ED 362 093

TITLE

INSTITUTIOaPUB DATENOTEAVAILABLE FROM

PUB TYPE

EDRS PRICEDESCRIPTORS

IDENTIFIERS

ABSTRACT

DOCUMENT RESUME

HE 026 701

Your Student Loan: A Financial Planning and RepaymentGuide.

California Student Aid Commission, Sacramento.[93]

23p.

California Student Aid Commission, P.O. Box 510845,Sacramento, CA 94245-0845.Guides Non-Classroom Use (055)

MF01/PC01 Pius Postage.Budgeting; *Federal Programs; Financial AidApplicants; *Higher Education; Loan Default; *LoanRepayment; Student Financial Aid; *Student LoanPrograms

*California; Family Education Loan Program;*Financial Planning; Parent Loans for UndergraduateStudents Program; *Supplemental Loans for StudentsProgram

This brief pamphlet is a financial planning andrepayment guide designed to help college students make informeddecisions about participating in Federal Family Educational LoanPrograms as administered in California through the California StudentAid Commission. Following an introduction the guide begins bysuggesting that students map out a financial plan including keyissues to consider, other options to explore, and theresponsibilities irvolved in taking a loan. Student rights andresponsibilities are listed and the various Federal FamilyEducational Loan Programs are described. These include the StaffordStudent Loans, Unsubsidized Stafford Loans, Federal SupplementalLoans for Students, Parent Loans for Undergraduate Students, and theConsolidation Loan Program. Worksheets for planning student loanrepayment and budgeting are included along with a table of estimatedentry level annual salaries. Final sections provide: a discussion ofinitiating student loan repayment (includes information on sellingand transferring loans), a list of lenders in California, a glossaryof terms, and a checklist of issues for student borrowers. (JB)

Reproductions supplied by EDRS are the best that can be madefrom the original document.

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California Student

' PFRMISSION TO REPRODUCE THISN. T 'MAL HAS BEEN GRANTED BY

Aid Co miss ion

,0 THE EDUCATIONAL RESOURCES 2-INFORMATION CENTER (ERIC).-

U.S. DEPARTMENT OF EDUCATIONOffice of Educational Research and linpio,erneni

E 0UC AT IONA L RESOURCES Ito' ORMATIONCENTER (ERICI

ar This documen1 has been ,e0,0tha ed AS

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California Student Aid Commission Members

Mr. Glen BecerraStudent Representative

Dr. Robert P. BillerIndependent California College and University Representative

Mr. Michael S. CaronaGeneral Public Representative

Dr. William F. FitzgeraldGeneral Public Representative

Ms. Tonian HohbergProprietary School Representative

Mr. Ralph J. KaplanGeneral Public Representative

Dr. Lee KerschnerCalifornia State University Representative

(vacant)California Secondary School Representative

Dr. Hector LopezCalWornia Community Colleges Representative

Mr. Rafael Maga llan

General Public Representative

Mr. Marc E. MitznerStudent Representative

Mr. Vishwas D. MoreGeneral Public Representative

Ms. Maridel M. MoultonGeneral Public Representative

Mr. Ronald K. Wakabayashi

General Public Representative

Dr. Joseph WatsonUniversity of California Representative

Responsible Borrowing A Vital Part of Student Financial Aid

The main goal of the California Student Aid Commission is to help students and their

families meet rising college costs, while assisting low-income and disadvantaged

Californians with access to higher edtration.

To achieve this goal, and to help ensure a realistic promise of full participation for all

citizens, the Commission provides a balanced program of grants, low-interest

educational loans and other special programs for students at all levels, from voca-

tional training through four-year college and graduate degrees.

Today, loans are a vital part of many students' financial plans for college. Student

loans now make up more than 50 percent of all available financial aid. That is where

the California Student Aid Commission can help. Every year, some 300,000 students

and parents take out more than $1 billion in educational loans under the

Commission's guarantee.

This guide is designed to help you be an informed, responsible participant in the

Federal Family Educational Loan Programs. Please read it carefully. A loan can help

you realize your education dreams, but it requires that you live up to your repayment

obligations. Please borrow wisely, get a good education and then repay your student

loan.

Sincerely,

Dr. Samuel M. Kipp, III

Executive Director

California Student Aid Commission

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Contents

Introducing Federal Family Educational Loan Programs 4

Mapping Out Your Financial Plan 5

Selecting the Right School Before Borrowing 5

Reviewing Other Financial Aid Options 5

Qualifying and Applying for a Student Loan 6

Accepting a Student Loan Means Accepting Responsibility 6

Student Rights and Responsibilities 8

Federal Family Educational Loan Programs 9

Federal Stafford Student Loans 9

Federal Unsubsidized Stafford Student Loans for Middle Income

Borrowers 10

Federal Supplemental Loans for Studsnts (SLS) 10

Federal Parent Loans for Underg- duate Students (PLUS) 12

Federal Consolidation Loan Program 13

Planning Your Student Loan Repayment 14

Monthly Student Loan Repayment Worksl-eet 14

Budgeting Your Dollars 15

Income/Expense Worksheet 15

Estimating Entry Level Salaries 16

Initiating Student Loan Repayment 17

Sturimt Loans Can Be Sold or Transferred 18

Tips on Managing Student Loans 18

Federal Student Loan Program Lenders 19

Glossary of Student Loan Terms 20

Checklist for California Student Loan Programs 21

53

Introducing the Federal Family Educational Loan Programs

California, through the Student AidCommission, offers many financial aidprograms for studying beyond highschool Cal Grants, GraduateFellowship, a State Work-Studyprogram and special programs forteachers and other groups. Moreinformation on ail student aid options isin the Commission's "Financial Aid forStudents" workbook available fromfinancial aid offices, counselors, libraries

or from the Commission.

This bookl2t is specifically about the

Federal Family Educational LoanPrograms: Stafford Student Loans,Unsubsidized Stafford Loans for Middle

Incme Borrowers, Supplemental Loanstor Students (SLS), Parent Loans forUndergraduate Student (PLUS) and aConsolidation Loan Program. Theseloans are federally supported low-interest educational loans for both

students and the parents of dependentstudents. The loans are designed toassist qualified students and theirfamilies meet college costs. Interest

rates, loan limits and repayment of thevarious loans vary. In California theseprograms are administered by theCalifornia Student Aid Commission.

This booklet tells how to apply for a

student loan. It explains loan eligibility,terms, conditions, responsibilities torepay, and has tips on how to manage astudent loan debt. As a current orprospective borrower, pay particularattention to the sections on repaymentand debt management. That first loanpayment may seem distant, but yourresponsibilities and obligations beginthe day you accept a student loan check.

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As you make financial plans for collegeand consider applying for a studentloan, keep these facts in mind:

la student loan can help make highereducation possible, and repayinghelps establish good credit; but

student loans must be paid back infull even if you do not find the jobthat you want, fail to graduate, areunhappy with the education or thetraining you receive, or believe theschool owes you a refund;

failure to repay a student loanknown as defaulting has seriousconsequences and will damage yourcredit rating; and

if you fail to repay your student loan,the Commission will use collection

agencies and seize your federal andstate tax refunds to recover unpaidstudent loan money.

Each year the Federal Loan Programshelp thousands ofstudents pay forcollege and vocationaltraining.The Student N.,AidCommissioncan help you too.Explore all financialaid options and, ifyou need to borrow,borrow only what youneed, not the maximumavailable. Get theeducation you want anddo not become astudent loan deflultst3tistic.

Mapping Out Your Financial Plan

A student loan may seem like an easysource of money for college, but it is aserious financial commitment. Map outa financial plan for school before youenroll or apply for a studeni ioan. Startby answering these important questions:

How much can you and your familycontribute toward your educationalosts? Discuss this early in yourcollege planning process.

Are you eligible for other forms offinancial aid and have you appliedfor them? Can you work more hoursand borrow less money? If you mustborrow, do so only to meet educa-tional costs.

Consider your expected salary andother future expenses. Will you beable to afford monthly student loanpayments? Repaying a large debt isnot always easy. Student loans havethe same legal requirements as otherconsumer loans. Depending on howmuch is borrowed, payments canrange from 550 to 5950 per month.

(See the Income/Expenses worksheeton page 15.)

Defaulting on a student loan failingto repay has serious consequenceswhich include loss of the following:future financial aid eligibility, monthlyloan repayment options, federal/stat,income tax refunds and lotterywinnings, and a good consumer creditrating for years to con....

Have you selected the lender that bestmeets your needs? Lenders partici-pating in the federal student loanprograms are listed on page 19.Financial aid offices also have a list oflenders and their policies. If you mustborrow more than once, stay with the

5

same lender to simplify yourrepayment plans.

Selecting The Right School BeforeBorrowing

Neither the California Student AidCommission, a lender, nor the federalgovernment can vouch for a school'squality or its programs. Before enrollingand accepting a loan and its responsi-bilities, learn as much about the schoolas possible. It is important that youknow that the school is licensed foroperation, and approved by a nation-ally-recognized accredifing agency. Youcan ask the school for proof of licensingand accreditation. These certify that theschool meets certain business andacademic standards.

Each college, university and vocationalschool is required to give prospectivestudents information about academiccost, their tuition and refund policy,quality of academic and trainingprograms, faculty and facilities,financial aid programs and graduates'job placement success. Be a smart

shopper; choose the school best for you.

Reviewing Other Financial AidOptions

Various financial aid options areavailable to those who take the time toapply, pay attention to detail and followup their effort.

Check with the school's financial aidoffice concerning your eligibility andconsider all possible sources including:

federal Pell Grants, College Work-

Study, Supplemental EducationalOpportunity Grants (SEOG) andPerkins Loans.

Average College Costs in California for 1992193

Living at Homeand Commuting

LivingOff Campus

LivingOn Campus

Community Colleges $4.740 $8,412 $7,199California Stato UnWersity* $5,950 $9,622 $9,188University of California* $7,542 $11,214 $11,711Independent Colleges $8,002 to $11,674 to $9,286 to

$21,658 $25,330 125,302Private Vocational Schools" $7,200 to $9,648 to WA

$20,310 925,206 WA

This chart lists average annual rate for single students during 1992-93 school year, includingtuition fees, room and board, books and supplies, transportation, and perscoal expenses suchas clothing, laundry, and entertainment. Contact each school for specific costs.

'Costs shovm indicate estimated fees"Low figures in a 6-monfh course; high figure is 12 month COMM

California's undergraduate CalGrants, Graduate Fellowships, StateWork-Study and programs for specialgroups such as teachers, lawenforcement officers and veterans;and

institutional financial aid options, orprivate scholarships.

Qualifying and Applying for aStudent Loan

Student loans can be an important partof an individual financial aid package;for Fome, it may be the only financial

aid option. There are different studentloans that meet different needs. Someloan limits are based on a student'sgrade level or length of the program inwhich they are enrolled. There are alsoloars for parents of dependent students.

Eligibility and application requirementsvary; some loans require students firstto demonstrate financial need or toapply for other aid. You must completethe Free Application for Federal StudentAid (FAFSA) to determine yourfinancial aid eligibility. The FAFS 4 is

available from high school counselorsand postsecondary school financial aid

6

offices. Student loan applications areavailable from school financial aid

officers.

Work closely with the financial aidoffice and a lender for exact applicationinformation and requirements. Moredetails on borrower eligibility areavailable in this booklet under each loanheading.

If eligible for a student loan, you or theschool must forward your completedapplication/promissory note to aparticipating lender. The time needed toprocess a loan may vary from a fewdays to a few weeks; therefore, studentsshould not plan to use loan money topay preregistration fees, housingdeposits, or other early fee payments.

Accepting a Student Loan MeansAccepting Responsibility

It is important that you understand andaccept your student loan responsibili-ties. Carefully read the loan promissorynote and disclosure statement. Ask thelender to explain any parts that areunclear.

If you qualify, the lender will processyour application and issue a check, or

BEST COPY AVAILABLE

disburse the loan through an electronicfunds transfer to your school. Depend-ing on the type of loan, certain fees arededucted by the federal and stategovernments to help pay some of theprogram's operating costs.

A federal student loan check may bemade either singly payable or co-payable. Checks are mailed to schoolsand released to students in two or moreinstallments after enrollment andsatisfactory academic progress havebeen verified. If singly payable, theschool releases the check to you. If co-payable, both you and the school mustendorse the check. Tlw. school may keepan amount you already owe for schoolcharges, but you still must repay theentire amount borrowed. PLUS loansare disbursed as co-payeble to parentsand schools and are sent directly to theschool.

Most students successfully repay theirloans, but some borrowers treat theirloan repayment responsibilitiescasually. Some fail to pay attention tolender notices, or forget who they owe.Others intend to repay, but fail to keeplenders informed of their new address.When this happens, the lender mayplace the loan in default because theborrower cannot be located to arrangerepayment.

Keep copies of all lender correspon-dence and maintain a file with the loanapplication/promissory note, disclosurestatement, repayment schedule,deferment requests, rights andresponsibilities statement and any otherpertinent items. If you change yourname, move, leave school or change

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your graduation date, inform yourlender. Follow up your telephone callsto a lender with a letter. Always keep acopy.

Many borrowers who default on astudent loan do so because they areunemployed or, even if workitig, do nothave enough income to meet their otherexpenses and repay a student loan too.Plan ahead before borrowing. Will thedegree, certificate or training lead to ajob that will enable you to meet all yourbills, including student loan repay-ments? Check salaries and job availabil-ity with potential employers beforeborrowing.

Some borrowers ignore their debtswhen they cannot make thepayments. This often leads toa loan default. It you cannotmake a payment, contactyour lender and askwhat can be done toprevent a default.A lender willwork with you topostpone or reducemonthly amountsuntil you canresume regularpayments.

Student Rights and Responsibilities

Education after high school requires time, money and cif rift. It is a big investment. Before

making a commitment, get complete information about the quality of academic programs,

graduation rates, fidl cost of attendance, refund policy, and financial aid programs.

Student Rights You have the right to ask a school:

What it costs to after.d and refund policies for students who drop out.

How the school determines whether students are maintaining satisfactory academic

progress and the consequences if they are not.

What financial assistance is avallable, including all federal, state, and school

financial aid programs.

What the deadline is for submitting each aid application and criteria used to select

recipients.How individual financial need is determined including how cost for tuition and

fees, room and board, transportation, books and supplies, and personal and

miscellaneous expenses are considered in your budget.

What resources (such as parental contribution, other financial aid, personal assets,

etc.) are considered in the need calculation, and how much of your fmandal need,

determined by the school, has been met.

To explain the various programs in your student aid package. If you believe you

have been treated unfairly, you may request reconsideration.

What portion of the financial aid must be repaid and what portion is grant aid.

When you take out a loan, you have theright to know the interest rate, the total

amount to be repaid, repayment procedures, the length of time to repay the loan,

and the date when repayment begins.

How to apply for additional aid if yourfinancial circumstances change.

