STUDENT L

OANS AND

DEFAULT FO

R EVERYONE

W V A S P A ST U D E N T L

O A N BA S I C

S AN D D

E F A U LT

1

FINANCIAL A

ID BUDGET

W V A S P A ST U D E N T L

O A N BA S I C

S AN D D

E F A U LT

2

IT STARTS WITH A FINANCIAL AID BUDGETSTuition and fees Full time by in state and out of state or some other methodRoom and board Dependent student (under 24/not married/no children they support) Independent student (over 24 or married or children/dependents they

support)Books and supplies Standard allowance for full timeTransportation Allowance All students regardless of close or far away from campusPersonal Expense Allowance Dependent student different from Independent student

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FINANCIAL AID BUDGETSDEPENDENT STUDENTS

 INSTATE DEPENDENT

OUT OF STATE DEPENDENT

INSTATE INDEPENDENT

OUT OF STATE INDEPENDENT

Tuition and fees 2400 7896 2400 7896Room and board 1999 1999 3999 3999Books and Supplies 1135 1135 1135 1135Transportation allowance 1400 1400 1400 1400Personal and Miscellaneous 1188 1188 2122 2122TOTAL AID 8122 13618 11056 16552

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THEN MAXIMUM STUDENT LOAN LIMITS PER YEAR BASED ON HOURS COMPLETED

Total Dependent Loan $5500 if < 30 hrs totalTotal Dependent Loan $6500 if Sophomore loan statusTotal Dependent Loan $7500 if Junior loan statusTotal Dependent Loan $7500 if Senior loan statusTotal Independent Loan $9500 if <30 hrs totalTotal Independent Loan $10500 if Sophomore loan statusTotal Independent Loan $11500 if Junior loan statusTotal Independent Loan $11500 if Junior loan status

1) Student loans require the student must be enrolled in 6 hrs or more at time of disbursement in a degree seeking program

2) Loan amount is lesser of remaining budget amount or loan limits above

5

THEN DETERMINE FEDERAL LOAN MAXIMUMS

Total Limit for Loans

Dependent Undergraduate Students

$31,000

Independent Undergraduate Students

$57,500

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NOW APPLY THIS TO A STUDENT TO GET AFINANCIAL AID BUDGET (EXAMPLE IN STATE STUDENT)

Sample Financial Aid Package (Fall and Spring)(any family size/income that has O EFC)

Budget $8122EFC - 0Need based aid $8122Pell grant -$5645Student Loan or other aid $2477Sample Financial Aid Package (Fall and Spring)(any family size/income that has O EFC)Budget $11056EFC - 0Need based aid $11056Pell grant -$5645Student Loan or other aid $5451

7

NOW APPLY THIS TO A STUDENT TO GET AFINANCIAL AID BUDGET (EXAMPLE FOUR YEAR INSTITUTION)

Sample Financial Aid Package (Fall and Spring)(any family size/income that has O EFC)

Budget $18,122EFC - 0Need based aid $18,122Pell grant -$ 5,645Student Loan or other aid $12,477Sample Financial Aid Package (Fall and Spring)(any family size/income that has O EFC)Budget $21,056EFC - 0Need based aid $21,056Pell grant -$5,645Student Loan or other aid $15,451

8

WHERE DO I FIND OUT INFORMATION ABOUT MY SCHOOL?Your College Catalog or your

College’s Financial Aid webpage will have your institutions budget information (most budgets assume students are full time)

9

STUDENT L

OAN

REPAYMENT C

OMPARISON

B A S I C R

E P A Y M E N T OP T I O

N S

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BASIC REPAYMENT OPTIONSStandard – 10 years with same payment per monthExtended fixed – 25 years with the same payment per month (loan must be over $30,000)Graduated standard - 10 years with loan amounts increasing on years 1,3,5,7,9)Graduated extended – 25 years with loan amounts increasing on all odd years (loan must be over

$30,000)Income Contingent- Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of: 1)the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or 2)20% of your monthly discretionary incomeIncome Based (IBR)-Under this plan the required monthly payment will be based on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years up to 25 years.

Pay As you Earn is the newest plan but has many date restrictions at this time

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CONSOLIDATION LOANSA Consolidation Loan allows a

borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments.

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STUDENT BORROWED $15,000 TOTALSTUDENT IS FAMILY OF 4 HAS $20,000 AGI

Plan Monthly payment # of payments total interest total payback$15,000 loan/$20,000 AGI   Family size 4    Standard $172.62 10 years (120 payments) $5,714 $20,714 Extended fixed N/A N/A N/A N/AGraduated standard

$99.57 (yr 1 and 2) 10 years (120 payments) $7,289 $22,289

 $131.05 (yr 3 and 4)      

 $172.48 (yr 5 and 6)      

 $227.00 (yr 7 and 8)      

 $298.71 (yr 9 and 10)      

