END · Web viewEvery single year the interest rate for a federal student loan can change. Congress sets those – not the department. So don’t get mad at me if they get higher,

PSC-ED-FSA-TISDCoordinator: Christal Simms

6-2-16/3:49 pm CTConfirmation #7740338

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PSC-ED-FSA-TISD

Coordinator: Christal SimmsJune 2, 20163:49 pm CT

Operator: Welcome and thank you all for standing by. All participants are in a listen-

only mode all throughout the duration of today’s conference call. Today’s call

is being recorded. If you have any objections, you may disconnect at this

point.

Now I’ll turn the meeting over to your host, Mrs. (Claire Lueker). Ma’am you

may now begin.

(Claire Lueker): Thank you so much. Good evening everyone, my name is (Claire) and today

we’re going to talk about some of our federal student loan repayment plans

and we’re also going to go through the repayment estimator.

Now I know that loans and repayment can be a very daunting topic. A lot of

times when we think about student loans or repayment we think about all the

horrible scary things. Like debt and bankruptcy and default, but hopefully

today I’ll go through all of the plans and give you a lot of information so you

never have to worry about those scary words and hopefully I’ll lesson the

stigma of talking about federal student loans.



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So today I’ll go over some of the basics of student loans, but of course, dive

deeper into talking about the repayment options that we have here at Federal

Student Aid and, of course, go through the repayment estimator.

Some of you may be wondering, what’s the repayment estimator? Well,

you’re just in luck, today we’re going to go through one of the features that

we have that really gives you an integrative look of putting in different

numbers, putting in your information in order to see what different repayment

plan may work best for you.

I’ll also give some information about postponing payments, the dreaded

default and discharging – forgiveness programs as well. And then I’ll leave

you with some federal state – federal student aid resources. So once this

webinar is over you can still have information if you have more questions.

So let’s get started by talking about the types of loans and, of course, loan

servicers. So the first thing you want to do, of course, is identify your loan. I

work for the Office of Federal Student Aid so today on this presentation we’re

going to talk all about federal student loans. However, there are private banks

and (SNT’s) that offer student loans as well. However, you won’t be able to

find those through our process – through the National Student Loan Data

System or, as we like to call it, NSLDS.

If you go to NSLDS.ed.gov, you will be able to see your whole federal student

loan history, but some of you out there might say, hey, what about my private

student loan history? I have federal student loans and I have private loans.

Well, if you want to know about your private loans you can check your credit

report, check in with the financial aid office and, of course, your personal

records as well.



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So we have a few different student loan programs at Federal Student Aid.

Some of you – I’ll kind of start with the FFEL program. We love acronyms

here - the FFEL program is the Federal Family Education Loan program. That

one ended on June 30, 2010. So if you borrowed loans starting July 1, 2010 –

it’s after that period, you’re in what’s called a direct loan program.

So for those of you who borrowed after, we’ll be talking about the direct loan

program. A lot of those are referenced, however, those of you who borrowed

before your loan may have been consolidated into a direct loan program. I

threw out a couple of big words there and some of you may be more familiar

than others. Don’t worry, I’ll break everything down in this presentation.

There’s also the Federal Perkins Loan Program. Some of you may have heard

that the Perkins loan is going through some changes. There was a while where

we announced that we ended new disbursements of it, but actually it was

reinstated for another year. The Perkins Loan as we know it may change in the

future, however, now there are new disbursements, but for those of you on this

line you’re interested in knowing about repaying it.

So most of you who have already borrowed Perkins Loans the new

disbursements and things aren’t relevant to you. You just want to figure out

how to pay them back – and we’ll talk all about that.

So on this chart here you can see right in the middle all of the federal student

loans – the Direct Federal Student Loans. So if we start at the top and go

around clockwise, we have the Subsidized and Unsubsidized Stafford Loans

or Direct Loans. Those terms are used interchangeable so the Stafford Loans

were during the FFEL Program, but they’re also used now during the Direct

Loan Program. So some of you may – will likely have Direct, either

subsidized or unsubsidized loans.



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If you have a subsidized loan, what that means is either the government

covered your interest while you’re in school, during a grace period or when

you’re in periods of deferment. We’ll talk about deferment a little bit later in

the presentation.

If you have an unsubsidized loan, that means the moment you take out that

loan and step on campus that interest starts accruing and it just continues on.

Also, we have the Plus Loans – we have the Parent Plus Loan and the Grad

Plus Loan. Parents can take out loans on behalf of their student and, no,

parents you are not able to transfer that loan back to your student. That is a

loan that you, the parent, are responsible in paying back. And, of course, Grad

Plus Loans where you can take out extra money in addition to those Direct

Loans as well for students in grad school.

We also have the Perkins Loan which I mentioned earlier. And then

Consolidation Loans. So to consolidate means you take a bunch of your

different loans and you put them together in one loan.

So, for example, let’s say you have a Direct unsubsidized loan, you have a

Perkins loan and you have a little bit of a Grad Plus load because grad school

is expensive, but once you’re done you’re graduated, congratulations, but just

to make it easier on yourself you want to put all of those loans together so it’s

just one loan with one interest payment, one loan servicer – that’s what’s

called a consolidation loan and we’ll talk more about that as well.

So I mentioned your loan servicer – having one loan servicer. A loan servicer

is a company that works on behalf of us here at the department to help collect

your payments, answer your questions and really to work with you in

determining what the best repayment plan is for you. So today I’m going to



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tell you all the options that we have and, of course, show you the repayment

estimator to show you what plan may be most attractive to you. However,

your loan servicer is the one who can access your file and really help you

through the process. They’re the ones you’ll want to communicate when you

have any questions about your loan in repayment and different things like that.