Student Responsibilities It is your responsibility to:

Review and consider all information about a school's program ic.lefore enrolling.

Pay special attention to your application for student financial aid, complete it

accurately and submit it on time to theright place. Errors can delay financial aid.

Intentional misreporting of information onapplication forms for financial aid is a

criminal offense subject to penalties.

Respond promptly and return all additional documentation, verification, correc-

tions, and/or new information requested by the financial aid office or the agency to

which you submitted applications.Read, understand and keep copies of all forms that you sign.

Notify the lender within 10 days of changes in your name, permanent mailing

address, and school status.

Repay the loan according to the repayment schedule. Payment is required even if

you do not get a bill.

Do not wait for the lender to contact you; Write and request a repayment schedule.

If you cannot make payment or feel payment is not due, contact yourlender and

reques' deferment of repayment, forbearance, hardship extension, or in-school

extension.

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BEST COPY AVAILABLE

Federal Family Educational Loan Programs

The California Student Aid Commission

administers the Federal Family Educational

Loan Programs which include Stafford

Student Loans, Unsubsidized Stafford

Loans, Supplemental Loans for Students

(SLS), Parent Loans for Undergraduate

Student (PLUS) and Consolidation Loans.

These government-sponsored, low-interest

loans for qualified students and parents of

students are made in cooperation with

commercial lenders, such as banks, credit

unions and savings and loan associations.

Federal Stafford Student Loans

Stafford Student Loans are for under-

graduate, graduate, vocational orprofessional students who demonstratefinancial need. For new borrowers afterOctober 1, 1992 the interest rate is avariable rate established annually andwill not exceed 9 percent. For borrowerswith outstanding balances from studentloans prior to that date, the interest rateremains the same as for the prior loans.

Students may borrow $2,625 for each of

the first two undergraduate years, andup to 54,000 annually through the fifthyear. Graduate students may borrow upto 57,500 a year. Not more than $17,250can be borrowed for all yoars ofundergraduate study, $37,000 for allyears of graduate study, or $54,750 for

undergraduate and graduate studycombined.

Stafford limits for first year borrowersare prorated according to programlength: 52,625 (one academic year);

$1,750 (2/3 of academic year); $875 (1/3

of academic year).

For loans with first disbursements madeon or after July 1, 1993 there will be new

annual loan limits, prorated for all

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undergraduates. Loan limits will remain

the same for first-year borrowers.Second-year limits will be prorated as

follows: $3,500 (full academic year);$2,325 (2/3 academic year); $1,175 (1/3

academic year). Maximum undergradu-ate borrowing will not exceed $23,000;the graduate study limit will be $65,500.

For borrowers who have completed atleast two academic years, the loan limitswill be prorated as follows: $5,500 (fullacademic year); $3,675 (2/3 academicyear); $1,825 (1/3 academic year). AfterOctober 1, 1993, the annual limit for full-time graduate students will be $8,500

with an aggregate cap of $65,500.

All federal loan programs define anacademic year as a period when a full-

time student is expected to completedthe equivalent of at least two semester,two trimester, three quarters, 24semesters hours, 36 quarter hours or 900clock hours. Check with your schoolfinancial aid counselor to determinehow your school year is measured.

Stafford loan fund', are disbursed toschools and released to students in two

or more payments after enrollment and

satisfactory academic progress havebeen verified. Origination andinsurance fees arededucted. These feesare subject to change.Lenders will offer a

graduated or incomesensitive repaymentschedules.

If you are

enteringthe firstyear of an

undergraduate

education program and have notpreviously received a student loan, yourschool may not release the firstinstallment of your Stafford loan until30 days after the first day of study.

Monthly Stafford loan payments beginsix months after graduation, droppingbelow half time or withdrawing fromschool. In certain circumstances, aborrower may be eligible for loanrepayment deferment or forbearance.(Check with your lender.)

To qualify for a Stafford loan, a studentmust be:

a U.S. citizen/national, permanentresident or an eligible noncitizen(only a U.S. citizen or national is

eligible to receive a Stafford loan forstudy at a foreign school);

enrolled or accepted for enrollment atleast half time in a degree or

certification program at a college,vocational school or correspondence

program approved by the U.S.Department of Education and theCalifornia Student Aid Commission;

a California resident attending eitheran approved institution in California,outside the state, or in anothercountry; or a resident of another stateattending an eligible Californiaschool; and

able to demonstrate financial need

determined by the school in accor-dance with federal regulations.

And must also:

have Pell Grant eligibility deter-mined;

not be in default on a student loan orowe a refund on any state or federaleducational grant;

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have completed U.S. Selective Serviceregistration requirements;

possess a valid Social Security

number; and

be making satisfactory academicprogress according to schoolstandards.

Federal Unsubsidized Stafford Loansfor Middle-Income Borrowers

Regardless of income, students mayapply for an unsubsidized loan. Withthe exception of demonstrating financialneed, the unsubsidized loan terms andconditions are the same as for theStafford Loans, such as loan limits,deferments and interest rates. Studentspay the interest during in-schoolperiods. Interest accruing during theseperiods can be capitalized as agreed byborrower and lender. Borrowers pay acombined.origination and insurancepremium fee, which is deducted by thelender from the amount borrowed.

