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2011 Graduating StudentsExit Loan Counseling
What is an Exit Interview & Why Do I Need to Do It? The FEDERAL government
requires that Federal Loan recipients complete Student Loan Exit Counseling prior to graduating or whenever they cease to enroll at least half-time.
The purpose of an exit session is to help students understand their rights and responsibilities as a student borrower.
Rights & Responsibilities
RIGHTS RESPONSIBILITESWritten information Must repay loansDefault information Notify loan servicer:Copy of your prom note *change in contact infoRepayment information *ability to paySubsidies, grace, deferment *change in status orForbearance grad datePrepayment without penalty *failure to enroll *Attend exit counseling
Loan Repayment Timeline
Federal Direct Sub &
Unsub*
6 month grace
Economic Hardship Deferment (Up to 3 years)
Must Apply Each Year
Repayment or Forbearance
Plus Loans FFEL or DL
Up to 6 month grace
Deferment Repayment or Forbearance
*If you have a FFEL/DL or a Federal Perkins Loan taken out prior to 7/1/93, please contact the Exit Counselor for pertinent information.
Federal Direct Repayment Options
StandardHighest monthly payment - Saves the most in interest
ExtendedLower monthly payments – Longer term, more interest
GraduatedStarts off low monthly payment - Increases every 2 yrs
Income-Contingent RepaymentBased on income to debt ratio – Accrues most interest
Income-Based Repayment Based on income to debt ratio – Accrues most interest Available 7/1/09 website www.ibrinfo.org
What is New
Income-Based Repayment (IBR) is available now. IBR is a new
option that will help by keeping your loan payments manageable with
payment caps based on your income and family size. IBR will also forgive
remaining debt, if any, after 25 years of qualifying payments. The student
loans must be in the Direct & Guaranteed (FFEL) loan programs, excluding
loans made to parents. This includes Stafford, Grad Plus, and
consolidation loans that do not include Parent PLUS loans.
Public Service Loan Forgiveness provides assistance to those borrowers
who work in public service jobs, including jobs in government at all levels
and nonprofit 501 (c) (3) organizations. It will forgive remaining debt after
10 years of eligible employment and qualifying loan payments, including
payments under IBR.
Please go to the website, www.ibrinfo.org , for additional information
on both these programs and the IBR calculator to see if you qualify .
Income-Based Repayment(IBR)
Effective date: July 1, 2009 Eligibility criteria:
Available for repayment of FFELP/Direct Stafford, Grad PLUS and Federal Consolidation Loans (FCL)
Cannot be used to repay Parent PLUS Loans
Cannot be used to repay FCL that included payoff of a Parent PLUS Loan
You must have “Partial Financial Hardship”
IBR Basics
To enroll in IBR, you have to demonstrate financial need according to a federal formula that will limit monthly payments to no more than 15 % of discretionary income.
As long as you demonstrate Partial Financial Hardship – on an annual basis – the monthly payment will be based on a portion of your discretionary income.
You can report $0 income – that is be unemployed $0 payments are allowed which count toward the IBR
payment limit and the PSLF payment limit After 25 years the unpaid balance will be forgiven,
however, this amount may be considered taxable income.
Extended Repayment vs. IBRAGI = $40,000
Things To Consider
The first step is to determine what you are doing after graduating.
If you do not have a job lined up or are under-employed, you may want to explore available options, which include:
Economic hardship deferment Unemployment deferment (actually
unemployed) IBR
Additional Information
You are STRONGLY encouraged to visit the following websites for more information:
www.ibrinfo.org http://equaljusticeworks.org AND use one of the on-line repayment calculators to
plug in your debt, income, household size information…
http://www.finaid.org/calculators/ibr.phtml http://studentaid.ed.gov/PORTALSWebApp/
students/english/IBRPlan.jsp www.salliemae.com/ibr
Rights & Privileges
Deferment Forbearance Cancellations Consolidation
Office of Student Financial Assistance Programs – Ombudsman
• (877) 557-2575• http://ombudsman.ed.gov
Deferment (principal & interest)
Economic Hardship* Unemployment Continuing Education Military Service (Active duty)You must apply and meet certain criteria…
Subsidized loans remain interest free. Unsubsidized loans continue to accrue interest.