Graduated extended N/A N/A N/A N/AIncome Contingent

$0 reviewed each year 25 yrs (300 payments) $16669 $16,669

 $151.33 last months      

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STUDENT BORROWED $35,000 TOTALSTUDENT IS FAMILY OF 4 HAS $20,000 AGI

$35,000 loan/$20,000 AGI Family size 4Plan Monthly payment # of payments total interest total paybackStandard $402.78 10 years (120 payments) $13,333 $48,333 Extended fixed $242.93 25 years (300 payments) 37,877 $72,877 Graduated standard

$232.33 (yr 1 and 2) 10 years (120 payments) $17,009 $52,009

 $305.77 (yr 3 and 4)      

 $402.42 (yr 5 and 6)      

 $529.62 (yr 7 and 8)      

 $696.99 (yr 9 and 10)      

Graduated extended

$198.33 (yr 1 and 2) 25years (300 payments) $43,932 $78,932

 $207.80 (yr 3 and 4)      

 $217.72 (yr 5 and 6)      

 $228.12 (yr 7 and 8) ** skipped 9 to 19    

 $301.78 (yr 19 and 20)      

Income Contingent $141.83 24 yrs (287 payments) $43,778 $81,399

 $379.55 last month      

Income Based IBR$0 reviewed each yr 25 years (300 payments) $16,699 $16,699 $151.00 last month

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REPAYMENT PLAN SUMMARYBilly Borrower has $35,000 in Direct Loan debt at an interest rate of 3.86%. His income is $30,000, he is single, and he lives in Indiana. His income increases at a rate of 5% per year.

Repayment Plan

Initial Paymen

t

Final Paymen

t

Total Paid

Total Paid in Interest

Total Time in

Repayment

Forgiveness

10-Year Standard

$352 $352 $42,244 $7,244 10 years -

Graduated $196 $590 $44,032 $9,032 10 years -

Extended $182 $182 $54,624 $19,614 25 years -

Extended Graduated

$113 $331 $59,711 $24,711 25 years -

Income-Based

$160 $352 $48,557 $13,557 15 yr., 5. mo. $0

Pay As You Earn

$106 $352 $51,283 $20,755 20 years $4,479

Income-Contingent

$231 $273 $46,822 $11,822 15 yr., 5. mo. $0

GRACE PERIODS

S T U D E N T LO A N R

E P A Y M E N T

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GRACE PERIODS

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After a student graduates, leaves school, or drops below half-time enrollment, there is a period of time before repayment begins. This is called the "grace period" and will be:

• Six months for a Federal Stafford Loan (Direct Loan Program℠ or Federal Family Education Loan (FFEL) Program℠)

• Nine months for Federal Perkins Loans

WHY GRACE PERIODS ARE IMPORTANT…

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Of the borrowers who defaulted, most didnot receive their full 6-month grace period

Schools must learn when a borrower leaves campus and promptly report this to NSLDS

During Grace Periods Student Loan ServicersContinue to establish a relationship with the borrowerUpdate borrower contact informationPromote self-service through the web Discuss repayment plan optionsDiscuss consolidation options

POSTPONING REPAYMENT - DEFERMENT AND FORBEARANCE

DEFERMENT & FORBEARANCE REASONS

Deferment• Unemployment• Economic hardship• Graduate fellowship• Rehabilitation training

program• Military• In-school

Forbearance• Medical/dental

internship residency• Student loan debt

burden• AmeriCorps• Teacher Loan

Forgiveness• DOD Student Loan

Repayment Program• National Guard• Medical/other

acceptable reasons

DEFERMENT AND FORBEARANCEPostpone making paymentsAll deferments have eligibility criteriaSome forbearances have eligibility criteria; others are at the

lender’s discretionMost have time limitsUnpaid interest capitalizes at endInterest does not accrue on subsidized loans during defermentsTime does not count against repayment period

DELINQUENCY AND DEFAULTDelinquency begins on the day after due date when full

payment not madeLoan servicers will begin activities to try to prevent default,

including contacting references and sending noticesLoan servicers always try to keep the borrower making

payments because it will save the borrower time and interest payments in the long run

Servicers will provide deferment and forbearance options if needed

Default occurs after 270 days of delinquency

CONSEQUENCES OF DEFAULT

Reported to credit bureaus

No more eligibility for federal student aid

Loan immediately due and payable in full

Lose eligibility for repayment plans and deferment or forbearance options

Collection agencies will contact borrower

Administrative wage garnishment

Garnishment of tax refunds

3 YEAR COHORT DEFAULT RATE (CDR)

2009 2010

National 13.4% 14.7%West Virginia 14.1% 16.2%National Public 4 year

7.9% 9.3%

West VirginiaPublic 4 year

10.4% 13.2%

% OF BORROWERS 90+ DAYS DELINQUENT ON STUDENT LOANS

2004 2005 2006 2007 2008 2009 2010 2011 20120.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

WVUS

% OF BORROWERS 90+ DAYS DELINQUENT ON STUDENT LOANS BY AGE

Under 30 30-39 40-49 Over 500.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

WVUS

3-YEAR DEFAULT RATES IN WV

2006 2007 2008 2009 20100.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Public 4 YearPubic 2 YearPrivateProprietaryWV

STUDENT LOAN DEBT IN WV

Average student loan balance 2012 is $22,920

24.4% of student borrowers are 90+ days delinquent at the end of 2012 (only behind MS and PR)

Federal Reserve Bank of New York

STUDENT LOAN DEBT IN WV

Proportion of student loan borrowers 90+ days past due by age (2012)

Federal Reserve Bank of New York

age below 30 age 30-39 age 40-49 age 50+

all age groups

21.1% 31.1% 29.8% 16.0% 24.4%

2009 2010 2011 (Draft)

Blue Ridge 19.5% 22.9% ?Bridgemont 27.0% 24.2% ?Eastern NA 0% ?Kanawha Valley

23% 18.3% ?

Mountwest 24.9% 32.2% ?New River 25.7% 31.7% ?Pierpont NA 29.2% ?Southern 22.1% 27.3% ?WV Northern 27.6% 31.8% ?WVUP 24.1% 25.8% ?

2009 2010 2011 (Draft)

Bluefield State

17.7% 23.5% ?

Concord 16.0% 19% ?Fairmont State

13.7% 18.2% ?

Glenville State

14.6% 23.9% ?

Marshall 9.9% 13.6% ?Shepherd 6.8% 10.7% ?WV State 14.1% 16.4% ?West Liberty 15.4% 14.5% ?WVU 7.6% 9.8% ?WVSOM 0.8% 0.6% ?

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CDRS: THE FORMULA

Numerator

Denominator

Borrowers who entered repayment in one year, and defaulted in that year or the next.

Borrowers who entered repayment during the one-year cohort period.

WHY IS THE DEFAULT RATE IMPORTANT?

Schools play a critical role. Their contribution will yield improved resultsWhat is your motivation to help?Protect federal program eligibility?Improve your school’s default rate?Save students from the consequences of default?

COHORT DEFAULT RATE

Lagging indicatorTakes a long time before you can

assess if any initiatives are workingExample – 2011 draft default rates

were released to institutions February 2014.

Students were enrolled 2009-2010Went into repayment 2010-2011A school has until September 30, 2014 to have any impact on 2012 default rates

COHORT DEFAULT RATE

Example – a student who leaves your campus today, goes into repayment 6 months from now is part of your FY2015 cohort and if went into default would be part of the draft rate you would receive…

February 2018

CDR Denominator:Enter Repayment

NumeratorDefault

Publish Rates Cohorts used for

Sanctions

FY 2009(3-year)

10/1/08-9/30/09 10/1/08-9/30/11

September 2012

No Sanction

FY 2010(3-year)

10/1/09-9/30/10 10/1/09-9/30/12

September 2013

No Sanction

FY 2011(3-year)

10/1/10-9/30/11 10/1/10-9/30/13

September 2014

FY 09, FY 10, FY 11

FY 2012(3-year)

10/1/11-9/30/12 10/1/11-9/30/14

September 2015

FY 10, FY 11, FY 12

FY 2013(3-year)

10/1/12-9/30/13 10/1/12-9/30/15

September 2016

FY 11, FY 12, FY 13

FY 2014(3-year)

10/1/13-9/30/14 10/1/13-9/30/16

September 2017

FY 12, FY 13, FY 14

APPROACHES

Traditional approach - It is the financial aid offices responsibility

Comprehensive approach – whole campus involved in:

Increasing program completion ratesDecreasing program completion timeHelping non-completers find a job Implementing institutional policies that promote student success: before a student walks on campus until their loans are paid off

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COMPREHENSIVE APPROACH

Data driven decisions Looking at who is defaulting and who is

repayingNot just who is defaulting but why are

they defaultingOnce you know who and why, then you can

implement strategies that will make a difference

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WHO ARE YOUR STUDENTS?

?% students place into developmental English?% students place into developmental Math?% students received GED or passed ATB ?% first generation college students?% of Pell recipients have Zero EFC ?% are part-time students?% retention Spring to Fall – ?% retention Fall to Fall

IDENTIFYING DEFAULT RISK

Poor Educational Outcomes

Poor Employment Outcomes

Poor Repayment Outcomes

STUDENTLOANS.GOVSign up for IBR, Pay As You Earn or ICR at StudentLoans.gov! 

ESTIMATE YOUR STUDENT LOAN PAYMENTS

Available at StudentLoans.gov.

RESOURCES

Successfully Managing your student loans from : financialaidtoolkit.ed.gov/resources/ ...student-loans.ppt

QUESTIONS???Brian WeingartWV HEPC State Director of Financial Aid Programsbweingart@hepc.wvnet.edu

Mary BlizzardDirector of Financial Aid for BCTC, KVCTC (now Bridge Valley CTC), and MCTCmblizzard@hepc.wvnet.edu

Janet FikeVP Student ServicesWV Northern Community Collegejfike@wvncc.edu