Exit Loan Counseling Presentation Office of Financial Aid Spring - PowerPoint PPT Presentation

Exit Loan Counseling Presentation Office of Financial Aid – Spring 2018

Why Do You Have to Be Here? Service design and you  Federal Regulations require federal loan borrowers to complete an “Exit Interview” session prior to leaving college  To learn about your: Responsibilities  Rights  Repayment Options  2

Federal Loans Interest paid by government Interest paid by student while in school & in grace in-school or accruing & period or authorized capitalizes deferment Direct Direct Subsidized Unsubsidized Graduate Perkins PLUS

Getting Organized – Where Are My Loans? Federal Loans www.studentloans.gov www.nslds.ed.gov Private Loans Or Lender’s Website(s)

From NSLDS.ED.GOV

Keep Track of Your Loans 6

Your Responsibilities Complete Exit Loan Counseling  Know the name and contact information of your loan servicer  Notify servicer of changes in name, email, address,  employment, etc. Make your monthly payments 

Know Your Servicer

Tips When Contacting Servicers  When reaching out to your servicer be sure to keep a record of your communications  Create a log of all phone calls including:  Date & Time  Who you spoke to  If they agreed to do anything for you (i.e. send paperwork, change repayment plan, etc.)  Open your mail/emails and be sure to see if you are required to take any action (i.e. renewing paperwork for your payment plan)

You promise to repay even if you Don’t receive payment notices or reminders from your  lender/servicer Unable to locate work after completing your program  Are not satisfied with your education  Don’t complete program of study 

Know What You Owe in Federal Loans Undergraduate Graduate Graduate PLUS Average Federal Average Federal Average Loan Direct Stafford Direct Stafford Debt Loan Debt Loan Debt Amount $23,510 $36,752 $34,992 Borrowed Interest Rate 4.45% 6% 7% Monthly $244 $408 $406 Payment May 2018 Graduates

Understanding Your Federal Debt

Capitalized Interest $30,000 $29,000 Total Principal & $1,000 Interest + New Interest Principal Interest Loan Loan   Capitalization is the addition of unpaid Interest accrues on most loans from accrued interest to the principal balance of disbursement date  the loan  Remains until enters repayment  Capitalization may occur more frequently for Can payoff before repayment which saves $ certain loans at certain times

Your Rights  Receive a copy of your MPN  Receive a disclosure statement  Receive notice if your loan is sold and the name of the new holder

Your Rights – Grace Period Grace Period Stopped Attending School Time before you start paying on your (Exhausted Your Grace Period) loans Type of Loan When Repayment Type of Loan Length Starts Subsidized/Unsubsidized 180 days (6 Months) Federal Loans Right after Graduate PLUS 180 days (6 months) Graduation Perkins 9 Months Within 30-45 days Private Loans Varies Private Loans Right after Graduation Within 30-45 days

Your Rights - Prepayment Any additional payment Option of requesting You may prepay all or a made above “required” shorter repayment portion of your loans monthly amount due will schedule without penalty reduce outstanding balance Must have all accrued interest paid Must not have late fees Be sure to consult with your servicer to ensure taking the correct steps Once loan paid in full, right to have proof of zero balance 17

Your Rights - Repayment Options Standard Graduated Extended Repayment Repayment Repayment • Federal debt must • Highest monthly • Interest only payments exceed $30,000 all payment initially within the same loan • Lowest total interest • Payments increase program (DL or FFEL) incrementally every 2 • 10 year repayment • Lowest monthly yrs term payment • 10 year repayment • Highest total interest term • Up to 25 years to repay

1. Standard 2. Graduated Repayment Repayment Payments start out low & increase Payments stay the same for every 2 years for 10 years 10 years $411 $244 $244 $244 $278 $137

3. Extended Repayment $237 Extended Fixed Borrowed at least $30,000 and payments will remain same for 25 years $237 $237 25 Years $237 $237 Extended Graduated (also available) Payments will increase every 2 years for 25 years

Traditional Repayment Examples - Undergraduate Repayment First Last T otal T otal Loan Repayment Plan Monthly Monthly Interest Paid Months Payment Payment Paid Standard $244 $244 $5,728 $29,238 120 Graduated $137 $411 $7,178 $30,688 120 Extended Not Eligible Not Eligible Not Eligible Not Eligible N/A Fixed Based on a debt of $23,510 at an interest rate of 4.45% 21

