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Exit Counseling. Agenda Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment. –Repayment Plans. –Consolidation. Repayment

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Page 1: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Exit Counseling<School Name/Conference Name>

Page 2: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Agenda

Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.

– Repayment Plans.– Consolidation.

Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.

Page 3: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Understand Your Commitment

Read all communication, forms and documents carefully.

Understand the terms of your student loan.

Manage your money. Ask for help.

Page 4: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Understand Your CommitmentNational Student Loan Data System

www.nslds.ed.gov.

Page 5: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Understand Your Commitment

Federal loans:– Federal Family Education Loan Program or Direct Loan

Programs. Subsidized or unsubsidized loans. Grad PLUS loan. Consolidation loan.

– Other federal loans. Perkins loan. Health-related program loan.

Non-federal education loans:– Also known as “private” or “alternative” loans.

Loan Types

Page 6: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Understand Your Commitment

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.

Master Promissory Note

Page 7: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Understand Your Commitment

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

Page 8: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Agenda

Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.

– Repayment Plans.– Consolidation.

Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.

Page 9: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

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.

Page 10: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

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:

Page 11: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

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

Page 12: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Mark Ashley

Total borrowed $4,000 $4,000

Accrued interest (final nine months of program, plus six-month grace period)

$239.58 $0

Outstanding balance at repayment $4,239.58 $4,000

Loan payment amount $50 for 105 mos. $50 for 98 mos.

Cumulative payments $5,241.35 $4,875.74

Total interest paid $1,241.35 $875.74

Mark Ashley

Total borrowed $4,000 $4,000

Accrued interest (final nine months of program, plus six-month grace period)

$239.58 $0

Outstanding balance at repayment $4,239.58 $4,000

Loan payment amount $50 for 105 mos. $50 for 98 mos.

Cumulative payments $5,241.35 $4,875.74

Total interest paid $1,241.35 $875.74

Mark Ashley

Total borrowed $4,000 $4,000

Accrued interest (final nine months of program, plus six-month grace period)

$239.58 $0

Outstanding balance at repayment $4,239.58 $4,000

Loan payment amount $50 for 105 mos. $50 for 98 mos.

Cumulative payments $5,241.35 $4,875.74

Total interest paid $1,241.35 $875.74

Mark Ashley

Total borrowed $4,000 $4,000

Accrued interest (final nine months of program, plus six-month grace period)

$239.58 $0

Outstanding balance at repayment $4,239.58 $4,000

Loan payment amount $50 for 105 mos. $50 for 98 mos.

Cumulative payments $5,241.35 $4,875.74

Total interest paid $1,241.35 $875.74

Mark Ashley

Total borrowed $4,000 $4,000

Accrued interest (final nine months of program, plus six-month grace period)

$239.58 $0

Outstanding balance at repayment $4,239.58 $4,000

Loan payment amount $50 for 105 mos. $50 for 98 mos.

Cumulative payments $5,241.35 $4,875.74

Total interest paid $1,241.35 $875.74

Mark Ashley

Total borrowed $4,000 $4,000

Accrued interest (final nine months of program, plus six-month grace period)

$239.58 $0

Outstanding balance at repayment $4,239.58 $4,000

Loan payment amount $50 for 105 mos. $50 for 98 mos.

Cumulative payments $5,241.35 $4,875.74

Total interest paid $1,241.35 $875.74

Mark Ashley

Total borrowed $4,000 $4,000

Accrued interest (final nine months of program, plus six-month grace period)

$239.58 $0

Outstanding balance at repayment $4,239.58 $4,000

Loan payment amount $50 for 105 mos. $50 for 98 mos.

Cumulative payments $5,241.35 $4,875.74

Total interest paid $1,241.35 $875.74

150 Percent Subsidized Loan Limit

Repayment Comparison

Example: Losing Interest Subsidy

13

Loss of interest subsidy cost Mark $365.

Page 13: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Agenda

Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.

– Repayment Plans.– Consolidation.

Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.

Page 14: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Grace Period

Subsidized and Unsubsidized Loans

Single six-month period in which no payment is expected.

Grace and Post-Enrollment Deferment Periods

No penalty for early repayment.

Post-Enrollment Deferment

Grad PLUS Loans Renewable six-month period after borrower ceases to be enrolled at least half time.

First loan payment due within 30-45 days after grace period ends.

Interest subsidy applies.

Page 15: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

RepaymentMethod of Payment

Online payments. Auto-debit.

– 0.25 percent interest rate reduction.

Coupon books.

Page 16: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Use a loan calculator to compare repayment options: – calculator.usafunds.org.

As a student loan borrower you may:– Prepay your student loans without penalty.

– Use an accelerated repayment option resulting in less interest.