Federal Supplemental Loans forStudents (SLS)

The Supplemental Loans for Students(HS) programs is available to graduate,professional and independent under-graduate students (also dependentundergraduate students underexceptional circumstances asdetermined by a financialaid officer). The SLS

interest rate may beadjusted annually `ss

up to 11 percent.

Am/

1 2

Lenders or schools can tell you thecurrent SLS interest rate.

The annual maximum SLS loan limit is:$4,000 (full academic year); $2,500 (2/3of academic year); $1,500 (1/3 ofacademic year). Borrowerscannotexceed a cumulative maximum of$20,000. A loan origination fee and aninsurance premium are charged. Feesare subject to change. Loans aredisbursed in two or more payments.

For loans first disbursed on or after July1, 1993, undergraduate students mayborrow $4,000 a year for the first twoyears of study and $5,000 yearly after

completing two years of study for anundergraduate aggregate amount of$23,000. Graduates may borrow $10,000a year for an aggregate of $73,000 for

graduate study (including loansreceived as an undergraduate).

Loans first disbursed on or after July 1,1993 are prorated according to programlength. For the first and second year ofstudy a borrower may borrow $4,000 (afull academic year); $2,500 (2/3

academic year; $1,500 (1/3 academicyear). Borrowers who have completedtwo academic years may borrow $5,000(full academic year); $3,325 (2/3 of anacademic year); $1,675 (1/3 academicyear).

See your lender or counselor for details.NOTE: Loan limits apply to the SLSprogram nationwide. Actual loanamounts may not exceed the cost ofeducation minus other financialassistance you receive. You must wait atleast nine months from the start of thelast loan period to receive an additionalloan. Graduate/Professional's aggregate

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loan limit includes any loans received asan undergraduate.

If you are entering the first year of anundergraduate education program andhave not previously received a studentloan, your school may not release thefirst installment of your SLS loan until30 days after the first day of study.

SLS eligibility is limitPd for a dependentundergraduate based upon the financialaid administrator's _eview of thestudent's and parents' financialinformation and other extenuatingcircumstances.

Students who have not completed thefirst year of undergraduate study at theinstitution where they are currentlyenrolled, regardless of programscompleted at other institutions, aresubject to reduced annual SLS loanlimits when enrolled in programs of lessthan a full academic year in length.

SLS loan repayment begins within 60days of receiving the loan. However, ifenrolled in an eligible program at leasthalf time, borrowers may defer paymentof principal and pay the interest only, ordefer payment of both principal andinterest and have the interest chargesadded to the principal. Check with yourlender about deferment options.

To qualify for a SLS loan, a studentmust:

meet all Stafford loan qualifications,

with the exception of demonstratingfinancial need;

have Pell Grant and Stafford loan

eligibility determined first (if anundergraduate);

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have obtained a high school diplomaor equivalency certificate (General

Education Development score orGED); and

possess a valid Social Securitynumber.

Federal Parent Loans forUndergraduate Students (PLUS)

The Parent Loans for UndergraduateStudents (PLUS) program is for parentswho wish to borrow for their depen-dents. The parent is responsible for therepayment even if the dependent'seducation is not completed.

The PLUS loan interest rate is variableup to 10 percent. The annual maximumPLUS loan limit is $4,000 per eligible

dependent student with a cumulativemaximum of $20,000 per eligible

dependent student. A loan originationfee and an insurance premium arecharged and are subject to change.Loans are disbursed as co-payable toparents and schools and are sentdirectly to the school.

Parents must begin repayment within 60days of final disbursement of the loan.If the parent or the student is enrolled atleast a half time, payment of theprincipal or both principal and interestmay be deferred. Check with yourlender for addifional deferment options.

After July 1, 1993, parents who do nothave an adverse credit history mayborrow up to the total cost of thestudent's education, minus any otheraid received by the student. Check withyour lender or counselor for details.

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To qualify for a PLUS loan:

parents must be California residentsor, if residents of another state,dependents must be enrolled oraccepted for enrollment at least half-time in a degree or certificateprogram at a college, vocationalschool or correspondence program(correspondence courses must be partof a program leading to an associate,bachelor, or graduate degree) inCalifornia and approved by the U.S.Department of Educafion and theStudent Aid Commission.

if both parents and dependent areCalifornia residents, the dependentmust be enrolled or accepted forenrollment at least half-time in aneligible program at an approvedschool in California, another state or aforeign country; and

parents must, in addition to filing thePLUS application/promissory note,undergo a credit check. A lender maydeny a PLUS application due to badcredit.

Parents as well as dependents mustmeet the following qualifications:

be a US. citizen/national, permanentresident or an eligible noncitizen(only a U.S. citizen or national mayreceive a PLUS on behalf of the

dependent for study at a foreignschool); and

not be in default on any educationalloan, or owe a refund on any state orfederal educational grant.