* Effective July 1, 2009, the formula for qualifying for EHD changed. Most graduates will no longer qualify so you will have to pursue other options.
Postponement Options
Economic Hardship Deferment has changed. As of July 1, 2009, the formula is now based on 150% of the poverty level.
www.finaid.org - EHD Calculator Alternatives:
Forbearance IBR
Forbearance (principal only)
Must apply annually-use AFTER grace and deferment options have been used
Will not extend repayment term No renewed grace period
Forms for Direct Loans at:
www.dlssonline.com
Interest accrues and capitalizes on all loans
Cancellations
Volunteers 12 months consecutive service
Vista & Peace Corps
Military Service 12 months consecutive service
Active duty
Teachers 12 months consecutive service
K-12, Title I school, Full Time
RN’s and 12 months consecutive service
Medical Technicians
Law Enforcement 12 months consecutive service
includes District Attorneys &Federal/Community Public Defenders
Consolidation
Direct Loan website www.loanconsolidation.ed.gov
Lower monthly payments
Additional interest rate reduction incentives
Possible loss of rights from old loans
Alternative Loan Programs and Outside Agency Loans WILL NOT QUALIFY
Is Consolidation Right For You?
Direct Loans disbursed before 7/1/06 are variable rate loans
Direct Loans disbursed after 7/1/06 are a fixed rate at 6.8%
The variable interest rate effective 7/1/10: in school, grace or deferment is 1.87%; in repayment or forbearance will be 2.47%
Does it make any sense to re-consolidate or consolidate your loans into a separate consolidation?
Use the loan calculator to see:
www.loanconsolidation.ed.gov
Consequences of Defaulting
Derogatory reporting on credit report (will stay on credit report for seven years)
Unable to obtain more federal aid Hold on student records and diploma Late fees will be assessed FTB and/or IRS can withhold income tax refund Wages can be garnisheed Lender can declare entire balance due You can be liable for litigation & collection costs (can be
up to 65% of principal) Eligibility for deferments & cancellations can be lost,
including IBR
How Can I Save Money?
Pay during the grace or deferment period – no penalties to prepay loans
Pay more than the minimum amount Claim interest on taxes (1098-E) Use shortest repayment period for
Direct Loans Pay interest up front on unsubsidized
loans Make payments via electronic debit Perhaps consolidate your loans
Taxes-Student Loan Interest Deduction
You may be able to deduct the interest you pay on a qualified student loan. And, if your student loan is canceled, you may not have to include any amount as income. More information is available at:www.irs.gov/publications/p970/ andwww.ire.gov/taxtopics/tc456.html
Budgeting with your net income
Net income should be more than when you were a student
Consider paying down higher interest rate debt first – such as private loans and credit cards before paying down federal educational loans
Consider working with a financial professional (financial planner or CPA)
Where Do I Go To Complete The Exit Interview?
www.studentloans.gov
Information You Will Need For the Online Exit Interview Your Social Security Number Your Driver’s License number Name, address and telephone number
of your next of kin and/or parent Names, addresses, telephone
numbers, and employers of two references residing at different U.S. addresses
Name, address and telephone number of your expected employer (if known)
Loan Totals Listed on NSLDS
NSLDS (National Student Loan Data System)
Loan Amounts of all Federally Backed Student Loans
This is now the best option to find out the loan servicing company for your Direct Loans.
www.nslds.ed.gov(800) 433-3243(800) 4-FED-AID E-mail: [email protected]
DON’T FORGET…………
It is a Federal Requirement (not Becker’s) to complete the Exit Interview. You can do this electronically by…..
www.studentloans.gov
Before you leave Becker…
Have you paid all of your Becker charges?
Make sure your transcripts and diploma are not held.
Check your Insite account or you may contact your representative at Student Accounting.
Conclusion
Federal Requirement Address updates Important information If you should have questions, please
feel free to contact the Financial Aid Office.
(508) [email protected]
CONGRATULATIONS!
