Entrance Counseling. Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences

Entrance Counseling<School/Conference information>

Agenda

Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers.

Understand Your Commitment

Read all communication, forms and documents carefully.

Understand the terms of your student loan.

Manage your money. Ask for help.


Master Promissory Note:– Must be signed in order to receive loan funds.– Legally binding document.– Specifies your rights and responsibilities.

MPN multi-year feature:– Sign once. – You can “opt out” and sign a new MPN for each loan. – Some schools do not use this feature.– May expire in certain cases.

Borrower’s Rights and Responsibilities Statement.– Expect a “Plain Language Disclosure” for any subsequent loans.

Separate MPNs.

Master Promissory Note


You promise to repay your loan, even if you:– Don’t complete your program of study at all or within the regular

time frame for completion.– Are unable to locate employment after completing your program.– Are dissatisfied with or don’t receive services purchased from the

school.– Don’t receive payment coupons or notifications from your loan

servicer.

Master Promissory Note

Understand Your CommitmentEffect on Other Aid

Monitor award notifications for updates.

Contact financial aid office with questions.

Borrowing loans may affect your other aid, and other aid may affect your loans.

Understand Your CommitmentEnrollment Status and Withdrawal

Half-time Enrollment

Required to receive:– Direct Loan

disbursements.– In-school deferment.

Definition:– Undergraduates: school-

defined, within federal requirements.

– Graduates: school-defined.

Drop below half-time:– Begin using grace period.– May enter repayment.

Withdrawal No longer attending

scheduled classes. Contact us if you

withdraw. Exit counseling materials. Drop below half-time:

– Begin using grace period.– May enter repayment.

Agenda


Your Loan TermsAvailability of Loan Types

Loan Type Undergraduate Students

Graduate and Professional

Students

Direct Subsidized Loan

Direct Unsubsidized Loan

Grad PLUS Loan

X

X X

X

Your Loan TermsInterest Rates

Interest Rates

First Disbursement

Undergraduate Borrowers Graduate Borrowers

Subsidized Unsubsidized Unsubsidized Grad PLUS

7/1/14-6/30/15 4.66% 6.21% 6.21% 7.21%

7/1/13-6/30/14 3.86% 5.41% 5.41% 6.41%

7/1/12-6/30/13 3.4% 6.8% 6.8% 7.9%

0.25 percent rate deduction with automatic payments.

Maximum Rates 8.25% 8.25% 8.25% 9.0%

Your Loan Terms

Interest that accrues will be capitalized. Payment of interest while in school saves money.

Interest Capitalization

Borrower 2$3,500 unsubsidized loan at 6.8

percent fixed. Pays no interest during in school or grace period. Interest

capitalized at repayment.

Total paid while enrolled $0

Amount capitalized $833

Monthly payment $51.07

Length of repayment 10 years

Total cost $6,128

Interest in repayment $2,629

Source: www.finaid.org Cost of Interest Capitalization Calculator.

Borrower 1

$3,500 unsubsidized loan at 6.8 percent fixed. Pays interest during in school and grace period at $19.83

per month.

Total paid while enrolled $833

Amount capitalized $0

Monthly payment $50

Length of repayment 7.4 years

Total cost $4,450

Interest in repayment $950

Your Loan TermsFees

Origination Fees

First DisbursementSubsidized and

Unsubsidized LoansPLUS Loans

10/1/14 to 9/30/15 1.073% 4.292%

12/1/13 to 9/30/14 1.072% 4.288%

7/1/13 to 6/30/14 1.051% 4.204%

3/1/13 to 6/30/14 1% 4%

Agenda


150 Percent Subsidized Loan Limit

Limits Direct Subsidized loans for “first-time borrowers.” – Limited to 150 percent of published length of student’s current

educational program.

Definition of first-time borrower:– No outstanding principal balance as of July 1, 2013.– Repaid all prior loans before July 1, 2013 before borrowing again.

150 Percent Subsidized Loan LimitEffect on Borrowers

– They no longer qualify for Direct Subsidized loans beyond 150 percent of the program length, unless entering a longer program.

– They no longer qualify for interest subsidy on previously obtained loans as of the date attendance begins after reaching the limit.

– Once interest subsidy is lost, it cannot be regained.

– Borrower becomes responsible for interest that accrues.

– Unpaid interest is capitalized.

Loss of subsidy on future loans

Loss of subsidyon prior loans

Affected borrowers who reach or exceed the 150 percent limit may experience:

Remaining Eligibility Period

Maximum Eligibility Period

– Subsidized Loan Eligibility Used

= Remaining Eligibility Period

150 Percent Subsidized Loan LimitDefinitions

3

Maximum Eligibility Period

Subsidized Usage Period

Department of Education calculates periods using information reported by schools.