– Change repayment plans to accommodate your situation.

Plans

Page 17: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

RepaymentPlans

Standard. Graduated. Extended. Income-related plans:

– Income-based repayment.– Income-sensitive (FFELP

only).– Income-contingent (DL

only).– Pay As You Earn (DL only).

Page 18: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Default repayment option. Payments of equal, monthly installments. Repayment period cannot exceed 10 years. Minimum payment of $50.

Plans

Standard Repayment

Page 19: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of a standard repayment schedule:

Plans

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.

Page 20: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Payments increase over time. Repayment term cannot exceed 10 years. Monthly payment amount:

– Must cover accruing interest.– Will not have a single payment more than three times the amount

of another.

Plans

Graduated Repayment

Page 21: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of a graduated repayment schedule:

Plans

Unsubsidized Loan (6.8 percent)

Loan Amount Payment Amount Number of Months

$10,000 $79 24

$96 24

$117 24

$142 24

$173 24

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

Page 22: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of a graduated repayment schedule:

Plans

Unsubsidized Loan (6.8 percent)

Loan Amount Payment Amount Number of Months

$50,000 $395 24

$480 24

$584 24

$710 24

$863 24

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

Page 23: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of a graduated repayment schedule:

Plans

Grad PLUS Loan (7.9 percent)

Loan Amount Payment Amount Number of Months

$10,000 $84 24

$102 24

$124 24

$150 24

$181 24

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

Page 24: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment Plans

Example of a graduated repayment schedule:

Graduated Repayment

Grad PLUS Loan (7.9 percent)

Loan Amount Payment Amount Number of Months

$50,000 $422 24

$511 24

$618 24

$749 24

$906 24

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

Page 25: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

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

– Totals from FFELP and DL may not be combined to equal $30,000.

Maximum repayment period of 25 years. Length of repayment is tied to the amount borrowed.

Plans

Extended Repayment

Page 26: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an extended repayment schedule:

Plans

Unsubsidized Loan (6.8 percent)

Loan Amount Payment Amount Number of Months

$35,000 $243 300

$50,000 $347 300

Grad PLUS Loan (7.9 percent)

Loan Amount Payment Amount Number of Months

$35,000 $268 300

$50,000 $383 300

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

Page 27: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Partial financial hardship exists if annual payments exceed discretionary income:

– Borrowers prior to July 1, 2014: 15 percent.– New borrowers on or after July 1, 2014: 10 percent.

Payment amount may be reduced or eliminated. Remaining amounts may be forgiven after:

– Borrowers prior to July 1, 2014: 300 qualifying payments over 25 years.

– New borrowers on or after July 1, 2014: 240 qualifying payments over 20 years.

Plans

Income-Based Repayment

Page 28: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an income-based repayment schedule:– Annual pretax adjusted gross income: $36,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.

Plans

Unsubsidized Loan (6.8 percent)

Loan Amount

Pretax Monthly Income Amount

Payment Amount

Number of Months

Rem. Balance

$30,000 $3,000 $231 187 $0

$50,000 $3,000 $231 300 $45,756

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

Page 29: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an income-based repayment schedule:– Annual pretax adjusted gross income: $36,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.

Plans

Grad PLUS Loan (7.9 percent)

Loan Amount

Pretax Monthly Income Amount

Payment Amount

Number of Months

Rem. Balance

$30,000 $3,000 $231 212 $0

$50,000 $3,000 $231 300 $60,031

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

Page 30: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Payments relate to FFELP borrower’s annual income. Repayment period may exceed 10 years, depending on

borrower’s income and amount borrowed. Borrowers must re-apply each year.

Plans

Income-Sensitive Repayment – FFELP Loans

Page 31: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an income-sensitive repayment schedule:– Annual pretax adjusted gross income: $24,000.– Residence: continental U.S.– Desired income percentage: 4 percent.

Assumes interest-only payment for first five years then standard repayment for the remaining term.

Plans

Unsubsidized Stafford (6.8 percent)

Loan Amount

Minimum Payment

Maximum Payment

Number of Months

Rem. Balance

$20,000 $113 $230 180 $0

$50,000 $283 $575 180 $0

Source: USA Funds finance department.

Page 32: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an income-sensitive repayment schedule:– Annual pretax adjusted gross income: $24,000.– Residence: continental U.S.– Desired income percentage: 4 percent.

Assumes interest-only payment for first five years then standard repayment for the remaining term.

Plans

Grad PLUS (8.5 percent)

Loan Amount

Minimum Payment

Maximum Payment

Number of Months

Rem. Balance

$20,000 $142 $248 180 $0

$50,000 $354 $620 180 $0

Source: USA Funds finance department.

