unsubsidized Stafford • Government is lender• Interest accrues immediately after disbursement• Can pay interest while in college (not required)• Capitalization occurs (increases principal balance
with additional interest)• Need based
Direct Plus • Government is lender• Interest accrues immediately after disbursement• Credit based• Amount determined by schools cost of attendance
minus other aid
Private • Any creditor can be a lender• Repay loans immediately• Credit based
FAFSA: The purpose of FAFSA is to determine how much aid a student is eligible for.
What you need:• Income tax return• Drivers license• SSN Number• W-2’s• FAFSA is free, do not
pay!
fafsa.ed.gov
National Student Loan Data System:
Provides personalized information regarding your:• Loan Type• Loan Disbursement schedule• Loan disbursement location• Principle Balances• Interest Accrued to Date• Loan Eligibility as a
Percentage• Contact info for Lenders• Grant Disbursement
http://www.nslds.ed.gov/nslds_SA/
These apply to Federal Student Loans only!
Repayment Options:
Repayment Plan Description
Standard • Automatic plan• Monthly payment of at least $50
Graduated • Start off with lower payments• Monthly payment increases every two years• ***will increase the cost of the loan in interest
Extended • Fixed or graduated• Requires loan principal to be at least $30,000• Payment will likely be less than the standard repayment
Income-Sensitive Repayment Plan • Monthly payment is based off income• Usually less than 10% of gross income (before taxes)• Can increase or decrease in accordance to income
Income-Contingent Repayment Plan • Based off annual income• Must pay on time for 25 years, the balance will be forgiven• Forgiven portion will be considered income and will be taxed.
Income-Based Repayment • Based off income• Capped at 15% of discretionary income• Must display financial hardship• Must pay on time for 25 years, the balance will be forgiven• Forgiven portion will be considered income and will be taxed
Don’t become the Class of IOU’s!!!
Questions? Don’t Wait!
Learning Assistance Programs
(573)-651-2273Student Financial
Services (573) 651-2253
Financial Literacy Project
(573) 651-2861
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