Integrated Problems in Practice Management (IPPM) Exit Counseling and Debt Management Keneshia Estimé Class of 2018
Agenda Navigat ing t he Financial Aid Repayment Process Repaying Federal Loans Repaying Privat e Loans Repaying BU Loans Consolidat ion Budget s and Planning for t he Fut ure Cont ingency Planning and Budget ing Credit Report s and S cores Helpful Resources Exit Mat erial Requirement s and S ign-out Process
Questions to ask yourself How much can I afford to pay per month? What are my other financial obligations? What are my short-term and long- term financial goals? Where do I see myself in 5, 10, 15 years?
Please Note: All examples are for illustrative purposes only- each student’s situation is unique
S alary Breakdown Assumptions: $99,000 in the first year over 12 months of working Tax filing status: single Tax Rate: $18,713.75 plus 28% of excess over $91,900 Taxes for year: $20,702 After Federal Taxes: $78,298 Source: https://www.forbes.com/sites/kellyphillipserb/2016/10/25/irs-announces-2017-tax-rates-standard-deductions- exemption-amounts-and-more/#5cd5f1b25701
S alary Breakdown Cont. $78,298 after federal taxes Don’ t forget about state taxes, social security payments, retirement contributions and health insurance Estimated net pay $5,558 per month (see: www.paycheckcity.com ) What can you afford as a monthly student loan payment?
Debt Assumptions for DMD IV Maximum Federal Loans Only for 4 years of Dental S chool Unsubsidized Loans: $180,000 5.31- 6.8% Grad PLUS Loans: $220,000 6.31- 7.9% Total: $400,000 We know these figures do not apply to many of you- this is just one example.
Debt Assumptions for AS II Maximum Federal Loans Only for 2 years of Dental S chool Unsubsidized Loans: $95,000 5.31-6.8% Grad PLUS Loans: $126,000 6.31-7.9% Total: $221,000
Ways to Repay Y our Federal Loan Based on assumptions on DMD IV slide: *This and the following slides based on the calculator available on www.studentloans.gov
Further Assumptions
Repayment Options www.studentloans.gov
S tandard Repayment Plan This is the default plan Typically the fastest way to repay your loan (10 Y ears) Monthly payments are a fixed amount Access Group, Inc.; Standard 10 Year; 2015; accessgroup.org; 2016
Graduated Repayment Plan Payments start low and increase every 2 years Monthly payments are made for up to 10 years Over the lifetime of the loan you pay more money Remember: with Federal Loans there is no prepayment penalty. Access Group, Inc.; Extended (Fixed) 25 Year; 2015; accessgroup.org; 201
Extended Fixed • Monthly payments are a fixed amount of at least $50 • Payments are lower than Standard Plan and Graduated Plan • Made for up to 25 years
Standard Graduated Extended
Income Driven Repayment Plans A plan that sets your monthly payment at an affordable amount based on income and family size Four different income-driven plans Must reapply annually
IDR Pros and Cons Advantages -more manageable monthly payments -may lead to forgiveness Disadvantages -payments may not cover interest, if gap between debt and income is high -different plans can be confusing -plan forgiveness is subj ect to income tax
Pay As You Earn (PAYE) • To initially qualify and to stay enrolled, you must have a partial financial hardship • Payments calculated based on income • Any outstanding balance will be forgiven after 20 years • Good option if seeking PSLF
PAYE (Pay As You Earn) Cont. Must display financial hardship Always check www.studentloans.gov for the most up to date information.