Page 33: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Payments relate to DL borrower’s annual income and family size.

Minimum payment of $5. Any remaining balance due after 25 years will be forgiven. Borrowers must re-apply each year.

Plans

Income-Contingent Repayment – Direct Loans

Page 34: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an income-contingent repayment schedule:– Annual pretax adjusted gross income: $30,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.

Plans

Unsubsidized Loan (6.8 percent)

Loan Amount

Pretax Monthly Income Amount

Payment Amount

Number of Months

Rem. Balance

$20,000 $2,500 $153 250 $0

$50,000 $2,500 $306 300 $725

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

Page 35: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an income-contingent repayment schedule:– Annual pretax adjusted gross income: $30,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.

Plans

Grad PLUS Loan (7.9 percent)

Loan Amount

Pretax Monthly Income Amount

Payment Amount

Number of Months

Rem. Balance

$20,000 $2,500 $162 271 $0

$50,000 $2,500 $306 300 $28,642

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

Page 36: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Partial financial hardship exists if annual payments exceed discretionary income by 10 percent.

– Consistent with “new borrowers” under IBR.

Payment amount may be reduced or eliminated. Remaining amounts may be forgiven after 240 qualifying

payments over 20 years.– Consistent with “new borrowers” under IBR.

Plans

Pay As You Earn

Page 37: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an Pay As You Earn repayment schedule:– Annual pretax adjusted gross income: $36,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.

Plans

Unsubsidized Loan (6.8 percent)

Loan Amount

Pretax Monthly Income Amount

Payment Amount

Number of Months

Rem. Balance

$30,000 $3,000 $154 240 $24,561

$50,000 $3,000 $154 240 $73,076

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

Page 38: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Example of an Pay As You Earn repayment schedule:– Annual pretax adjusted gross income: $36,000.– Family size: 1 (single, no dependents).– Residence: continental U.S.– Increase in annual income: 2.5 percent.

Plans

Grad PLUS Loan (7.9 percent)

Loan Amount

Pretax Monthly Income Amount

Payment Amount

Number of Months

Rem. Balance

$30,000 $3,000 $271 161 $0

$50,000 $3,000 $271 240 $48,196

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

Page 39: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment Plans

Total unsubsidized loan amount = $50,000.

Comparison

Initial Monthly Payment

Highest Monthly Payment

Interest PaidTotal

Amount Paid

Years in Repayment

Standard $575 $575 $19,044 $69,048 10

Graduated $395 $863 $22,778 $72,778 10

Extended $347 $347 $54,112 $104,111 25

IBR $154 $224 $44,924 $44.924 20

ICR $406 $422 $34,150 $84,150 17

ISR $283 $575 $36,048 $86,048 15

Pay As You Earn $154 $224 $44,924 $44,924 20

Page 40: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Agenda

Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.

– Repayment Plans.– Consolidation.

Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.

Page 41: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Eligible loans:– FFELP and Direct Subsidized and Unsubsidized loans.– FFELP and Direct PLUS loans.– Consolidation loans.– Federal Perkins loans.– Federal Nursing Student Loans.– Health Professions Student Loans.– Health Education Assistance Loans.– Certain other education loans.

Consolidation

A new loan that pays off existing loans and carries new terms.

Page 42: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

RepaymentConsolidation

Advantages Disadvantages Combines several loans into

one new loan. One lower monthly payment. Interest rate is fixed. Interest subsidy still applies,

but only to subsidized loans. No fees or prepayment

penalties.

Increases interest charges due to longer repayment period.

Reduced options for cancellation and forgiveness.

May lose benefits; varies by lender.

May lose remainder of grace period.

Page 43: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Sum of Consolidation Loans and Other Education Debt Maximum Term

Less than $7,500 10 years

$7,500 - $9,999.99 12 years

$10,000 - $19,999.99 15 years

$20,000 - $29,999.99 20 years

$40,000 - $59,999.99 25 years

$60,000 or more 30 years

Consolidation: Maximum Repayment Periods

Page 44: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment

Fixed interest rate based on loans being consolidated.– Weighted average, rounded up to nearest one-eighth of one

percent.– No longer capped at 8.25 percent, for new applications filed on or

after July 1, 2013.

Consolidation: Interest Rates

17

Page 45: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Agenda

Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.

– Repayment Plans.– Consolidation.

Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.

Page 46: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment Relief

Deferment. Forbearance. Cancellation. Forgiveness.

Direct Loans have repayment options to assist borrowers who need help:

Page 47: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment Relief

Postpone repayment for borrowers who qualify. Entitlement for eligible borrowers. Suspend payment of principal and interest:

– Interest subsidy resumes.

