Michael T. Goodman Associate Vice President Tulane University Financial Aid 8/9/2012

Money Management for Entering Students

Entrance Interview

Michael T. Goodman

Associate Vice PresidentTulane University Financial Aid 8/9/2012

Disclaimer: All information and estimates are based on AAMC interpretation of federal regulations as of June 2011 and are subject to change. These are estimates only. Students should always contact their servicer(s) to discuss the terms and conditions of the loans.

©2011 Association of American Medical Colleges. All rights reserved.

IntroductionOperationsKnow the Details of Your LoansThe TimelineBorrowing StrategicallyHave a Spending PlanUnderstand and Protect Your Credit

Disbursements of aidRefunds for living expensesReconsiderationsApplying for 2013-2014Aid for 2013 summerAdditional informationQuestions???

Agenda


Introduction

Tulane University Health Sciences CenterOffice of Financial Aid

Suite 1213, Tidewater Building1440 Canal Street

Serving…School of Medicine School of Public Health & Tropical Medicine


Operations

Counselor by alphabet (last name):A-HO: Carl Hudson, Counselor HP-MB: James Bourgeois, Associate DirectorMC-Z: Shirley Davis, CounselorMonday-Thursday from 12-4PM @ the 15th floor of the Murphy Building…Jonathan Jouet, Counselor

Program Coordinator: Donna Fasullo


Operations

Tidewater OfficeHours: 9AM – 5PM, Monday – FridayCounselors available: M-W 1PM – 4PM

Th & F 9AM – 1PM Recommend appointments Communications: (504) 988-6135

(504) 988-6136 faxWebsite: http://tulane.edu/financialaid/hsc/


Where Are We?

Accepted aid award via Gibson on-lineCompleted Direct Loan entrance counseling on-line (for both Stafford and Graduate PLUS Loans)Completed Direct Loan master promissory notes (MPNs) on-line (for both Stafford and Graduate PLUS Loans)If awarded and accepted Federal Perkins Loan, completed Perkins MPN on-line (via ACS) Completed direct deposit information on-line with the Tulane Accounts Receivable Office


Know the Details of Your Loans


The FIRST Stop…

www.aamc.org/FIRST

Medloans® Organizer and Calculator


Finding Your Federal Loans

To access, provide:

- SS# - Date of Birth- First 2 letters (last name)- PIN # (www.pin.ed.gov)

www.nslds.ed.gov

http://www.pin.ed.gov/


Finding Other Loans

www.annualcreditreport.com

To access, provide:- Name - Address- Date of Birth- Social Security #


Rights include the ability to:

Prepay any federal loan without penalty

Request a shorter repayment schedule

Change repayment plans

Request a deferment or forbearanceReview your promissory note for all rights

Rights and Responsibilities


Rights and Responsibilities

Responsibilities include:

Make on time loan payments Make payments despite receipt of billNotify the lender of changes in contact infoAttend an Exit Counseling sessionReview your promissory note for all responsibilities


A Serious Obligation

Student loans must be repaid

Manage your debt -don’t let it

manage you


DelinquencyDefault

Consequences of…


Interest Rates


Loan Fees

Federal Perkins: noneFederal Stafford: 1.0% example: borrow $10,000 with 1.0%

fees: $10,000 x 1.0% = $100$9,900 disbursed, yet

repayment = $10,000

Federal Graduate PLUS: 4.0%

Alternative Loans: usually 0% front fees, varies on back-end fees, check with private loan lender


Subsidized vs. Unsubsidized

Sub • si • dy [suhb-si-dee] noun -

Financial assistance granted by the government to cover accruing interest while in-school, in grace, or in a qualifying deferment.

Source: www.dictionary.com


Subsidized vs. Unsubsidized

Perkins* Primary Care Loans LDS Loans* Instiututional Loans (some) Consolidations Loans (underlyng subsidized loans)

Unsubsidized StaffordDirect PLUSPrivate LoansInstitutional Loans (some)

Consolidation Loans (underlying unsubsidized loans)

Subsidized Unsubsidized

*subsidy and deferment rights lost during consolidation


Capitalization

Addition of unpaid interest to the principal

Principal + Interest = Larger Principal

$162,000$185,029

$23,029

Debt Management TipPay the interest on

unsubsidized loans PRIOR to capitalization


If dropping below half-time or withdrawing:

Contact the Financial Aid Office immediately

Exit Counseling is required

Payments are required or grace periods begin

For questions contact your Financial Aid Office

NOTICE: Repayment Begins


Direct PLUS loans

Enters repayment upon full disbursement

In-school deferment will post-pone payments

Interest begins accruing upon disbursement

Interest accrues continuously

Maximum interest rate is 7.9%

NOTICE: Repayment Begins


The Timeline


Grace Periods

Grace

A period when payments are not required :

Occurs automatically

Subsidized loans are interest free during grace

Unsubsidized loans continue to accrue interest

Availability and duration is based on loan type


Options During Residency

During residency, there are two choices:

Postpone Payments

Make Payments

DefermentForbearance

Select a Repayment Plan


Deferment

A period when payments are not required

Must apply and qualify

Interest does not accrue on subsidized loans

Unsubsidized loans continue to accrue interest

NOTE: For more details on deferment or to request a deferment, contact your servicer




Forbearance

A period when payments are not required

Must request from the servicer

Interest accrues on sub and unsub loans

Many types (administrative, discretionary, mandatory)

NOTE: For more details on forbearance or to request a forbearance, contact your servicer



Determines the payment

amount &

interest cost

$2,130/mo

$1,280/mo

$1,050/mo

$ 630/mo

$ 400/mo


Strategic Borrowing


Alternatives to Debt

Scholarships Support Forgiveness/ Repayment Options

• Outside

• Service based

• Institutional

• www.aamc.org/stloan

I II IIi

• Financial Aid Office

• Family


86% of class report having educational debt

59% of class report debt $150,000 or higher

Public Schools

Private Schools

All Schools

Median $155,000 $180,000 $162,000

Class of 2011 Indebtedness

Source: AAMC 2011 Graduate Questionnaire (GQ)

National Data


• MEDIAN $263,227

82% of class had educational debt

78% of class had debt $150,000 or higher

Class of 2011 Indebtedness

Source: AAMC 2011 Graduate Questionnaire (GQ)

Tulane Class of 2011 Data


How Will You Borrow?

Do NOT borrow just because you are eligible

Borrow what you need, not what you want

Decline loans that exceed your need

Accepting loans may affect eligibility for other aid

Avoid forfeiting low rate loans for higher rate debt

Financial Aid FactIf a shortfall occurs,

previously declined monies may be obtained – see

financial aid for assistance


CHALLENGE

Borrowing $5,000 less each year will REDUCE:

Monthly Payment By: $400 (+)

The Total Loan Cost By: $39,000 (+)

Repayment Term By: 2 (+) years

Borrow Wisely

Note: Assumes amount borrowed in Stafford Loans with 6.8% interest with forbearance during a 3-year residency

Source: AAMC FIRST Analysis

TIP: Have a budget and borrow less


Have a Spending Plan



A Spending Plan in 1-2-3

1) Put it in writing

2) Review periodically to identify leaks

3) Make necessary adjustments

“Live like a student while you are a student…”



www.aamc.org/FIRST


The Basics of Budgeting

Your Total Income

Your Total Expenses

Your Discretionary Income


Tulane Budgeting & Billing

You will receive by e-mail a monthly billing statement detailing charges and credits that occurred during the prior month.2012-2013 School of Medicine’s tuition & fees: $25,300.00 tuition per semester $ 1,300.00 academic support fee per semester $ 120.00 student activity fee per semester $ 320.00 health services fee per semester $ 87.50 rec. center fee per semester $27,127.50 = Total tuition & fees per semester Other charges: Books, Parking, Deming Pavilion, Health Insurance



Financial Aid Budget for the 2012-2013 Academic Year:assumption: not residing with parents

Tuition & fees: $54,255Room & board: $14,100*Books & supplies $ 1,500Transportation: $ 3,100*Miscellaneous: $ 4,000*TOTAL: $76,955

*$21,200 living expenses equates to $2,120/month



Financial Aid Award for the 2012-2013 Academic Year:Federal Direct Unsubsidized Stafford Loan: $40,500Federal Direct Graduate PLUS Loan: $36,455TOTAL: $76,955

Thus, total financial aid award = total cost of attendance.


Disbursements of Aid

Example of 2012 Fall Semester disbursements:Tuition & fees $27,127.50 = $27,127.50- Unsub. Staff. ($20,048.00) - Grad. PLUS ($17,499.00) = $37,547.00

= A/R balance ($10,419.50)+ Refund $10,419.50= A/R balance $ 0.00

Are Credit Cards Bad?


The Minimum Payment Trap

$5,000 Balance with an 18% Interest Rate (Making minimum monthly payments)

Source: BankRate.com

22.75 years to repay in full

$6,923 in total interest costs alone

What could possibly be worth paying more than twice its original value?


Credit: Understand & Protect


35%

30%

15%

10%10%

Payment history

Utilization rate (amount owed)

Length ofcredit history

New credit

Type of credit used

A FICO Score is Based On…


How to Improve Your Score

During medical school, be sure to:

Pay bills on time

Pay down debt on lines of credit

Apply for credit sparingly


Check your Credit Report

www.annualcreditreport.com


Your loan servicers’ and their websites

Your medical school financial aid office

Support Along the Way

FACEBOOK: FIRST for Medical Education

www.aamc.org/FIRST

www.ombudsman.ed.gov

Careers in Medicine ®

Medloans ® Organizer and Calculator


Reconsiderations

Computer purchase (max. = $2,500) only allowed once during medical school career

Combined MD/MPH degree program

Special financial circumstances

Receive any other financial assistance:outside scholarship and/or grant


Applying for 2013-2014

2013-2014 FAFSA

2013-2014 School of Medicine Financial Aid Addendum

No need for new federal loan MPN

Apply for Grad PLUS or private loan (since credit-based)

2013 Summer aid for MD/MPH


Additional Information

Outside Scholarships:www.finaid.org

check bulletin board and e-mailCommunication: Tulane e-mail address

Emergency loans:not an ATM $1,000 maximum per academic year

[email protected]

http://www.finaid.org/

Questions?

Documents

Michael T. Goodman Associate Vice President Tulane University Financial Aid 8/9/2012