Now here is a list of all of the loans servicers that work with our federal

student loans. Some of you may be looking and see yours on there. I see mine

there. I actually work with Fed Loan Servicing and I have a really good

experience with them. They email me, I can go online and log into their web

portal and check my information there. I can see how much interest is piling

up, I can see how much I’ve paid, when my payments are due and all of that

information.

I actually used to be with Nelnet and Nelnet was really cool because they had

a chat option. So the different servicers offer different ways of

communicating, but all of their purpose is the same – to help you repay your

federal student loans.

So now that we’ve discussed the basics, let’s jump right in and talk about

different repayment plans and talk a little bit more about consolidation as

well.

So we have two major types of repayment plans – there is one based on

income – there is some based on income and there’s also some based on your

loan debt. So think about it like this, if you have $10,000 worth of student

loans. You may want to pay that off based on your loan debt, which means

just every month you have a payment that will pay off that entirety of the loan.



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However, let’s say that you want to do it based on your income. You make

$100,000 a year and so you either have different options on how to pay it back

based on your discretionary income. And, as you can see, we have a lot of

options here. So I’m going to show you all the charts. Don’t get overwhelmed,

I know there’s a lot of numbers there, but I promise once I explain it it’ll

really give you a lot of information in describing the different types of plans

and what may work best for somebody.

So let’s start with (Billy Borrower) as an example. So (Billy Borrower), he

has $40,000 in Direct loan debt with a 6% interest rate. His income is $35,000

a year, he’s single and ready to mingle and he lives in Colorado – living it up

in Denver. So let’s say his income increases at the rate of 5% a year. So every

year (Billy Borrower) is moving on up in the world. So this is kind of his

income profile. Now, let’s look at all of the plans we mentioned and kind of

see the different options that (Billy) has.

As you notice, the last four plans I put a little asterisk by to show you that

those are the income driven plans. Those are the plans based on (Billy

Borrower)’s income. The first four are based on the amount of the loan. So

let’s get started.

As you can see in the first column we have the repayment plan named. The

second column shows the initial payment – that’s the first payment that he’s

paying. The next column – final payment. It shows what the final – literally,

what the final payment will be. Then, of course, next the time to repay – the

amount of time it’ll take to pay off that loan in entirety and then at the end, as

you can see, it says total paid.

I’m sure probably the most shocking thing about this chart is the total paid

versus what he actually borrowed. If you look back at the top, (Billy



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Borrower) took out $40,000 in loan debt. However, in that total paid column

as you often unfortunately see, none of those numbers are close to 40 and

that’s because of interest. So keep that in mind when you’re taking out student

loans, to only borrow what you need because that interest will definitely pile

up. But still, now let’s go back and look at the initial payment.

Let’s say starting out with (Billy)’s $35,000 income his goal is to pay the

lowest amount possible. So in that case, as you can see, picking one of the

income driven repayment plans might be most favorable to (Bill). As you can

see here, by doing the Pay as You Earn Plan or the Revised Pay as You Earn

Plan, his payment only starts out at $143 a month. That seems affordable.

However, as you noticed, the total paid is a little bit higher versus doing the

standard plan. As you can see, the standard plan is literally just what it sounds

like. It’s what you pay every month to just pay off your principle interest and

pay off the total loan amount. And that payment is – does not change. The

initial payment of $444 is the exact same as the final payment and that

standard payment plan is always a 10-year plan. But let’s see that $444, that’s

a little too much. But let’s say he says, okay, let me look at the graduated plan.

The graduated – a lot of these names sound just like they are. So as you can

see, the initial payment is $254, but the final payment is $762. That’s because

as time goes on the payment gradually increase. The theory behind this is

because (Billy)’s income is going to gradually increase he can therefore afford

more of the payment. And, as you can see, it still gives him 10 years to repay

it, but because we’re doing the graduated plan he starts at a lower amount. A

little more interest piles up and so the total paid is a little bit more than a

standard.



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The Extended – the Extended is just like it sounds. You start with an amount,

however, you have more time to pay it off. So, of course, that lowers your

payment, as you can see the $258 versus the standard payment of over $400.

And, yes, 25 years to pay it, but as you can see adding that extra time

definitely adds the extra interest and the total paid is the most expensive out of

all the options.

And the Extended Graduated is literally a mix. It’s the little baby between

Graduated and Extended, whereas the initial payment increases – the initial

payment increases over time and you also have more time to pay it off. And,

as you can see, actually that is the most expensive one because not only is

your payment starting low and increasing, but you also have more time to pay

it off. So keep that in mind when picking your payment – when you’re

thinking which one might be best for me.

Also keep in mind that you may start in one payment, but – in one plan and

then realize, hey, my income changed a little bit more than I thought – or I lost

my job and now I need help and I need to be in a different plan. Keep that in

mind. You have a lot of options.

And, as you can see, these different income-driven plans, I’m going to go a

little more in-depth with those. Most of us who are just starting out in the

career field – those are the most attractive to us because those are the ones that

help us maintain our lifestyle and not having a very large payment. So I’m

going to go in depth between our newest plan, the Revised Pay as You Earn,

Pay as You Earn, Income Based and Income Contingent – try to say that five

times fast.

So the income driven plans – as I mentioned, remember these are the plans

that are based off your discretionary income. Not necessarily the amount of



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the loan, but the amount that you make – or discretionary income. So as you

can see here, don’t get too overwhelmed by my chart.