In addition, dependents must meet eachof the following:

be making satisfactory academicprogress as determined by the school;

possess a valid Social Security

number; and

have completed U.S. Selective Service

requirements.

Federal Consolidation Loan Program

The loan consolidation program makesrepayment easier for students with large

or unmanageable educational loan

payments. After January 1, 1493,

consolidation lenders pay off existingstudent loans and make a new loan

having a single monthly payment withan extended repayment term of up to 30

years. Married borrowers may consoli-

date their individual loans under asingle payment schedule.

To be eligible for loan consolidation,

you must:

have borrowed $5,000 ($7,500 or more

after 7/1/93) or more in FederalStafford, Federally Insured StudentLoans (FISL), Federal SLS, Federal

Perkins Loans, Federal PLUS(student), Federal PLUS (parent loansmade after October 17, 1986) or the

Health Professions Student Loan(HPSL) programs;

be in the "grace period," already inrepayment, or a defaulted ordelinquent borrower who will enterrepayment through consolidation;

have no other consolidation applica-tion pending or in process at another

lender; and

have not been enrolled at least half

time at an eligible institution duringthe previous four months.

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The consolidation interest rate is at least

9 percent and not more than 12 percent

per year based on the weighted average

of the loans being consolidated. Eachlender offers its own repayment optionsand plans. Some plans may have level

payments for the life of the loan; require

interest-only payments for period of

time; involve graduated payments; or

require income-sensitive paymentswhich begin low but increase later.

There is no insurance or origination fee

on a consolidation loan.

The benefits of loan consolidation aredifferent for each borrower. Generally,monthly payments are less, butborrowers often pay more interest over

the course of the extended repaymentperiod. Consolidation offers fewerdeferment options and borrowers areresponsible for paying all accruedinterest charges when principalpayment is deferred.

More information about the FederalFamily Educational Loan Programs is

available from campusfinancial aid offices,participating lenders orthe California Student AidCommission, CentralInquiry Unit,P.O.Box 510845,

Sacramento, CA

94245-0845,

(916) 445-0880.

Planning Your Student Loan Repayment

Plan your finances now to avoid futurestudent loan problems. Set up a budgetand determine payments using theMonthly Repayment Worksheet below.It assumes a 10-year (120-month)

repayment period, the maximumallowed by law. The total minimumpayments during any 12-month periodfor any student loan is the greater of$600 or the amount of interest due.Repayment estimates also vary due tovariable interest rates on Stafford (forfirst disbursements madeon or after10/1/92) SLS and PLUS loans which areadjusted annually.

To complete the worksheet, find theinterest rates of any loans you may havenow. Enter the loan amounts and theadditional amount, if any, you plan toborrow. Then, multiply each loan by therepaymen: factor. Finally, add all themonthly payment amounts together toestimate your total month payment. Forexample, the formula for $15,000 inConsolidation loans at 10 percent

interest would be: .013215 x $15,000 =$198.22 in monthly loan payments overa 10-year repayment period.

Monthly Student Loan Repayment Worksheet (sample)

Interest Applicable Federal RepaymentRata Loan Factor

LoanAmount

MonthlyPayment

7% Stafford .011611 x $ = $

8% Stafford .012133 x $ $

9% Stafford/Unsvbsidized/SLS/ .012668 x $ = $PLUS/Consolidation

10% Stafford/SLS/PLUS/CONS. .013215 x $ = $

11% SLS/PLUS/CONS. .013775 x S. = $

12% SLS/PLUS/CONS. .014347 x $ = $

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Total estimated monthly payment for ail student loans $

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Budgeting Your Dollars

Completing the Income/ExpensesWorksheet below will help you developa repayment plan. The Estimated EntryLevel Annual Salaries chart on Page 16

can be used to calculate a projectedmonthly income. To estimate futuresalaries and costs, multiply currentfigures by an annual 3 rercent cost-of-living increase.

From the Monthly Student LoanRepayment Worksheet, enter the totalrepayment figure (include any otherstudent loan payment such as a Perkins

loan) on the appropriate line of theincome/expenses worksheet. Subtracttotal expenses from projected monthlyincome to determine if you will have a

manageable budget.

If you have little or no extra money(disposable income), thrn redo yourbudget. You may have to adjust howmuch you will borrow or cut downother personal expenses. Be realistic;create a budget you can live with, one

that makes student loan repaymentpossible.

Income/Expenses Worksheet (sample)

Projected Net Monthly Income(Gross income less 35% for estimated taxes)

Estimated Living Expenses:Housing and Maintenance(includes rent, mortgage,utilities and furnishings)

Transportation(includes auto payments,insurance, gas, repairs, etc.)