Traditional Repayment Examples - Graduate Repayment First Last T otal T otal Loan Repayment Plan Monthly Monthly Interest Paid Months Payment Payment Paid Standard $814 $814 $25,959 $97,703 120 Graduated $468 $1,404 $33,055 $104,799 120 Extended $484 $484 $73,417 $145,161 300 Fixed Total debt of $71,744 (Unsubsidized $36,752 at an interest rate of 6% & Graduate PLUS debt of $34,992 at an interest rate of 7%) 22

Income Driven Repayment Plans

Income Driven Repayment Plans IDR plans are based on your income, family size, marital status and state of residence. Since these can change, annual updates are required to keep payments aligned with your current situation. 24

Income Driven Plans Income Based • Payments capped at standard 10 year amount • Must submit annual paperwork to determine IBR yearly payment • Up to 25 years to repay • FFEL & Direct Loan Program Pay As You Earn Revised Pay As You Earn • Payments capped at standard • Payment amount is10% of household income REPAYE 10 year amount without a cap PAYE • Must submit annual • Must submit annual paperwork to determine paperwork to determine yearly payment yearly payment • Up to 20 years to repay (Undergrad debt) • Up to 20 years to repay • Up to 25 years to repay (w/Grad debt) • Direct Loan Program Only • Direct Loan Program Only

Married Eligibility Loan Forgiveness Borrowers 27

IDR Repayment Examples - Undergraduate Repayment First Last T otal T otal Loan Repayment Plan Monthly Monthly Interest Paid Months Payment Payment Paid IBR (New) $183 $244 $6,709 $30,219 122 PAYE $183 $244 $6,709 $30,219 133 REPAYE $183 $331 $6,401 $29,911 120 Based on a debt of $23,510 at an interest rate of 4.45%, AGI $40,000, 1 household, reside in CT 28

IDR Repayment Examples - Graduate Repayment First Last T otal T otal Loan Projected Repayment Plan Monthly Monthly Interest Paid Loan Months Payment Payment Paid Forgiveness IBR (Old) $399 $814 $53,870 $125,614 n/a 198 PAYE $266 $814 $47,887 $119,631 $39,037 240 (IBR New) REPAYE $266 $1,020 $86,512 $158,256 n/a 282 Total debt of $71,744, AGI $50,000, 1 Household residing in CT (Unsubsidized $36,752 at an interest rate of 6% & Graduate PLUS debt of $34,992 at an interest rate of 7%) 29

Keep in Mind with IDR • Increased interest will accrue and may have negative amortization • Unpaid interest will capitalize at some point • Monthly payments could change • All IDR payments except REPAYE will cap at the standard 10 yr amount • Must select an IDR plan if seeking public service loan forgiveness (PSLF) 31

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Thinking Public Service Loan Forgiveness  Need to make 120 qualifying payments under the IDR plan on your Federal Direct Loans  Work for a non-profit organization full-time for the 10 years of payments  Any remaining loan balance after the 120 payments will be forgiven but are not taxable Eligible Eligible Payments Forgiveness Eligible Loans Employment 1 st payment Plan Last payment T otal Paid T otal Forgiven IBR (New) $266 $460 $42,746 $75,544 Graduate Unsub. and GPLUS debt $71,744

PSLF – Primary Servicer is FedLoans Learn more www.saltmoney.org

Understanding Your Federal Debt

Borrower Benefits Contingent Benefits .25% Interest Rate  Reduction for Auto-Debit  12 on-time payments* for loans disbursed before July 1, 2012 Possible rebate Programs  36

Having Difficulty Repaying Loans? Contact servicer regarding possible options/rights:  Adjustment of Repayment Plan  Deferment  Forbearance  Cancellation  Specific terms apply

Your Rights - Deferment  In-School part-time or more  The economic hardship deferment has a complicated set of eligibility criteria, contact your servicer for specifics  Military service  Peace Corp  Federal government pays the interest on subsidized Stafford loans, Perkins loans and on the portion of a consolidation loan that paid off a subsidized Stafford loan

Your Rights - Forbearance  Temporary time when you are not making loan payments and considered in good standing  Must be approved before stopping payment  Total of 36 months for the life of your loan, generally receive 6 months at a time  Interest is still accruing during a forbearance or you may pay on it