As you know, I’m going to break it down for you. If you look to the left at that

first column, you can see that we have different rows. The first row is how the

monthly payment is calculated, when will your loan be forgiven, is there a

payment cap and is your spouse’s income calculated when creating your

payment. That’s actually a hot button issue. I’ve heard of couples who thought

that they, you know, were trying to distinguish when to get married or not and

trying to be strategic about it so they could make sure they have the lowest

payment possible. So we’ll talk about each of these with each plan.

So the revised Pay as You Earn Plan, your monthly payment is calculated

based on 10% of your discretionary income - similar to the Pay as You Earn

Plan. And question of when your loan will be forgiven – after a certain point,

yes, your – if you have a remaining balance of your loan it will be forgiven,

but be aware that that forgiven amount may be taxed. So make sure that you

talk to your loan servicer and do research about that extra amount that is

forgiven to insure that there aren’t any tax penalties because for some of these

plans there are.

Is there a payment cap? So, yes, for some of the plans, as you can see, the Pay

as You Earn and the IBR – that income based repayment – there’s a cap. Your

payment will never be higher than your standard repayment amount. So I’m

going to go back real quick and show you. Remember that standard payment

amount? As you can see for (Billy Borrower) it was 444. So that – the plans

down here, that Income Based Repayment Plan and that Pay as You Earn

Plan, those amounts will never be higher than that Standard Plan.



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All right, and in terms of your spouse’s income. So, as you can see, for the

repay plan, yes, your spouse’s income and loan debt are a factor. However, for

the rest of the plan only if you filed jointly with your partner will that be a

factor. So keep that in mind as well. You do have the option to file taxes – of

course, most of you know, - as married by filing separately. So keep that in

mind when trying to pick the plan.

There’s a lot to keep in mind. I don’t want you to get overwhelmed and that’s

why I’m trying to give you all the information. I mentioned earlier – I forgot

to mention earlier, but some of you already are asking your questions in the

Q&A box. So as I’m talking if you have questions please feel free to go

ahead, add your question in the Q&A box and I can always go back to a slide

and we’ll have – my colleague is answering questions in the box as well.

So (unintelligible) borrowers. So a lot of you may want to know, okay, those

income based – income driven plans sounds good, but do I qualify? Who

qualifies? What programs qualify? So here is some information about that.

Now more importantly than anything, I want you to know that StudentAid.gov

you can find full detailed information about each of these plans of who is an

eligible borrower, but I’ll quickly talk about each one who is eligible.

So for the Income Contingent Plan – that ICR. This is actually the only

income driven plan where borrowers with Plus Loans – Parent Plus Loans

specifically (unintelligible) qualify. Those Parent Plus Loans that only that

they have consolidated with a direct consolidation loan program. Keep that in

mind. Only that they have consolidated with a direct consolidation loan

program for those plus loans and I’ll repeat – I mentioned this earlier, but plus

loans that are taken out by parents – those Parent Plus Loans – they cannot be

transferred to the student. Keep that in mind.



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All right, also I mentioned earlier the FFEL programs – the ones that you

could get before January – June 30, 2010. You can consolidate those into

Direct Loan Programs too and those can be eligible, but without consolidation

those FFEL Loan Programs are only eligible in the IBR.

And keep in mind, as you can see here you see the debt to income ratio for the

IBR and the Pay as You Earn Programs. That’s because we don’t want you to

go into this program if your income is – your program is going to make your

loan payment higher than the standard payment. The point of going into an

income driven repayment program is to have your monthly payment lower

than the standard. We’re trying to help you along the process.

So if your debt to income ratio doesn’t work out to where your payment will

be lower than that standard payment then you wouldn’t qualify and the best

way to find that out – in addition to using the repayment estimator is, of

course, to call and discuss with your loan servicer.

All right, so the Pay as You Earn – as you can see that one as well there’s a

couple you need to be eligible. Basically all the Direct Loan programs makes

you eligible for these programs. It gets tricky when you’re talking about the

Parent Plus loan and, of course, the FFEL – the old loan program. However,

all the information about consolidation, which of course, I’ll talk to more

about is all available on StudentAid.gov as well.

This chart makes it a little bit easy to understand which – what qualifies for

what. So, as I mentioned, essentially students who take out any of these Direct

loans can qualify for any of the income driven programs. Unfortunately, the

Plus loan you take out as a parent you do not qualify unless, as you can see at

the bottom, you consolidate into the Direct Loan Program.



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So Income Sensitive Repayment Plan – this is different than the program that

I was talking about before for the Income Driven Payment Plan. The Income

Sensitive Repayment Plans are specifically for students who took out

themselves through the (unintelligible) program.

So this is a program for low-income borrowers. They’re not applicable for

those with the Direct loans, but all the other programs we talked about

because there’s enough. Right? There’s already four for those Direct loans.

And, of course, the payments can increase and decrease based on income.

It’s important that you do have a federal loan that hasn’t been consolidated

into a new Direct Loan Program and you’re still needing relief that you talk to

your loan servicer about an option that will work best for you. And for those

of you who said, well, I’m not really sure who my loan servicer is. You can

find out who your loan servicer is by calling our hotline at 1-800-4fed-aid, by

going to nslds.ed.gov or even by going to studentloans.gov as well to find out

who your loan servicer is. And they can really help you through this process.

So consolidation – you all heard me say this word a couple of times through

the presentation so far and here’s a graphic to show you exactly what it is.

Literally you can take all of your different loans and whether direct subsidized

or unsubsidized and make them into one big loan. So there are advantages and

disadvantages to that and we’ll talk about.