– Interest accrues on unsubsidized portion.

Some deferments must be updated at least annually. Can apply retroactively. Borrowers must request deferment. Once repayment resumes, first payment usually due

within 60 days.

Deferment

Page 48: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment ReliefDeferment Types

Half-time enrollment. Time limit: none.In-School

Not working at least 30 hours per week in work that will last at least three moths.

Actively seeking employment. Time limit: 36 months.

Unemployment

Financial difficulty making loan payments. Time limit: 36 months.

Economic Hardship

Page 49: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment ReliefDeferment Types

Participating in a qualifying vocational or health-related rehabilitation program.

Time limit: none.

Participation in a full-time graduate fellowship for at least six months.

Time limit: none.

Serving on active duty for other than training purposes.

Time limit: none.

Students enrolled at least half time within six months of activation.

Time limit: 13 months.

Rehabilitation Training

Graduate Fellowship

Military Service

Post Active-Duty Student

Page 50: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment Relief

Generally granted at the discretion of the lender. Forbearance may include any of following changes to

repayment agreement:– No monthly payment.

– Interest-only payments.

– Lower payment.

– Other arrangements.

Can be applied retroactively for up to 12 months. Interest subsidy is not available.

– Any unpaid interest may be capitalized.

Lender required to inform borrower of status, obligations and associated costs.

Forbearance

Page 51: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment ReliefForbearance Types

Lender believes borrower is willing but unable to make payments.

Time limit: up to 12 months.

Internship/Residency. National service. Loan forgiveness.

DoD repayment. High debt. Active duty.

Overdue payments under certain circumstances.

Disaster, national emergency or military mobilization.

Processing periods.

Discretionary

Mandatory

Administrative

Mandatory Administrative

Page 52: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

If the borrower dies, the government discharges the remaining loan amount.

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Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

The government discharges loans when a student cannot complete a program due to the school closing.

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Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

Loan discharge is available if the school improperly certified a loan for the borrower.

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Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

If the borrower can prove in court that he or she was the victim of identity theft, the loan may be cancelled.

Page 56: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

Available when the borrower is unable to earn sufficient income due to illness or injury expected to continue indefinitely or result in death.

Page 57: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

If court finds that repayment of student loan will cause undue hardship to the borrower, cancellation may be available.

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Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

Failure to receive a student loan refund may qualify the borrower for discharge.

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Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

Forgiveness available for up to $17,500, depending on type of teaching position.

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Repayment ReliefCancellation, Discharge and Forgiveness

Death of borrower. School closure. False certification. Identity theft. Total and permanent

disability. Limited bankruptcy. Unpaid refund. Teacher loan forgiveness. Public service loan

forgiveness.

Discharge remaining debt after 10 years of qualifying payments.

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Agenda

Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.

– Repayment Plans.– Consolidation.

Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.

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Consequences

Delinquency

Delinquency

Lender has not received payment by the stated due date.

Late charges may be assessed.

Negative mark on your credit record.

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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

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Agenda

Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.

– Repayment Plans.– Consolidation.

Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.

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Money Management

Identify your financial goals. Develop a realistic monthly

budget. Pay your bills prior to the

due date. Keep accurate and

well-organized records. Save for the future.

https://www.mint.com.

Page 66: Exit Counseling. Agenda  Understand Your Commitment.  150 Percent Subsidized Loan Limit.  Repayment. –Repayment Plans. –Consolidation.  Repayment

Money Management

Latte $3.00 Loan balance $20,000

What would you do with $780?

Days per week x 5

Weekly cost $15.00

x 52

Yearly cost $780

Cost over 10 years $7,800

Repayment term 10 years

Regular payment amount $230.16

Extra monthly payment $65.00

x 52

Savings over 10 years $2,543.59

Reduction in term 2.8 years

Yearly cost $780

Source: www.finaid.org.

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Agenda

Understand Your Commitment. 150 Percent Subsidized Loan Limit. Repayment.

– Repayment Plans.– Consolidation.

Repayment Relief. Consequences. Money Management. Tax Benefits. Getting Help. Questions and Answers.

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Tax Benefits

There are a variety of tax credits, deductions and savings plans available to assist with higher education expenses:

– American Opportunity Tax Credit.– Hope and Lifetime Tax Credit.– College Tuition and Fees Deduction.– Student Loan Interest Deduction.

See www.irs.gov for more information.

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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

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Questions and Answers

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Resources

http://calculator.usafunds.org. www.nslds.ed.gov. www.mint.com. www.finaid.org. www.studentaid.ed.gov. www.ombudsman.ed.gov.

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A nonprofit corporation, USA Funds® works to enhance

postsecondary education preparedness, access and success

by providing and supporting financial and other valued services.