Days in loan period

Days in academic year

Program length

x 150 percent

= Maximum Eligibility Period

Agenda


Repayment

Repayment begins:– After a six-month grace period that starts once no longer enrolled

at least half time.– Immediately, if grace period expired previously.

Interest subsidy applies. – Eliminated for loans first disbursed July 1, 2012 – June 30, 2014.

No penalty for early repayment.

Subsidized and Unsubsidized Direct Loans

Unless delayed or deferred, the borrower’s first payment usually is due within 60 days of entering repayment.

Repayment

Repayment begins when the loan is finally and fully disbursed.

– No grace period.

May qualify for a post-enrollment deferment period.– Payment of principal begins six months after borrower ceases to

be enrolled at least half time.– Renewable.

No penalty for early repayment.

PLUS Loans

Unless delayed or deferred, the borrower’s first payment usually is due within 60 days of entering repayment.

Repayment

Default repayment plan. Generally results in lowest interest cost. Minimum payment: $50/month.

Standard

Payments increase over time. No payment will exceed three times any other

payment.Graduated

Borrowers with $30,000 or more in FFEL or DL student loans.

Longer repayment period.Extended

RepaymentIncome-Driven Plans

Must have a partial financial hardship. Minimum payment: $0/month. Forgiveness available after 25 years.

Income-based

Payment amount based on annual income. Must re-apply each year.

Income-sensitive(FFELP)

Payment amount based on annual income. Minimum payment: $5/month. Must re-apply each year.

Income-contingent (DL)

Must have a partial financial hardship. Minimum payment: $0/month. Must re-apply each year..

Pay as You Earn(DL)

Repayment

Example of a standard repayment schedule:

Standard Repayment

Direct Unsubsidized Loan (6.8 percent)

Loan Amount Payment Amount Number of Months

$10,000 $115 120

$50,000 $575 120

Grad PLUS Loan (7.9 percent)Loan Amount Payment Amount Number of Months

$10,000 $121 120

$50,000 $604 120

Source: http://calculator.usafunds.org/.

RepaymentRelief Options

Consolidation. Deferment. Forbearance. Discharge and

forgiveness.

Agenda


Consequences

Delinquency

Delinquency

Lender has not received payment by the stated due date.

Late charges may be assessed.

Negative mark on your credit record.

Consequences

Lose eligibility for future federal financial aid. Lose eligibility for flexible loan repayment options. Adverse credit reports. State-issued licenses can be withdrawn or denied. Income tax refunds can be withheld. Wages can be garnished. Federal benefit payments can be confiscated. Interest continues to accumulate. Federal debt collection procedures, including fees and

fines. Legal action.

Default

No loan payments for 270 consecutive days or more

Agenda


Affordability Analysis

How much income will you have?

How much of your income are you willing to spend on your loans?

How much can you borrower before your loans are no longer affordable?

www.usafunds.org: Search for “Student Loan Affordability Analysis”

Agenda


Getting HelpNational Student Loan Data System

www.nslds.ed.gov.

Getting Help

If you cannot make a student loan payment:– Your loan holder.– Your school.– Department of Education.

If you have an unresolved issue:– Department of Education

Ombudsman: Phone: (877) 557-2575 E-mail: [email protected]. www.ombudsman.ed.gov.

Difficult Situations

Agenda


Review

Q: What legally binding document must you sign before you can receive your subsidized, unsubsidized or Grad PLUS loan funds?

A: A Federal Master Promissory Note.

Review

Q: Do you have to repay your Direct Loans if you don’t finish your program of study?

A: Yes. By signing a Master Promissory Note, you are promising to repay your student loan even if you don’t finish your program, you are dissatisfied with your educational experience, or you cannot find a job.

Review

Q: When will repayment begin on your subsidized, unsubsidized loan or Grad PLUS loan?

A: After you no longer are enrolled at least half time in a degree or certificate program, you will have one six-month grace period (or post-enrollment deferment period for Grad PLUS loans) before repayment begins. The first payment is due within 30-45 days after the repayment period starts.

Review

Q: Which of the following statements about defaulting on your student loan is false?

a. Default means no payment was made for 270 days.

b. Default usually results in additional fees and collection costs.

c. Defaulted loans are not reported to consumer reporting agencies.

d. Defaulted loans must be returned to good standing in order to get future federal financial aid.

Review

Q: List at least one way to get help regarding your student loan if you need it.

A: Your resources include:– Your loan servicer.– Your school.– U.S. Department of Education.– U.S. Department of Education

Ombudsman.

Questions and Answers

Resources

www.usafunds.org. www.nslds.ed.gov. www.studentaid.ed.gov. www.ombudsman.ed.gov.

A nonprofit corporation, USA Funds® works to enhance

postsecondary education preparedness, access and success

by providing and supporting financial and other valued services.

Documents

Entrance Counseling. Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences