Student Loan Repayment

Presented by Bill Bufkins

The Master Promissory Note

You signed a Master Promissory Note (MPN) when you first received

student loans.

The MPN is a legally-binding agreement where you promised

to repay all federal loans you received.

You may have used one MPN for all of the loans you received.

– MPNs can be used for multiple loans with the same lender for up

to 10 years.*

*U.S. Department of Education. ―FAQs—Master Promissory Note.‖ https://studentloans.gov/myDirectLoan/faqs.action. (Accessed 03/11)

Rights and Responsibilities

Disclosure statement

Copy of the Master Promissory Note and actual note when paid in full

Repayment schedule

Interest rate benefits, if eligible

Grace period

Prepayment without penalty

Notice of loan sale or transfer, if payments are sent to a new location

Deferments, when eligible

Forbearance requests

Federal Loan Repayment

Six-month grace period for Stafford loans

Nine-month grace period for Perkins loans

Repayment date

Repayment term may be 10-25 years, depending on which plan you

choose*

No prepayment penalties; prepaying can reduce length of term

Need to make payments on time

Know who all of your lenders are

Know who your loan servicer is and where payments, change

of address notification and inquiries should be directed

*U.S. Department of Education. ―Repayment Plans and Calculators.‖

http://studentaid.ed.gov/PORTALSWebApp/students/english/OtherFormsOfRepay.jsp. (Accessed 03/11)

Federal Loan Repayment Options

Standard Repayment:

Most repayment plans are standard, unless you arrange for

a different plan

10 years of equal monthly payments

Offers the least total interest costs

Income-Contingent Repayment:

Payments are recalculated annually based on your income, family size and

total amount of Direct Loans

Maximum repayment period is 25 years

Higher total interest costs in the long run

U.S. Department of Education. ―Repayment Plans and Calculators.‖

http://studentaid.ed.gov/PORTALSWebApp/students/english/OtherFormsOfRepay.jsp. (Accessed 03/11)

Federal Loan Repayment Options (continued)

Income-Based Repayment:

Monthly payments capped at an amount that is intended to be affordable based on income and family size

http://studentaid.ed.gov/students/attachments/siteresources/IBRQ&A_template_123109_FINAL.pdf

Graduated Repayment:

Monthly payments will gradually increase over a period of time

Offers higher total interest costs in the long run

Extended Repayment:

Allows qualified borrowers with at least $30,000 in federal student loans to extend their repayment plan up to 25 years

Offers lower monthly payments over a longer period of time

Offers higher total interest in the long run

U.S. Department of Education. ―Repayment Plans and Calculators.‖

http://studentaid.ed.gov/PORTALSWebApp/students/english/OtherFormsOfRepay.jsp. (Accessed 03/11)

ECASLA 2008

The Ensuring Continued Access to Student Loan Act (ECASLA) of

2008 ensures that every eligible student and his or her parents are able

to obtain the federal student loans they need to meet educational

expenses.

This law allows private lenders to sell eligible Federal Family

Education Loan Program (FFELP) loans to the U.S. Department of

Education.

Loan terms remain the same on loans sold to the Department of

Education.

U.S. Department of Education. ―Ensuring Continued Access to Student Loans.‖ http://federalstudentaid.ed.gov/ffelp. (Accessed 03/11)

ECASLA 2008What do I need to know?

If your FFELP loan is sold to the

U.S. Department of Education,

you’ll receive letters from the

department and your new loan

servicer.

Questions and loan payments

should be directed to your new loan

servicer.

If you’re not sure who is holding

your loan, you can track your

guaranteed student loans on the

Department of Education’s National

Student Loan Data System at

NSLDS.ed.gov.

U.S. Department of Education. ―Ensuring Continued Access to Student Loans.‖ http://federalstudentaid.ed.gov/ffelp. (Accessed 03/11)

ECASLA 2008Federal Loan Servicing Contacts

ACS Education Services(ACS)

1-800-835-4611

ACS-Education.com

FedLoan Servicing (PHEAA)

1-800-699-2908

MyFedLoan.org

Great Lakes

1-800-236-4300

MyGreatLakes.org

Nelnet

1-888-486-4722

Nelnet.com

Sallie Mae

1-800-722-1300

SallieMae.com

ECASLA 2008What’s it mean for me?

Borrower benefits may remain the same, although you will need to

make payments to and discuss repayment questions with your new

loan servicer.

To find out more, visit ed-servicing.com.

Borrower Benefits

Borrower benefits are money-saving incentives that borrowers may

receive as a reward for things such as making on-time payments and

making payments via auto-debit.

Visit your lender’s Web site or call your lender to determine which

benefits are available to you.

Deferment

Deferment allows you to

temporarily suspend payment

on your federal student loans.

Government pays interest on

subsidized loans during periods

of eligible deferment.

Interest continues to accrue

for unsubsidized loans during

deferment.

Check with your lender or servicer

for more information.

Common Deferments:

In-school

Unemployment (max. 3 years)

Economic hardship (max. 3 years)

Approved fellowship/rehabilitation

training programs

Military

Remember to continue making

loan payments until the request

has been approved.

U.S. Department of Education. ―Postponing Repayment.‖

http://studentaid.ed.gov/PORTALSWebApp/students/english/difficulty.jsp. (Accessed 03/11)

U.S. Department of Education. ―Funding Education Beyond High School.‖

http://studentaid.ed.gov/students/publications/student_guide/2009-2010/english/postponeloanpayment.htm. (Accessed 03/11)

Forbearance

Forbearance allows you to temporarily

postpone or reduce your monthly

student loan payment.

It is typically granted in 12-month

intervals.

It is typically granted at the discretion

of the lender or servicer; some are

also mandatory.

You are responsible for interest as

it accrues, regardless of loan type.

You may pay interest as it accrues.

Any unpaid interest may be added to

your principal balance at the end of

the forbearance period (capitalization).

Common Forbearances:

Discretionary:

– Economic hardship

– Disability

– Other acceptable reasons

Mandatory:

– Medical/dental internship/residency

– Student loan payments that are 20% or

more of monthly income

– Payments being made by the Department

of Defense

Remember to keep making loan

payments until the request has been

approved.

U.S. Department of Education. ―Postponing Repayment.‖ http://studentaid.ed.gov/PORTALSWebApp/students/english/difficulty.jsp.

(Accessed 03/11)

U.S. Department of Education. ―Funding Education Beyond High School.‖

http://studentaid.ed.gov/students/publications/student_guide/2009-2010/english/postponeloanpayment.htm. (Accessed 03/11)

Forgiveness

Teachers*:

Up to $17,500 for teachers in certain specialties or schools

Must meet other eligibility requirements

Child Care providers**:

A percentage of the loan is forgiven for borrowers who work in an eligible child care center for two consecutive years.

Must meet other eligibility requirements

In most cases, the borrower must start the process by applying to the lender or servicer.

*U.S. Department of Education. ―Stafford Loan Forgiveness Program for Teachers.‖

http://studentaid.ed.gov/PORTALSWebApp/students/english/cancelstaff.jsp. (Accessed 03/11)

**U.S. Department of Education. ―Child Care Provider Loan Forgiveness Program.‖

http://studentaid.ed.gov/PORTALSWebApp/students/english/childcare.jsp. (Accessed 03/11)

Forgiveness

Public Service:

Forgives the remaining balance of eligible loan(s) after borrower has made 120 monthly payments

Borrower must be employed full time by a public service organization when making payments and when applying for loan forgiveness

Borrower must be employed by a public service organization, which includes: Most public schools, colleges and universities

Public child or family service agencies

AmeriCorps or Peace Corp positions

Not-for-profit organizations that provide emergency management, law enforcement, military service, public safety, public interest law services, etc.

http://studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessMarch18.pdf

Discharge/Cancellation

Total and permanent disability

You cannot complete your course of study because your school

closed

False certification, including identity theft

Employment in certain designated public school service professions

Death

Note that in most cases, student loans are NOT dischargeable in

bankruptcy (only in cases where a bankruptcy court determines

repayment would cause undue hardship)

U.S. Department of Education. ―Discharge/Cancellation.‖

http://studentaid.ed.gov/PORTALSWebApp/students/english/discharges.jsp?tab=repaying. (Accessed 03/11)

Delinquency

If you don't make a payment on time or if you start missing payments –

even one – your loan is considered delinquent and late fees can be

assessed. If you are making late or partial payments, contact your

lender or servicer immediately for help.