Food

Clothing and Personal(incl. child care, entertainment)

Medical

Savings

Student Loan Repayment

Other

TOTAL EXPENSES

Disposable Income (4-)(Projected Net Monthly Income minus Total Expenses)

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Estimated entry level annuai salaries

Position Degree Annual Gross Salary

Accountant

ArchitectBookkeeperChemist

College/University Faculty

CosmetologistJental HygienistDentist

Engineer

Health Services ManagerHotel ManagerLawyerLibrarian

Mathematician

Nurse

Occupational TherapistPharmacistPhysical TherapistComputer ProgrammerPsychologist

ReporterSchool CounselorSecretarySocial WorkerSpeech PathologistTeacher

Travel Agent

Truck Driver

Bachelor'sMaster's

Bachelor'sMaster'sDoctorate

InstructorAsst. ProfessorAssoc. ProfessorProfessor

Bache loesMaster'sDoctorate

Bachelor's

Bachelor'sMaster'sDoctorate

AssociateRNLPN

Bachelor'sMaster'sDoctorate

Bachelor's

ElementarySecondaryBeginnerExperience

$26,60031,10036,00017,80039,00045,00055,00026,10034,60041,80056,200

2,600 24,60017,50080,00031,90036,20050,40040,200 - 96,00042,300 - 56,00047,00025,300 - 27,100

29,50032,40042,80019,40016.20 - 29.1Whr.17,400

30,50041,30017.01 - 20.52/hr.34,00017,00025,00049,90020,400 - 38,90017,700 - 49,30024,000 - 32,90023,000 - 36,00025,00032,40033,20014,00024,00011.60 - 13.50/hr.

(SOURCE: OCCUPATIONAL OUTLOOK HANDBOOK 1992-93)

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Initiating Student Loan Repayment

Repayment of a federal Stafford loanbegins six months after you drop belowhalf-time student status. This graceperiod gives vou time to find work andprepare for loan repayment. One to fourmonths before your grace period ends,the lender will send you a repaymentschedule listing the unpaid principaland interest, the monthly paymentamount, and the payment due date.

SLS and PLUS loans have no graceperiod; repaymei it begins immediatelyupon disbursement. Interest paymentson an unsubsidized Stafford loan beginimmediately after the loan is fullydisbursed or may be added to the

principal balance.

Regular payments for an unsubsidizedStafford loan begins six months afterthe borrower ceases to carry at least one

half the normal full-time school

workload.

Payment deferment is possible if youcontinue as a full or half7time studentor if you serve with a group such asVISTA, the Peace Corps or on active

duty in the Armed Forces. You also areeligible for a deferment if you aretemporarily totally disabled or have a

dependent who is temporarily totallydisabled and needs your care. Ifunemployed, but conscientiouslyseeking work, vo- inay have loanpayments postponed for up to twoyears. Check with your financial aidoffice or lender for additional details.

For disbursements made on or after July

1, 1993 to "new borrowers" (borrowerswho have no outstanding balance ofprincipal or interest owing on anystudent loan at the time of application)

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deferments are reduced to: in-school,

pursuing at least half-time study,approved graduate fellowship,approved rehabilitation trainingprogram for the disabled; unemploy-ment (up to 3 years); and economichardship (up to 3 years).

If you do not qualify for a defermentand cannot make payments, request ahardship extension or "forbearance"from your lender. Under this hardshipextension, payments may be tempo-rarily suspended, reduced or limited tointerest only. Interest on the loancontinues to accumulate during periodsof forbearance. Each lender has its own

forbearance policy.

Request the appropriate deferment orforbearance forms from your lender.Until you receive written approval,continue making payments. Defaultingon your loan will make you ineligible.

Keep copies of all correspondence withyour lender.

If you have large debts or haveborrowed from several educational loanprograms or ienders, you may considerloan consolidation. Check with yourlender for deferment and forbearanceinformation.

Student Loans Can Be Sold orTransferred

Secondary markets are importantpartners in the student loan program.By purchasing student loans from theoriginal lenders, lenders are providedwith money to make new educationalloans.

When a lender transfers or sells yourloan, the new holder notifies you bymail using the last address your originallender had on record. If you have notkept the lender informed, you could beunaware of a new holder or servicer.Your loan could become delinquent andgo into default. R is crucial that youalways inform your lender or any newholder in writing of an address changewithin 10 days.

Some lenders and most secondarymarkets contract with loan servicingagencies to handle student loancollection. If a lender assigns your loanto a servicer, you must now makepayments to the servicer. The serviceranswers all inquiries and updates yourfile with information provided by youor your school.

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Tips on Managing Student Loans

Here are some tips on managing yourloans:

Apply to the same lender each timeyou borrow. This increases the chanceof combining your payments. If youborrow from different lenders, youwill have multiple monthly pay-ments.

If a lender sells your loan to asecondary market, request the samesecondary market for any later loans.This lets you make payments to asingle holder.

When making payments to more thanone lender, ask each lender to prorateyour monthly payments based on thetotal outstanding debt. This reduceseach payment amount.

Inform all lenders/holders in writingwithin 10 days of any changes in youraddress and enrollment status.