But the best way to make you kind of understand how that works is, let’s say

that you have a Direct Stafford loan at the interest rate – the new interest rate

actually of 3.76%. Let’s say you have a Perkins loan at 5% and you take out a

Grad Plus loan at the new rate of 6.31%. Now remember, you heard me say

the new rate. Every single year the interest rate for a federal student loan can



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change. Congress sets those – not the department. So don’t get mad at me if

they get higher, but also I can’t take the praise if they get lower. And actually

our 16-17 interest rates are lower than the 15-16 year. So that is a good thing,

but I can’t take the credit. So every year those change.

And let’s say you’re in school for four years. You’re done with school, but

now you have all these different interest rates for your three different loans for

your four different years and you had different loan servicers and you just

think this is too much and you just want to consolidate them and just boom –

just have one loan servicer, one interest rate and it just makes things a lot

simpler.

The great thing about consolidation is you heard me mention earlier when I

said there were a lot of income driven repayment plans that were contingent

on being in a Direct Loan Program. In a lot of ways, you can get into a Direct

Loan Program by consolidating other loans – by consolidating that Perkins

Loan or that Plus Loan. So it’s great. You may be eligible for more repayment

plans, however, there may be some drawbacks as well. There are some of you

who may lose different benefits because of consolidation.

One example off the top of my head I can think of is the Teacher Cancellation

Program through Perkins. If you consolidate that Perkins loan into a Direct

Loan you may not be eligible to get that teacher cancellation for Perkins if that

loan is consolidated. So that may be one reason why you don’t want to

consolidate.

Also, there’s – that may change your interest rate – we just don’t know what

it’s going to be and that goes back to the theme of this webinar is to talk to

your loan servicer to see what works best for you.



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On a related note, even for me, I’m in the income driven repayment plan.

When I first started out I was in the income based repayment. I was doing IBR

because I wanted the lowest one. However, the next year the Pay as You Earn

Plan turned out to be the best one for me as my income increased. So you

guys know what I did, I quickly switched plans and went from IBR to Pay as

You Earn.

And my recertification time is coming up because every year if you’re an

income driven program you need to submit your AGI, your tax information so

we can – so the loan servicer can determine which program is best for you. So

that time is coming up for me again and who knows, I may be in a new

income driven repayment program because of that.

So the point is, everyone’s situation is different and every year your situation

changes. So you want to make sure you’re really having that discussion with

your loan servicer to determine which is best for you. And a very important

note at the bottom here, private loans are ineligible for federal loan

consolidation.

I know there has been a lot of you on the call right now who have received

letters in the mail or even phone calls about private companies who are

offering to refinance or consolidate your loans, but always for a fee or a flat

rate or something else. Here at Federal Student Aid we will never charge you

to consolidate your loans. We will never charge you. It is a free service that

we do. Your loan servicers are working for you for free to help you repay your

loans.

So these private companies – they’re out there. Some of them are scams so

you need to be careful about that. Some of them may be legit, but why pay for

something when you can get it from Federal Student Aid for free and not



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question the legitimacy of the organization? But, for your private loans talk to

your bank or whoever the private lender is to determine your best repayment

options for that. Because, unfortunately, the Federal Student Aid – we only

work with federal loans in terms of consolidation and repayment.

All right, so now that you know all the student loan basics, we talked about all

the different types of repayment plans, let’s talk about some of the things you

can do to determine what’s best for you. So, of course, in addition to calling

your loan servicer, which is the best way, Federal Student Aid has a few

options – a few things you can do online – some self-service – to determine

what may be best for you and there’s two main things. We have a quick kind

of survey, if you want to call it, at studentloans.gov/repay. It’ll ask you a few

questions and they’ll tell you what may interest you, what may work best for

you – so we’re going to check that out and, of course, the Repayment

Estimator.

The Repayment Estimator is located on StudentAid.gov and literally what it

does is you put in all your numbers. It calculates and it tells you, just like the

chart I showed you earlier for (Billy Borrower), you personally get your own

(Billy Borrower) chart to show you with your own numbers and your own

loan debt what plan might be best for you.

And that whole best for you can vary. For some of us, best for you may mean

the lowest monthly payment. For others, it may be however they can get it

done the quickest and pay the least interest. And our best for you may change

as the years go on. So it’s really helpful to constantly be checking your

financial situation as well as your loan debt to see what might work best for

you.



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So let’s go ahead and check it out. All right, as you can see here the first thing

I will show you is our StudentLoans.gov page with the repay. So, as you can

see, I’ve been to this site before. So StudentLoans.gov/repay – we’re going to

go to that site and, as you can see, the first question it asks is, do you have

federal student loans? Why, yes I do. Did you take out your student loans

before 2011? No, I didn’t – for the purposes of this I’ll say no. Do you work

for the government of a non-profit? In this scenario I actually do. I work for

the federal government so I’ll click yes.

The first thing it tells me to do is consider an income driven repayment plan

because I could qualify for public service loan forgiveness. So this is

awesome. So now I already know I have two choices – I could have either

paid a repayment plan based on the amount of my loan or I could pick a

repayment plan based on my personal income. For the purpose of public

service loan forgiveness, and of course who doesn’t want to qualify for loan

forgiveness, they recommend that I do an income driven plan.

So now this is awesome. I can even get more information, see all the things I

need to do and now I’m prompted to go ahead and look up the income driven

repayment options and see which plan may work best for me. So it’s just a

quick and easy way to and kind of just steers you in the right direction.

So - but let’s go back and say, yes, I did take out loans before 2011 – for those

of you who took out loans – and then, no, I do not work for the government.