U.S. Department of Education. ―Repay.‖ http://studentaid.ed.gov/students/publications/repaying_loans/2009-2010/glossary.htm.

(Accessed 03/11)

Default

If you don't make payments for more than 270 days, your loan will go into default and your credit rating could suffer.

Consequences:

Your entire loan amount, plus interest and penalties, will be due in full immediately.

Default is reported to national credit bureaus and will affect your credit rating.

You'll have difficulty qualifying for credit cards, a car loan, a mortgage, or renting an apartment (credit checks are required to rent an apartment).

Your account may be turned over to a collection agency.

You may become ineligible for additional financial aid.

The federal government may withhold your income tax refunds.

Your wages may be garnished.

You may not be able to obtain a professional license or get hired by an employer that performs credit checks.

Default may result in legal action.

U.S. Department of Education. ―Don’t Default.‖ http://studentaid.ed.gov/students/publications/repaying_loans/2009-2010/dontDefault.htm.

(Accessed 03/11)

National Student Loan Data System

Students can access loan information from the National Student Loan

Data System (NSLDS) by visiting nslds.ed.gov.

– You must know your federal PIN number.

Information on the NSLDS site is updated by lenders and guaranty

agencies and may not be as current as the latest information from

the individual loan holder.

If you do not have Internet access, call the Federal Student Aid

Information Center toll free at 1-800-4-FED-AID (1-800-433-3243).

Federal Student Aid Ombudsman

The Ombudsman’s office is a resource for borrowers when other approaches to resolving student loan problems have failed. Borrowers should first attempt to resolve complaints by contacting the school, company or agency involved.

If you have made a reasonable effort to resolve the problem through normal processes and have not been successful, contact the Ombudsman.

Federal Student Aid Ombudsman

830 First Street, NE

Fourth Floor

Washington DC 20202-5144

T: 1-877-557-2575

fsahelp.ed.gov

Update Your Information

Collect and update the following:

Expected permanent address after leaving school

Address of your next of kin

Name and address of your expected employer (if known)

Changes in name, address, Social Security Number and references

Current driver’s license number and state

Managing Credit Responsibly

Obtaining and maintaining credit is an important responsibility.

You can get a free copy of your credit report at

AnnualCreditReport.com.

Understand your credit responsibilities.

A Budget You Can Live With

Live within your means

Be aware of your expenses

Income to debt calculations

Compare costs with the estimated repayment schedule

Loan payment is a fixed cost, like rent or utilities

Plan now and avoid problems later

Other Important Information

Your school may provide you with the current name and address

of your lender, based on the latest information available.

You should always keep copies of all correspondence to and from

lenders about your loans.

Your lender will send you the due date and the payment address

before your first payment is due. If you have more than one lender,

you will receive this information separately from each.

If you do not hear from your lender, the money is STILL DUE and

you should contact them.

Important Information: The articles contained in this publication are for

informational purposes only and are intended as resources for students to identify

financial and other related information. Resources or Web sites cited are provided

solely as references to information on topics that may be useful, and Chase has no

control over the content in third-party resources. Chase does not guarantee the

authenticity of these documents and/or Web sites and is not implying any

endorsement of or responsibility for the opinions, ideas, products, information or

services offered or representations made therein. © 2009 JPMorgan Chase & Co. All

rights reserved. The information contained within this document was current at the

time of publication. Contact Chase for current product information. (11-138) 03/11