STUDENT LOAN EXIT INTERVIEW - MedWeb

Office of Admission and Financial Aid

Student Loan Exit Counseling

Spring 2013


Today’s Topics

• Loan Programs

• Rights and Responsibilities

• Repayment

• Deferments/Forbearance

• Cancellation/Forgiveness

• Tax Benefits

• Default

• Managing Your Money and

Your Credit Report

http://www.usc.edu/


Loan Programs

• Subsidized Loans

– Subsidized Federal Stafford Loan

– Federal Perkins Loan

– Institutional Loan

• Unsubsidized Loans

– Unsubsidized Federal Stafford Loans

– Federal Grad PLUS Loans

– Private Loans (CitiAssist, Signature)


Rights and Responsibilities

• Rights – Know how much you borrowed (disclosure statement)

– Where to make payments

– Where to write or call with questions

– You may pre-pay your loan at any time without penalty

• Responsibilities – PAY YOUR LOAN

– Notify your lender if you change your name, address, telephone number or student status

– Notify your lender if anything affects your ability to pay your loan


www.nslds.ed.gov

• Get information on all of

your existing Federal

Loans

– Stafford,

– PLUS,

– Consolidation

– Perkins

• Access information on

your

– Loan Amounts

– Loan Servicers

– Loan Status

Where are my loans?


Federal Loan Servicing

Servicer Borrower Phone Website

FedLoan Servicing (PHEAA) (800) 699-2908 myfedloan.org

Great Lakes (800) 236-4300 mygreatlakes.org

Nelnet (888) 486-4722 nelnet.com

Sallie Mae (800) 722-1300 Salliemae.com


Federal Loan Servicing

Servicer Borrower Phone Website

Aspire (IA) (855) 475-3335 aspireresourcesinc.com

Cornerstone (UT) (800) 663-1662 mycornerstoneloan.org

EdFinancial (TN) (855) 337-6884 edfinancial.com/dl

EdManage (SC) (855) 479-0490 edmanage.myedloan.com

Granite State (NH) (888) 556-0022 gsmr.org

KSA Servicing (KT) (877) 292-4825 ksa.myedloan.com

MOHELA (MO) (888) 866-4352 mohela.com

OSLA Servicing (OK) (866) 264-9762 osla.org

If you have a loan at Direct Loan Serving, your loan will be moved

at sometime in the future


Multiple Loan Holders

• Only FFELP Loans from 2008-09 and 2009-10

• Federal Direct Loans

Not All of Your Loans May Have Been Sold to the Department of Education

• Two bills

• Two minimum monthly payments

• Two requests for deferment/forbearance

This May Cause “Split Servicing”


www.studentloans.gov

You may take out a

Federal Direct

Consolidation Loan to

resolve the split in

servicing


Federal Loan Consolidation Process

Complete and submit

the application

Verifies Payoff

Amounts

Sends you a Pay-Off

Loan Statement

Pays off the old loans

Sets up your new account

This process

takes 60-90 days


Federal Loan Consolidation Process

Print out your loan history on NSLDS

Before the end of your grace period, complete and submit the Direct Consolidation Loan Application

Make payments or apply for a deferment or forbearance to keep your loans from becoming delinquent while they process your application.


National Average Indebtedness for

Medical Class of 2012

All Schools Public

Schools Private Schools

USC Keck 2013

Mean $166,750 $155,978 $183,066 $168,069

Median $170,000 $160,000 $190,000 $178,784

• 86% of class report having educational debt

• 62% of class report debt $150,000 or higher

•30% of class plans to enter loan/forgiveness programs


Interest Rates

In-School, Grace , Deferment and

Repayment

Federal Stafford Loans

(loans after 7/1/06) 6.8%

Federal Graduate PLUS Loans (taken before

2010-11 academic year) 8.5%

Federal Graduate PLUS Loans (taken after

2009-10 academic year) 7.9%

Federal Perkins Loan, HPSL, LDS, PCL 5.0%

USC Institutional Loans 4.0 to 5.0%

Federal Consolidation Loan Fixed rate based on weighted average

interest rate of underlying loans rounded up

to nearest one-eighth of a percent (capped

at 8.25%)

*varies annually based on 91-day t-bill set every July 1st


What is Capitalization?

DEFINITION: The Addition of Accrued Interest to Outstanding Principal

• Grace,

• Deferments

• Forbearances

Generally, unpaid interest is capitalized once each time the borrower enters repayment

May be capitalized more frequently on private loans

Payments you make in grace will reduce overall interest cost


Capitalization

Capitalized

Interest

Interest Paid

In-School

Amount borrowed $10,000 $10,000

Monthly Interest Payment 0 $65.83

Interest to Capitalize $2,370 0

Principal Balance at Repayment $12,370 $10,000

Estimated Monthly Payments $149.43 $120.80

Total Payments $17,931.53 $16,865.98

Total Interest Paid $7,931.53 $6,865.98

Additional Cost to Capitalize $1065.55 0.00

Based on $10,000 loan at 7.9% interest, deferred for 3-years and capitalized once at repayment


Grace Periods

Loan Program Grace Period

Federal Stafford Loans 6 months

Federal Grad PLUS Loans (before 7/1/2008) N/A

Federal Grad PLUS Loans (after 7/1/2008) 6 months*

Federal Perkins Loan 9 months

Federal Consolidation Loan N/A

*you will need to request a post enrollment deferment from your loan service agency.


Repayment

Consider Affordability and Overall Cost

• Standard Repayment

• Graduated Repayment 10-Year Repayment

Period

• May extend repayment up to 25 years, depending on how much you borrowed

Extended Repayment

• Payment amount varies with income Income-Based

Repayment (IBR) & Pay As You Earn (PAYE)

Standard Repayment Chart Federal Direct Stafford Loans - 6.8%

Debt Amount Number of

Payments

Monthly Payment Total Interest Total Payback

$100,000 120 $1,151 $38,096 $138,096

$125,000 120 $1,438 $47,620 $172,620

$150,000 120 $1,726 $57,145 $207,145

$175,000 120 $2,014 $66,669 $241,669

$200,000 120 $2,302 $76,193 $276,193

Standard Repayment Chart Federal Direct PLUS Loans – 7.9%

Debt Amount Number of

Payments

Monthly Payment Total Interest Total Payback

$50,000 120 $604 $22,480 $72,480

$75,000 120 $906 $33,720 $108,720

$100,000 120 $1,208 $44,960 $144,960


I

P

10 YEARS

$ Payment Summary

Total $ Payments $248,574

Total Interest $68,574

Total # of

Payments 120

Monthly Payment Schedule

Initial Balance $180,000

Remaining

Terms $2,071

Standard Repayment


Payment Summary



Total # of

Payments 120

Graduated Repayment

Monthly Payments


Years 1-2 $1,422

Years 3-4 $1,729

Years 5-6 $2,102

Years 7-8 $2,555

Years 9-10 $3,107


Payment Summary



Total # of Payments 300

Extended Repayment

Monthly Payments


Year 1-30 1,249


Repayment in Residency

Consider Overall Cost vs. Affordability

• Median Post-MD Stipends for 2012 and IBR and PAYE Approximate Payments

• 1st Year $49,651 $411 $274

• 2nd Year $51,428 $433 $289

• 3rd Year $53,454 $459 $306

• 4th Year $55,750 $487 $325

Pay Now: Income-Based Repayment

• Interest will accrue during forbearance

• Unpaid interest will be capitalized at the end of the forbearance period.

Pay Later: Forbearance


Income-Driven Repayment

(IBR and PAYE)

• Appropriate for early in careers or public service

High Debt Relative to Income

• From 15% to 10% of discretionary income

Allows for Reduced Payment

• Spousal income and student loan debt considered

Married Borrowers Filing Jointly

• For IBR, after 25 years. For PAYE, after 20 years.

• IRS considers amounts forgiven to be taxable income in the year forgiven

Allows for Forgiveness


Eligibility for Income-Driven Plans

(IBR and PAYE)

• Direct Loan and FFEL Program borrowers with eligible loans and

• Their payments would be lower on IBR relative to what would have been paid under the 10-year standard repayment plan

Income-Based Repayment (IBR)

• Direct Loan borrowers with eligible loans

• Their payments would be lower on PAYE relative to what would have been paid under the 10-year standard repayment plan

• New borrower on/after 10/1/2007 who received a new loan on/after 10/1/2011

Pay As You Earn (PAYE)


Payment Amounts for Income-Driven Plans

(IBR and PAYE)

• 15% of discretionary income

• Possible interest subsidy for up to 3 years

Income-Based Repayment (IBR)

• 10% of discretionary income

• Possible interest subsidy for up to 3 years



Applying for Income-Driven

Repayment Plans

Electronic application for Income-Driven Repayment Plans

• Available at studentloans.gov and via servicers websites

Uses IRS Data Retrieval Tool that is used on the FAFSA

• Retrieves the most recent tax information from two most recently completed tax years

Electronically transmits application to loan servicers

• No follow-up necessary unless AGI is unavailable or borrower wants to submit alternative documentation of income

Servicer may require Alternative Documentation of Income (ADOI)

• If AGI is unavailable or does not reasonably reflect current income

Must recertify family size and update income information each year

• Failure to do so, will revert the account to the 10-year standard repayment plan.