How to calculate Financial Hardship? PAYE Calculation: (Income – 150% of poverty line) X 10% (discretionary) 12 Months = Your Monthly Payment ($99,000 – $18,090*) X 10% 12 Months = $674 Source:https://aspe.hhs.gov/poverty-guidelines
REP AYE • Monthly payment are 10% of discretionary income and can be more than standard plan • No financial hardship qualification • Good option if seeking PS LF https://studentaid.ed.gov/sa/about/announcements/repaye
Income Based Repayment • Must display financial hardship • Monthly payments will be 10% or 15% of discretionary income • Must have a high debt relative to income • Must be a new borrower after July 1, 2014 • Good option if seeking PSLF
Income-Contingent Repayment • Must display financial hardship • Any outstanding balance will be forgiven after 25 years • Payments are 20% of discretionary income • Can be more than standard repayment plan • Good option if seeking PSLF
Income-Based Repayment Step 1: Apply for the IDR on StudentLoans.gov Step 2: Find your Loan Servicer Contact info on NSLDS.ed.gov Step 3: Set up a user name and password on your servicer’s website Step 4: Upload Income documentation to certify your income annually
Considerations If you do not certify your income and reapply on an annual basis: May no longer be in the plan Interest capitalization (P AYE/ REP AYE) Payment may revert to standard 10 year amount (P AYE)
Federal Consolidation Loan Allows you to combine your Federal Loans into one loan that can be paid off over 30 years No fee to consolidate Be aware of losing borrower benefits associated with original loans Interest rate is a weighted average of underlying loans Y ou cannot consolidate your loans with your spouse’s student loans For more info visit: https:/ / studentaid.ed.gov/ repay- loans/ consolidation
Repayment Timeline for Federal Loans Repayment begins 6 months after you graduate, drop below half time or take a leave of absence Loans that were in repayment before entering Dental S chool go into repayment immediately Make sure you are prepared to make your first payment and that you are set up with your servicer(s) before that payment is due
Trouble Making Payments? Contact your loan servicer at least a month before you might miss a payment Y our Loan S ervicer wants to help you keep your loan in good standing Check to see if a different repayment plan would help Ask if you qualify for either a Deferment or a Forbearance
After Graduation Loan Forgiveness Public Service Loan Forgiveness National Health Service Corps Loans forgiven after 120 non-consecutive, Eligible loans: qualifying payments. All federal, state, or commercial educational loans. Eligible Loans: Full time and part time forgiveness programs Direct Loans, Direct Graduate PLUS loans Must be general or pediatric Dentist Eligible repayment plans: To apply, find a j ob at an approved site: http:/ / nhscj obs.hrsa.gov/ S earch_HPOL.aspx Income Driven Plans Apply by stated deadlines: Eligible Job: Any state, federal or local http:/ / nhsc.hrsa.gov/ loanrepayment/ government or non-profit organization (501c3) For more info visit: www.studentloans.gov
After Graduation Delinquency and Default Delinquency Definition: late student loan payments Default Definition: 270 days past due No longer eligible for federal student aid Wages may be garnished; tax refunds withheld May not be able to get/ renew professional licensing Denied malpractice insurance
After Graduation Cancellation Loan cancellation (discharge) available due to: Death Total and permanent disability Loan is not transferred to spouse or children Documentation must be provided to loan holder/ servicer Y ou must pay these loans off even if you do not become a dentist, obtain your chosen career, or declare bankruptcy
After Graduation Tax Benefits S tudent Loan Interest Deduction* - Ability to write-off up to $2,500 for interest paid on student loans - Receive a 1098-E from lenders - Eligible to write-off if income is less than: $80k if single OR $160k if married and filing j ointly Please contact the IRS or a personal accountant for any filing questions * Amounts based on 2014 Tax Publication 970: www.irs.gov Always check www.irs.gov for the most up to date information.
Tips for paying off your loan faster If you can, pay some (or all) of the interest that has accrued on your loans before the end of your 6 month grace period when the interest capitalizes If you are able to, making additional payments can reduce the total interest paid, and the time it takes to repay your loan Always follow up with your loan servicer when making additional payments
Determining Loan S ervicer(s) Go to www.studentloans.gov Click on “ My Financial Aid History” S elect Financial Aid Review Log In Using your FS A ID (the same process as F AFS A) Click on each loan for more detail, including the loan servicer for that loan Check all loans, you may have more than one servicer
Credit Based Loans Repayment Timelines The terms and conditions vary- check with your lender Always follow up when making payments Ask about incentives for on-time payments and co-signer release Private loans do not show up on www.studentloans.gov
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