Federal Student Loan Program Lenders

The following lenders are active participants in the Federal Family Educational Loan Program:

American Baptist Credit Unicn*

Bank of America"

Bank One, Merrillville*

Bank of Stockton

Calif. Higher Education LoanAuthority***

Chase Manhattan Bank*

Chevron Federal Credit Union

Citibari:: and Citibank Federal SavingsBank"

Educaid*

Exchange Bank

F & A Federal Credit Union*

Farmers & Merchants BPnk

First Interstate Bank*

The Golden One Credit Union*

Great Western Bank*

Hughes Aircraft Empl. Fed. Cr. Union*

LA Water & Power Employees CreditUnion*

Litton Employees Federal Credit Union*

Lockheed Federal Credit Union*

Manufacturers Hanover Trust*

Marine Midland Bank (EFSI)*

Methodist Ministers Federal CreditUnion

Mission Federal Credit Union*

Mitsui Manfacturer's Bank

Monterey Federal Credit Union*

Napa Valley Bank

Nazarene Federal Credit Union*

New England Education MarketingCorp.*"

Norstar Bank of Central New York"

Northern California Latrivan Cr. Union*

Orange County Teachers Federal Credit

Union*

Pan American Bank

Provident Central Credit Union

Sacramento Savings Bank*

Safe Ainerica Credit Union

Security Pacifk State Bank*

Sierra National Bank

Silverado Federal Credit Union*

Stockton Savings & Loan

Student Loan Marketing Association*"

Tucoemas Federal Credit Union

US. Bank of California*

Union Bank

University Credit Union

Valley National Bank of Arizona*

Ventura County National Bank*

Wells Fargo Bank

Westwood Student Federal CreditUnion

Note: * Participates in Stafford, SLS, and PLUS programs.** Participates in the SIS, PLUS, and Consolidation programs.*** A secondary market which buys Stafford, SLS, PLUS loans; also offers Consolidation

loans.

This list does not indicate those lenders who participate in the Unsubsidized Stafibrd loan program.

Borrowers should contact their specific lenders to determine unsubsidized loan participation.

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Glossary of Student Loan Terms

Anticipated Completion Date: Theexpected graduation date from a degreeor certifi,:ation program and the dateused to determine when your first loanpaymmt is due. Changes should bereported to the lender.

Cost of Attendance: The total amount itcosts to attend school. This coverstuition, fees, books, supplies, transporta-tion, room and board and othernecessary expenses.

Default: Failure to make schedule loanpayments or otherwise honor the termsof the loan. Defaults are reported tocredit bureaus and will damage yourcredit rating.

Deferment: A period(s) during whichpayment of principal on a loan ispostponed and interest subsidypayments are made by the federalgovernment.

Disclosure Statement: Statementprovided by the lender, detailing theactual cost of a loan, including the

interest rate and any additional financecharges (e.g. insurance premium fee andloan origination fee).

Federal Interest Subsidy: The loaninterest paid by the federal governmentto a student loan lender while thestudent is in school or qualifies for a

deferment.

Forbearance: An arrangement at theoption of the lender to delay principaland/or interest payments if you arehaving financial difficulties.

Grace Period: A period following theend of at least a half-time enrollmentstatus when no loan payment is

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required. Stafford and unsubsidizedStafford loans have grace periods; SLS

and PLUS loans do not.

In-School Verification: A document toverify current enrollment status so aloan is not put into repayment. Staffordborrowers who transfer schools beforethe end of a grace period must providetheir lender with proof of enrollmentfrom their new school.

Insurance Premium: A fee paid by theborrower to guarantee the lenderagainst loss if default occurs.

Interest The amount of money whichmust be repaid in addition to the loanprincipal. Interest rates vary and arecalculated as a percent of the amount

borrowed.

Origination Fee: A charge which offsetsthe government's cost of subsidizing the

loan.

Principal: A sum of money owed.Interest charges are made on theprincipal, and both must be repaid.

Promissory Note: A legally binding .

contract between the lender andborrower in which the borrowerpromises to repay the amount bor-rowed.

Repayment Schedule: A form providedby a lender when a student arrangespayment. It lists the amount borrowed,the amount of monthly payments andwhen payments are due.

Checklist for Student Loan Boirowers

Before You Apply for a Student Loan ...

0 Check your finances. How much can you and your family contribute? Can youwork part time to reduce the amount you must borrow?

CI Select a school wisely. Apply to the school that offers the best academic orvocational program for you. Ask for information on costs, graduate rates, jobplacement, faculty and financial aid policies.

0 Consider all types of financial aid. Check with the financial aid office to determineif you qualify for aid. Grants and scholarships need not be repaid, but loans mustbe paid back in full.

If You Must Borrow ...

CI Limit your borrowing. Borrow only what you need to meet educational expenses.

LI Select a lender. If you borrow more than once, stay with the same lender. This willmake repayment easier.

0 Be aware of penalties for defaulters. Defaulting has serious consequences,including loss of future financial aid, monthly payment options, and federal or statetax refund. Your credit rating will also be damaged.

Manage Your Loan ...

0 Read and keep copies of all loan documents. Maintain a file of all correspondencewith your lender and the school regarding your student loan.

LI Inform your lender. To avoid default, notify the lender within 10 days of a changein your name, permanent address, school, enrollment status, or graduation date.

0 Arrange repayment. Don't wait for the lender to contact you; write and request acopy of the repayment schedule.

C3 If you cannot make a payment, request a deferment or hardship forbearance.

L-80B/150K

January 1993

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