• Can update income information and family size early if it changes mid-year.


Income-Based Repayment (PAYE)

Annual Income (Median First Year

Stipend)

$49,651

Total Educational Indebtedness $180,000

Monthly Payment Under Standard

($180,000 in Stafford Loans at 6.8%)

$2,071

Monthly Income $4,137

150 % of Poverty Level (Single) 16,755

Discretionary Income $32,896

15% of Discretionary Income X 10%

Monthly Payment Under IBR $274



Annual Income Family Size

1 2 3

$40,000 $194 $144 $95

$50,000 $277 $228 $178

$55,000 $319 $269 $220

$60,000 $360 $311 $261

$65,000 $402 $353 $303

$70,000 $444 $394 $345

$80,000 $790 $478 $428

$90,000 $610 $561 $511

$100,000 $694 $644 $595


Public Service Loan Forgiveness

Program for federal student loan borrowers who work in certain kinds of jobs.

It will forgive remaining debt after 10 years of eligible employment and qualifying loan payments.



• Direct Stafford, Direct Graduate PLUS, Direct Consolidation Loan Programs

The Right Loan - Federal Direct Loan

• Federal, State, Local or Tribal Government

• Private nonprofit 501(c)(3) organizations

• AmeriCorps or Peace Corps positions

The Right Job – Full Time Employment (30 hours/week)

• 120 On-time Payments Under the IBR Plan

The Right Payment


Pay as You Earn (PAYE) and


Year of IBR/

Post-MD

Income Monthly Loan

Repayment

Year 1 $49,651 $274

Year 2 $51,488 $285

Year 3 $53,393 $296

Year 4 $55,368 $309

Year 5 $120,000 $802

Year 6 $124,440 $875

Year 7 $129,044 $909

Year 8 $133,819 $943

Year 9 $138,770 $979

Year 10 $143,904 $1,017


Pay as You Earn (PAYE) and


Payment Summary

Total # of Payments 120


NPV of Total Payments $57,230

Total Loan Forgiveness $221,619



• Direct Stafford, Direct Graduate PLUS, Direct Consolidation Loan Programs

The Right Loan - Federal Direct Loan

• Federal, State, Local or Tribal Government

• Private nonprofit 501(c)(3) organizations

• AmeriCorps or Peace Corps positions

The Right Job – Full Time Employment (30 hours/week)

• 120 On-time Payments Under the IBR Plan

The Right Payment


For More Information

Repayment Plans and

Forgiveness Options


IBR/PSLF Actions

Graduate

Consolidate

Choose ICR, IBR or PAYE Repayment Plan and start making on-time payments

Complete Employment Certification (annually)

Loan will be transferred to myfedloan.org


ASK FOR HELP!!

• Let your Lender or Loan Service Agent know if

anything effects your ability to pay your loan

• You may be eligible for a

– Deferment

– Forbearance

– Cancellation


Deferments

• In-School Deferment

• Unemployment Deferment

• Economic Hardship Deferment


Forbearance

• Financial Difficulties

• Reduced-Payment Forbearance

• Med or Dental Internships

• Debt Exceeds Monthly Income

• Americorp/Teacher Loan Forgiveness

• Local/Nat’l Emergency

• Military Mobilization

• Designated Disaster Area

• Borrower Ineligible for Deferment

Temporary suspension or reduction of loan payments


Cancellation

DEATH

Your Loans Will Qualify for Cancellation in the Event of Your Death

PERMANENT AND TOTAL DISABILITY

Your Loans Will Qualify for Cancellation Should You Become Totally AND Permanently

Disabled


Loan Repayment Programs

• NIH Loan Repayment Programs:

www.lrp.nih.gov

• NHSC Repayment Program:

www.nhsc.hrsa.gov/loanrepayment

• Other programs available at AAMC website:

www.aamc.org/stloan


www.irs.gov/publications/p970/

The Taxpayer Relief Act of 1997

Full Deduction Partial

Deduction No Deduction

Single $60,000 or less $60,001 to

$74,999 $75,000 or more

Married

filing jointly $120,000 or less

$120,001 to

$149,999 $150,000 or more


Stafford/Grad PLUS Online Exit

Counseling

www.nslds.ed.gov

Update contact

information for:

•Yourself

•Your employer

•Your references

Login with your:

•Name

•SSN

•Date of Birth

•Fafsa PIN


USC Administered Loans

• Federal Perkins Loan

• Health Professional Student Loan

• Loan for Disadvantage Students

• USC Institutional Loans


USC Administered Loans

• www.ecsi.net Register and Create a User ID View and Manage Your Account Make One Time Payment Make Scheduled Payment Update Address Information

You can check out your USC Loan Accounts online at:


Due Diligence & Default


Consequences of Default

Hold on University Services

Adverse Credit History

Tax-Offset & Wage Garnishment

Loan Acceleration

Sent to a Collection Agency

Late Fees & Collection Costs

Litigation

Suspension of Professional Licenses


OSFA Ombudsman

Office of Student Financial Assistance,

Ombudsman

The SFA Ombudsman works with student loan borrowers

to informally resolve loan disputes and problems.

Customer Service: (877) 557-2575

http://ombudsman.ed.gov

http://www.ed.gov/


Your Money, Your Credit and You

Manage

your debt.

Don’t let it manage you.


Four

Basic

Steps

1) Set

Financial

Goals

4) Evaluate

& Adjust

3) Track

Expenses

2) Identify

Income

Creating A Budget


SMART Financial Goals

S=Specific

M=Measureable

A=Attainable

R=Relevant

T=Time Bound


Four

Basic

Steps

1) Set

Financial

Goals

4) Evaluate

& Adjust

3) Track

Expenses

2) Identify

Income

Creating A Budget


Habitual Spending

• What is your Spending Habit?


Credit Cards

• Credit card payment example: • 18% credit card

• $2,500 balance

• Minimum payment (2% of balance)

Results Minimum monthly payment

2% $50 $75

Total Cost to Pay Off:

Total Interest Paid:

Number of Years:

Paying Off Your Balances

$3,388

$888

3.8

$4,656

$2,156

7.8

$8,396

$5,896

27.8


Entitled to an annual free copy of your Credit Report

(877) 322-8228

www.myfico.com – fee for service

www.bankrate.com – info and articles

www.annualcreditreport.com

../Local Settings/Michael Kim/

../Local Settings/Michael Kim/


What is a FICO Score Based On?

35%

30%

15%

10% 10%

Payment history

Utilization rate (amount owed)

Length of

credit history

New credit

Type of credit used


Higher the FICO Score,

the Lower the Payment

FICO score APR* Monthly

payment

Total Interest

Cost

720-850 3.394% $731 $1,330

690-719 4.822% $747 $1,902

660-689 6.88% $771 $2,740

620-659 10.458% $812 $4,234

590-619 15.71% $875 $6,513

*National average interest rates as of 02/27/2013 (myfico.com). This table illustrates

how different FICO score ranges can affect rates and monthly payments on a $25,000,

36-month fixed-rate auto loan.


Protect Yourself

Read All of Your Mail

Guard Your Mail and Trash from Theft

Deposit Outgoing Mail at the Post Office

Place Mail on Hold when on Vacation

Shred, Shred, Shred

Charge Receipts

Credit Applications or Offers

Insurance Forms

Checks and Bank Statements

Expired Credit or Debit Cards

888-5 OPTOUT (888-567-8688) optoutprescreen.com


Keep Personal Information Personal

• Watch what information

you share on Social

Networks

• Keep your PIN private

• Use Good P@ssw0Rds!

• Lock your phone with

password.


More Information

• www.nslds.ed.gov

• www.ecsi.net

• www.lrp.nih.gov

• www.nhsc.hrsa.gov/loanrepayment

• www.aamc.org/stloan

• www.studentloans.gov

• www.annualcreditreport.com

• www.myfico.com

• www.bankrate.com

• www.feedthepig.org


Although every effort is made to provide the most

accurate and up-to-date information, the content of

this publication is subject to change due to

alterations in federal, state, university or lender

policy or procedure. The USC Financial Aid Office

cannot be held liable for the consequences of such

changes in policy or procedure. The most current

information can be found by contacting your

lender.

Disclaimer

Documents

STUDENT LOAN EXIT INTERVIEW - MedWeb