Agenda

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Agenda

• Loan types and interest rate
• Grace period
• Repaying your student loans
• Repayment plans and incentives
• Avoiding delinquency and default

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Key Industry Players

• Financial aid office
• Federal government
• Lender
• Servicer
• Secondary market
• Guarantor

• Credit bureaus
• Experian
• Equifax
• TransUnion
• Ombudsman
• 1.877.557.2575
• www.ombudsman.ed.gov
• NSLDS
• www.nslds.ed.gov

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Subsidized Stafford Loans

• Need-based
• Federal government pays interest
• In school
• During grace period (six months)
• During deferment periods
• Payment not required while in school

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Unsubsidized Stafford Loans

• Not need-based
• You are responsible for the interest that accrues
  while in school
• Interest begins accruing at disbursement
• Option to pay interest as you go
• Capitalization of interest
• Unpaid interest is added to the principal
• Increases total debt monthly payment

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Interest Rates and Loan Fees

• Loans disbursed after July 1, 2006
• Fixed rate of 6.80 percent
• Loans disbursed before July 1, 2006
• Variable rate adjusted annually every July 1
• Interest rate cap of 8.25 percent
• 1 percent origination fee
• 1 percent default fee

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Grad PLUS Loans

• Not need-based
• Must meet credit eligibility requirements
• You are responsible for the interest that accrues
  while in school
• Interest begins accruing at disbursement
• Option to pay interest as you go
• Capitalization of interest
• Unpaid interest is added to the principal
• Increases total debt monthly payment

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Grad PLUS Loans

• No set annual or aggregate limits
• Must sign a PLUS MPN
• No grace period
• Fixed rate of 8.50 percent
• 3 percent origination fee
• 1 percent default fee

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The Grace Period

• One-time grace period for subsidized and
  unsubsidized Stafford loans
• Six months
• Begins after you graduate, leave school or drop
  below half time
• Monthly payments begin when your grace period
  ends
• No grace period for Grad PLUS loans

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National Student Loan Data System

• Central database for student aid records
• Track loans from disbursement to payoff
• Total student loan indebtedness
• Loan status interest rate
• www.nslds.ed.gov
• Request a PIN
• www.pin.ed.gov

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Loan Repayment Chart
Interest rates on federal Stafford loans
disbursed after July 1, 2006 are at a fixed 6.80
percent. Grad PLUS loans have a fixed rate of
8.50 percent.
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Standard Repayment Plan

• Fixed monthly payment
• 50 minimum payment
• 10-year repayment schedule

Interest rates on federal Stafford loans
disbursed after July 1, 2006 are at a fixed 6.80
percent. Grad PLUS loans have a fixed rate of
8.50 percent. Total Paid includes principal plus
interest.
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Graduated Repayment Plan

• Payment gradually increases over time
• Payment must cover interest due
• 10-year repayment schedule

Interest rates on federal Stafford loans
disbursed after July 1, 2006 are at a fixed 6.80
percent. Grad PLUS loans have a fixed rate of
8.50 percent. Total Paid includes principal plus
interest.
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Income-Sensitive Repayment Plan

• Payment based on monthly gross income
• Payment must cover interest due

Federal Stafford Loans (subsidized
unsubsidized) and Grad PLUS loans
8.50
6.80
Interest Rate
Next 10 Years
First 5 Years
Gross Monthly Income
Total Paid
Total Paid
Next 10 Years
First 5 Years
Gross Monthly Income
Total Amount Borrowed
124
19,129
71
17,210
115
57
1500
10,000
1,775
620
354
95,642
86,048
575
283
4000
50,000
3,100
Interest rates on federal Stafford loans
disbursed after July 1, 2006 are at a fixed 6.80
percent. Grad PLUS loans have a fixed rate of
8.50 percent. Total Paid includes principal plus
interest.
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Extended Repayment Plan

• Loans greater than 30,000
• Standard or graduated repayment plans
• Repayment term not to exceed 25 years

Interest rates on federal Stafford loans
disbursed after July 1, 2006 are at a fixed 6.80
percent. Grad PLUS loans have a fixed rate of
8.50 percent. Total Paid includes principal plus
interest.
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Money-Saving Benefits

• Interest rate reductions
• Consecutive, on-time monthly payments
• Sign up for automatic payment
• Ask lender for details
• Tax credits
• www.edfund.org
• www.irs.gov

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Financial Planning

• EDWISEOnline Financial Planning Guide
• Develop good money strategies
• Create a school spending plan
• Create a post-school spending plan
• Compare salaries
• Compare repayment options
• Find money-saving tips
• www.edwise.org

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Your Rights

• Receive a copy of your signed Stafford MPN or
  Grad PLUS MPN
• Receive a disclosure statement
• Receive a six-month grace period (Stafford loans)
  
• Prepay all or part of your loan without penalty
• Deferments forbearance, if eligible
• Written notice if your loan is sold
• Proof of discharge after repaying loan in full

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Your Responsibilities

• Repay your loan(s)
• Make on-time, monthly payments
• Read correspondence from lender
• Notify lender of changes within 10 days
• School enrollment status
• Name, address telephone number
• Ask your lender for help

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Avoid Delinquency and Default

• Pay on time
• A payment received one day late is considered
  delinquent
• Delinquent payments are reported to the credit
  bureaus
• Always call your school or lender for help

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Deferment

• Postponement of payments
• Not automatic
• You must apply receive approval from lender
• Primary reasons
• In-school
• Unemployment
• Economic hardship
• Military service

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Forbearance

• Temporary reduction or postponement of payments
• Not automatic
• You must apply and receive approval from lender
• Primary reasons
• Poor health
• Residency program
• Financial hardship
• Interest will continue to accrue

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Loan Consolidation

• Combine loans into a single new loan
• You agree to new terms and conditions
• One monthly payment
• Lower payment/longer repayment period
• Payments begin at consolidation
• Be informed
• www.edfund.org

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for Stafford Loans
Loan Forgiveness

• Volunteer work
• Military service
• Teach or practice medicine in certain communities
• AmeriCorpswww.americorps.gov
• Peace Corpswww.peacecorps.gov

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Loan Cancellation

• In extreme extenuating conditions
• Total and permanent disability
• Inability to complete course of study due to
  school closure
• False certification by school
• Identity theft
• Death

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Consequences of Default

• Full amount of loan is due
• Including collection costs
• Subject to federal and state offsets
• Wages and tax refunds may be garnished
• Credit will be tarnished
• Lose deferment and forbearance options
• Lose eligibility for future financial aid
• Responsible for collection charges
• May lose eligibility for certain federal or state
  jobs
• May lose professional license

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Keys to Successful Repayment

• Keep school and lender informed about changes
• Keep copies of all documents in one place
• Open all mail
• The longer it takes to repay your loans, the more
  interest you will pay
• Build good credit with timely payments
• Always ask for help

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True or False

• T
• F
• F
• T

• I must repay my student loans even if I fail to
  complete my education.
• My Grad PLUS loan counts towards the loan
  aggregate limit for grad/professional students.
• My Grad PLUS loan is eligible for a grace period.
• I may change repayment plans annually to
• meet my financial needs.

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