Now they ask me questions. Have you ever missed a student loan payment

because you couldn’t afford it? Let’s say, no, I haven’t had any problems thus

far. Do you want to lower your student loan monthly payment? No, I’m a big

baller (unintelligible) my payment. I’m going to click no.



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So, all right, they’re telling me I have some options here. I can consolidate my

loans – because I mentioned I had borrowed before 2011 they’re thinking,

hey, she may have some FFEL loans, maybe she’ll want to consolidate with

our new loans and also direct debit. Direct debit is if you’re paying your loan

early or paying more than what’s actually due. Because I will be in the

situation where I just want to get it done – I just want to empty my entire

savings and pay off my student loans. But let’s go back – because most of us

are not in that situation.

So the question, do you want to lower your payment? Let’s say I click yes,

and look at that. They recommend income driven repayment and, of course,

loan consolidation. And as you can see here, it gives you steps on everything I

can do and my different options here as well.

So this little survey is pretty cool. You can kind of go in and play around with

it and kind of see where it leads you. This, I would say, is a great first step if

you literally have no idea where to start or if you have friends or family that

have questions this may be a great place to direct them to because it gives a lot

of information.

So let’s get out of this and jump right into the repayment estimator. So this is

– oh, well I’ll just show you right now. This is the landing page for

studented.gov. So if you have any questions about anything for the entire

financial aid life cycle – from preparing for college all the way to repaying

your loans – obviously there was a bunch on this webinar if you’re interested

in loan repayment. So I can go ahead and click right here and it’ll take you to

the page and it’ll tell you everything you want to know.

So I’m going to go down here and go right to the repayment estimator. It gives

some information about it, but let’s just go ahead and get started. So it gives



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you two options. You can log in with your FSA ID username and password

and do estimates based on your actual loan information or you can just

proceed without it. And for the purpose of this we’ll go ahead and I’ll put

some information in.

So, of course, the first thing they ask is enter your information. So – okay,

let’s see and the loan balance displays. All right and interest rate – if you have

any questions about those. And let’s go ahead and add that information in. So,

as you can see, they give you options to enter in any of your loan

(unintelligible). So let’s go ahead and say I have a Direct unsubsidized loan.

Does everyone remember what unsubsidized means? Unsubsidized is where

the government does not cover the interest. So as soon as you step on campus

that interest is popping.

However, remember that subsidized – we take care of the interest while

you’re in school, while you’re in your grace period and while you’re in

periods of deferment. So keep in mind, especially for those of you – most of

us on the call are already in repayment, but if you have children or friends that

are about to go into the process, you know, given the option of taking a

subsidized or unsubsidized loan, of course, make sure that they take out that

subsidized loan before any unsubsidized.

Okay, so back to it. Loan balance – let’s say I have $50,000 in unsubsidized

loans and I’ll add the new interest rates. Okay, now it’s asking about my tax

filing status. I’m currently filing single and – well not ready to mingle at the

moment, but single nonetheless. And my income – I’ll go ahead and add a

number in there. Okay and I’m clicking AGI just in case anyone has any

questions about that. All of these kind of tax terms sometimes get convoluted

for a lot of us, especially for all the recent college grads out there – shout out

to all of you, congratulations. Adjusted Gross Income – so let’s just go ahead



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and put in $45,000 and my current family size is 1. State of residence – I’m

representing the District of Columbia. And – wow, let’s calculate those

results.

And, as you can see here, isn’t this awesome? Literally, I told you guys. Just

like the chart said (Billy Borrower) had all those made up numbers. Now we

have a real chart. So imagine if all of you go ahead right now into the

repayment estimator and put in your numbers. You can figure out what’s best

for you. So now I’m looking at this. Okay, it’s telling me with the information

that I put in that my first monthly payment through a standard plan – or my

payment throughout the 10 years would be $500 - $501 to be exact. Okay, that

sounds a little steep for me. So let’s see what my other options are. A lot of

them look a lot lower, but looking at the total amount paid – that’s another

important factor.

So for me right now, okay, I’m pretty confident that my $45,000 a year is

going to increase so the graduate looks – the graduated repayment plan looks

good for me right now. It’s not too much more than the standard you have to

pay at the total amount. My first monthly payment is low – just a little more

than half of what the standard is expected of me and not so much interest

versus the other programs like, hey. But also looking down here at the IBR –

if you look at that, as I mentioned to you all, that was the first repayment plan

that I went into – that IBR program – because, look at that total amount paid.

Looking good, especially compared to some of the other ones.

So this is just a great example of a way you can go ahead and put in your

numbers and see what works for you. I’ll just do one more example and then

we’ll hop right back into the presentation.



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So let’s say we want to change some of this or even add another loan. Let’s

say I also have a Perkins loan and that Perkins loan is always 5%. And I can

even go down and change other things too. Let’s see what happens if I change

my marital status. And see, I change my marital status to married filing jointly

and now it gives me the option to add my spouses loan information. Let’s say,

I go ahead and add their information in – all right, as well as their interest rate

and calculate those results and see how things change. All right, everything –

okay, are we good? Let’s see.

Let’s refresh that page and see if those numbers update and of course they

didn’t. They brought me back to the beginning but, as you can see, this

process is really fast. So it will take no time at all to go ahead and add those

new numbers in, but that’s just an example of something that you all can do in

order to – really before you talk to your loan servicer or even after to take it

upon yourself to see the differences and see what works best for you.

I’m going to go right back into the presentation here. And if any of you guys

have questions, again, about where that was and that student repayment

estimator, you can go right into student loan – studentaid.gov/repay and you’ll

see it right there, that repayment estimator and you can put in your

information.

So now that we’ve seen how you can go in and use the studentloans.gov/repay

landing page to do that quick survey -- how to use the repayment estimator -- I

talked all about the different repayment options. And I also kind of gave you

some of the student loan basics; let’s talk about what happens once you’re in

the thick of repayment and you’re having issues paying your payment and

avoiding default and, of course, briefly talk about some of the discharge

options and forgiveness programs as well.



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Deferment and forbearance – those are words that are often used

interchangeably, but are pretty different. But essentially they’re similar

because they’re both situation where if you’re in deferment or forbearance

that can postpone your student loan payment. The one thing to keep in mind

though is another keyword of the webinar, interest. So let’s start with

deferment.

As you can see here on the screen there are a bunch of different options of

why you may qualify for a deferment. The most popular one is when you’re in

school. When you’re in school you’re not required to pay your student loans,

they’re in deferment, however, unless you have a direct subsidized loan or a

federal Perkins loan, that interest is accruing while you’re in school unless

you have a subsidized loan or a Perkins loan that interest – even though you’re

in deferment, the interest is piling up.

So a lot of times some people will recommend that while students are in

school they pay like a little monthly payment. They go ahead and get a jump

start on paying that interest off so once they graduate it’s, you know, it’s not –

they’re already ahead of the game. But that’s not the case for all of us – it

definitely wasn’t the case for me, but that is an option for some of you out

there.

But – so keep in mind that for forbearance that’s a situation where essentially

you’re temporarily – your payments are temporarily suspended or reduced.

However, that interest is still piling up so keep that in mind. You may have a

limited time to use forbearances as well so make sure you use them wisely.

Talk to your loan servicer before you decide to use a forbearance because in

reality what might be the case is that you just need to switch your repayment

plan and that may help if you’re having trouble making payments. But, of

course, as we all know life happens and you may be in a situation where



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neither deferment or forbearance (unintelligible) so make sure you discuss all

of your options and the consequences to what you decide with your loan

servicer.

So default – the dreaded default. Default occurs after you haven’t made a

payment on over 270 days. So before it’s to the point of default, definitely talk

to your loan servicer. Talk about deferment or forbearance and, of course, talk

about switching repayment plans. But if you do get to that point, just know

that these are some of the consequences of default.

Of course, I’m sure so many of you have heard that it can ruin your credit.

You’re not eligible to take out any more federal student aid. Your wages can

be garnished – so literally the government will take money directly from you,

which is painful. And there’s a lot of other things that can happen and you

don’t want to be – get to the point where you’re in default. But, if you do get

to that point, that doesn’t mean all is lost. You have three main different

options in getting out of default.

One of them is to consolidate. Consolidation is a way that you can – it’s

basically the quickest way to get out of default. What it means is just like with

how I talked about consolidation with the regular loans, you can do that for

getting out of default as well. It’s fast. The only problem with it is, once you

consolidate your loans and made the appropriate payment, your credit – it

doesn’t come off your credit report that you were in default. So that is one

major thing. Although consolidating your loan debt can get you out of – to get

you out of default fast, the problem is it stays in your credit report.

However, if you take another approach, the debilitative approach, that can

completely come off your credit report if you go through the process of

paying your payments over the 10 months. Of course it takes longer, but in the



Page 23

long run it may be worth it. It depends what your desired outcome is and what

you want to do and what works best for you in your personal situation. What I

would recommend, in addition to talking to your loan servicer, of course is

check out studentaid.gov to research the different information about the

different ways you can get out of default and what works best for you. You

can also call our hotline at 1-800-4fed-aid and talk to the default resolution

group. They can help give you advice and also help you through this process

as well.

And, of course, the third option, which is unlikely for most of us – whether

we’re in default or not – is just to completely pay off your loan. And, as you

can see, impractical for most, but it is an option in getting out of default.

Discharge, forgiveness and cancelation – so there are a few ways to get rid of

your student loans and one of them as morbid as it may be, is death. I’ve heard

of horror stories about certain private student loans where the private student

loan is transferred onto the spouse and next of kin. However, with federal

student loans when you pass your loans do with you so you don’t have to

worry about that.

In addition, disability – if you’re a person who has a disability that is

considered total and permanent and you aren’t able to have gainful

employment, then you can go to disabilitydischarge.org and provide

information in order to discharge all of your federal student loans. So keep

that in mind – disabilitydischarge.org or just talk to your loan servicer.

There’s different processes for veterans, specifically, than others, but

essentially the process is to provide medical documentation to show that you

have a total and permanent disability that will prevent you from having

gainful activity and employment to helping pay off your federal student loans.



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And in addition to discharge there’s also forgiveness and cancelation. So our

most popular loan forgiveness program is the public service loan forgiveness.

That forgives those direct loans. When I mentioned direct consolidation a lot

of times people love to consolidate their federal loans or their other Perkins

loans in order to qualify to have those loans forgiven under public service

loans.

Forgiveness – I’m not going to go into detail about public service loan

forgiveness today, but just briefly, if you work for the federal government – or

not even just the federal government – federal, state and local government and

non-profit – all of those organizations will qualify for this public service loan

forgiveness. Definitely go on our website and Google and look up all the

information about the program. Essentially, after 120 payments or 10 years

your loans will be forgiven with no tax penalty.

So keep in mind that this is an option if you’re interested in public service.

And also, teaching. We have a teacher loan forgiveness program and teacher

cancelation program. The teacher loan forgiveness program for direct loans

and federal loans and the teacher cancellation of the Perkins loan – this is an

awesome program, but you have to be teaching a certain number of years and

in a certain type of school. So if you want information about if you qualify for

this, make sure you visit our website and, of course, talk to your loan servicer

to see if you qualify.

So, just to review, we’re getting to the end here. I want to go through a

checklist briefly to talk about what you should be doing before you graduate

and after you graduate and you’re in repayment. As you can see here, of

course, number 1 is you want to review your federal student loan history and

you can do that by doing what? Yes, you guys are correct. It’s visiting



Page 25

nslds.ed.gov. That’s where you can view your federal student loan history.

Also, it’s really important to compare your borrowing history with other

communications you receive to make sure everything is matching up. One

way you can do that is by checking your credit report and, of course, talking

to your federal student aid office to see what else you’ve borrowed. In

addition to that, you want to make sure you get to know who your federal

student loan servicer is so you know who to contact if you need help or if

you’re not sure about something.

As I mentioned earlier, consider making payments while in school. That can

really help with the interest – it can make a huge difference. And, of course,

you have no choice, but to complete the mandatory exit counseling. Those of

you who may not have graduated yet, you remember that when you go and

take out student loans. You have to do entrance counseling. Well, when

you’re on your way out we want to make sure that you know your

responsibilities as a borrower so you do have to do that exit counseling as

well.

Al right, and after you graduate when you register for an online account with

your servicer there you can go into their portal and get all the information that

you need. Create a budget - literally this is exactly what I need to do now is

create a budget. I’m so bad at that, but I hope all of you guys do in order to

help manage your student loan payments and every other financial

responsibility you have in your life.

Consider consolidation – I’ve probably said consolidation about 20 times in

this last hour. It’s really important and there’s a lot of information that goes

into it. So make sure you consider and weigh your options and see if that’s

something that works for you.



Page 26

Select an affordable repayment plan – whether that be one of the plans that are

based on the amount of the loan or it’s based on your income – whatever is

best for you. You can also enroll in automatic payments. A lot of times if you

enroll in automatic payments that can actually lessen your payment by a

percentage or lessen that interest. So keep that in mind, it may be an option.

Talk to your loan servicer about this and see if that works for you.

Also, know your options if you can’t make a payment. Know about

forbearance and deferment and all of these things. Know that if you’re in a

standard payment – standard repayment plan and you feel like it’s just too

much even though your original intention was to get it done in 10 years and

that’s your goal. You want to be debt free by 30 and all of those things. It’s

okay – your life happens. Lives change. Know that you have options that you

can change plans. That you can get a forbearance. That you can talk to your

loan servicer about other options.

Also, find out if you’re eligible for forgiveness. I briefly mentioned the public

service loan forgiveness program as well as our teacher loan forgiveness

cancelation program, but there are other programs out there and you want to

make sure you do your research in knowing where, you know, you work or

different things that can make you eligible for loan forgiveness.

And, of course, deducting your student loan interest from your federal income

taxes and the 1098E tax form which, for me, is sent by my loan servicer can

give you information about how much of the percentage that you paid for loan

interest and that can be reduced. So that is a really important document and

you want to make sure that you’re getting all the money back that you deserve

for paying your student loans.



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And I’m going to leave you with a few resources, as I promised. Most

importantly, studentaid.gov. You can go right up there and to repay your

student loans and get all the information you need about all of the programs

that I mentioned.

Also, at studentloans.gov. This is where you’ll go to sign up for those income

driven repayment plans. To find out if you qualify and to get even more

information about that as well. And, of course, studentloans.gov/repay is

where I showed you where it had that quick questionnaire to kind of drive you

to see what information you might need and really to give you an initial

starting point about what student loan repayment plan option may be best for

you.

And, of course, nslds.ed.gov. You can log right in there and see your whole

federal student loan history.

So we have about 10 minutes left. So if there are any questions go ahead in

the Q&A box. Some of those questions have already been answered by my

colleague, but I’ll look in here and see which ones were asked and I’ll kind of

reiterate them. But, of course, for your specific scenario and specific questions

the best thing you can do is to contact your loan servicer. And remember, you

can find out who your loan servicer is through calling our hotline at 1-800-

4fed-aid, by going to nslds.ed.gov. That’s where you can get that information.

And I’m going to monitor this and see – all right, here’s a good question about

public service loan forgiveness. Is there a minimum amount of debt that you

have to have to qualify for public service loan forgiveness program? No,

there’s not a minimum amount of debt, but keep in mind that for public

service loan forgiveness your loans are forgiven after 10 years or 120

payments. So for someone who maybe had $5000 in student loan debt, well,



Page 28

that’s going to be paid off in – faster than 10 years. So that may be a situation

where someone may not qualify. So, of course, someone with more loan debt

may be a more advantageous situation to have more forgiven, per say, but no,

there’s not a cutoff in terms of that. But if you are interested in the public

service loan forgiveness, go ahead and make – do some research about what

loan programs qualify you for that program.

Okay, awesome – I see another question. A lot of question about public

service loan forgiveness. I wonder why, wink wink. Here’s a question that

someone was – heard that they weren’t eligible for public service loan

forgiveness and that their loans weren’t eligible and trying to figure out why.

So only Direct loans – only Direct loans qualify for public service loan

forgiveness. So, for example, if you have a Perkins loan or if you have a Plus

loan that you have not consolidated into a Direct loan program or a FFEL loan

or a Stafford Loan that’s not a direct loan. Those may be situations where you

won’t qualify, but you may qualify if you decide to consolidate and to a Direct

loan consolidation program. Because, remember, those Consolidated Direct

loans, those are Direct loans. So keep that in mind, that may be a reason why

as well.

These are great questions everyone. Let’s see, (unintelligible) public service

loan forgiveness. Okay, that’s so funny - all of the question about public

service loan forgiveness. Let’s see, I’m trying to figure out the best way to ask

some of these. Okay, great. Here’s a good one.

For public service loan forgiveness, can previous years of service count

towards this or is it only as of the date you become eligible? Great question,

yes, so it only counts when you start repayment of your student loans. Like as

soon as you start your payment of your student loans, that’s when – okay,



Page 29

that’s when it starts. Knowing your employment – if you’re with one of the

qualifying organizations.

So, no, you can’t – like for me personally – let’s say anybody – let’s say

there’s a college student who just graduated and their first job out of college is

at a non-profit, however, all through college they volunteered at this non-

profit. No, that time doesn’t count or even if it was not just volunteered, but

work. No, it starts when they start repaying their loans. Also, the public

service loan forgiveness program started in 2007.

So obviously any time before that wouldn’t count as well. But let’s say some

of you who have been paying back your loans for a few years now, but just

didn’t know about this program or are just learning about it, but have been

paying in a qualifying repayment plan. You may be able to claim that time

and those payments.

Talk to your loan servicer and fill out the public service loan forgiveness

employee certification form. That employee certification form you can find

online. Just go ahead to studentaid.gov and in the little search bar type in

public service loan forgiveness or just search for the employee certification

form and you’ll be able to find that as well.

Let’s see – okay, I see a question here that was about where was the tool that

helped you pick a plan – the repayment estimator. The repayment estimator

can be found at studentaid.gov/repay and then like literally you just scroll

down a little bit and you’ll see repayment estimator – it looks like a little

calculator. And then you click the link and it’ll take you to the page. I’m glad

that was helpful for everyone.



Page 30

I feel like the repayment estimator is a really great way to just be able to easily

see all of your options and to see what plan works for you. Because it is one

thing to hear someone over the phone say, okay, you can do this program or

this is the cheapest, but to be able to just look at that chart and know all of

those numbers relate to you is really helpful.

Okay, great. Here’s another great question. Is there a time limit as to how

many times you can change your payment plan? No – and, sorry – actually

I’m sitting back and thinking about that one for a minute. Because I’m

thinking in terms of – at least for income driven, you know, every year you

recertify by giving your income information. However, if right now I wanted

to get out of that and go to standard and then I realized in a couple of months

that, you know, my income significantly changed and I want to change plans –

no, you can go ahead and do that. So that is a wonderful question.

I also want you to check with your loan servicer to make sure. Because there

are definite limits onto how many times you can apply for forbearance. But as

long as you’re paying your amount on time every month in terms of your plan

and you’re still thinking about going through plans and changing to different

plans, I haven’t heard of -- and I can pretty confidently say that there is no

limit -- but definitely double check with your loan servicer about that.

All right, this is a good question. Is it true – they’ve heard that your

professional license can be revoked if you go into default. Yes, that is a real

thing. Student loan default can affect our employment significantly. I feel like

I’ve heard random stories about certain doctors who weren’t paying back their

student loan – like medical doctors.

And (unintelligible) understandably so, they have a lot of student loan debt,

but still they could have worked with their loan servicer to get out of default



Page 31

or prevent default from happening, but anyways, yes, going into default can

significantly obviously effect your credit, but it can also affect your

employment. And, of course, the licensure – the license you have – the

professional license.

So, please, before you get to that point talk to your loan servicer. And, it’s

okay – if any of you are on this webinar are currently in default, don’t let

yourself be in that stress another day. Call your loan servicer. They’re there.

They’re trying to work with you. They’re not the private loan scammers who

are going to, you know, just want your money and want – I mean, yes, we

want you to pay back your student loan, but we want to help you be able to

have a real life and still – and get out of default and be able to pay it back.

All right, we have about two minutes left. I hope I was able to answer all of

your questions. If I see another one come on in the next minute I’ll definitely

answer it, but thank you all for joining this webinar. We have a series of

webinars – so if you go back to where you actually click the link, I’m sure all

of you when you registered you saw there are a lot of other webinars we had

coming up. One hot topic – one is about the FSA ID. As you all know, in

order to log into studentloans.gov, nslds.ed.gov – you need an FSA ID

username and password.

Some of us who are old school we’re familiar with that pin. The pin is gone.

There is no where you can use the pin. You need an FSA ID so make sure you

create that. We have a webinar next week actually – next Thursday at 4:00

PM all about FSA ID – creating that. So if you have any questions make sure

you go ahead and log into that webinar. And, of course, studentaid.gov,

nslds.ed.gov, studentloans.gov and our information center 1-800-4fed-aid. We

have lots of resources out there to help answer your questions. I hope this



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webinar is helpful. There will be many, many more. So please continue to

give us your questions.

Also, after this webinar there will be a short survey where you can say –

evaluate this webinar. And, also, in the comments say what you feel like you

wish you had more information about. I’m noticing that most of the questions

are related to public service loan forgiveness.

So if you want a webinar – and want information specifically related to public

service loan forgiveness, please let us know. Because we can dedicate another

webinar, as we have in the past – we’ve had webinars specifically about

public service loan forgiveness, but we can always have more to give you all

more information about this. Because, hey, who doesn’t want their loans

forgiven. Right? I know I do.

Well thank you all for joining us. We’re at the end of the hour. I hope you all

have a wonderful day and here at Federal Student Aid we just hope to help

you. Have a great one.

END

Documents

END · Web viewEvery single year the interest rate for a federal student loan can change. Congress sets those – not the department. So don’t get mad at me if they get higher,