Federal Loan Exit Interview

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Federal Loan Exit Interview NORTHEASTERN
UNIVERSITY March 2009
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Agenda

• Federal Loan Types
• Repayment Options
• Deferment, Forbearance, Forgiveness, Cancellation
• Federal Loan Consolidation
• Failure to repay your loans (Default)
• How to view your Federal Loans online (NSLDS)
• Other Student Loans
• Loan Contacts and Review of Forms to be Completed

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FFEL Stafford and PLUS loans (borrowed while at
Northeastern University 2007-2008 and prior)

• Who is involved on these loans?
• Lender Lending institution or bank on your loan
• Servicer Typically the party you are in the
  most contact with. They handle repayment and loan
  account questions for the lender in most cases.
• Salliemae for most students
• Guarantee Agency
• American Student Assistance (ASA) for most
  students

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Direct Stafford and PLUS(borrowed while at
Northeastern University 2008-2009 and after)

• Who is involved on these loans?
• The U.S. Department of Education (Direct Loans)
  handles all repayment aspects on these loans
• Some lenders may sell their loans to Direct Loans
  under the Loan Purchase Commitment Program
  established under the Ensuring Continued Access
  to Student Loans Act (ECASLA) of 2008

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Federal Stafford Loans
During repayment and forbearances, interest
accrues on both types of loans
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Federal Stafford Loans

• Repayment Interest Rate
• Fixed 6.8 interest rate for all loans taken out
  July 2006 and after
• Slightly reduced fixed interest rate on
  undergraduate subsidized loans taken out
  2008-2009
• Variable rate (adjusted every July 1st) capped at
  8.25 for loans taken out prior to July 2006
• Grace period for each loan before first payment
  is due
• 6 months unless already used from a prior
  withdrawal or leave of absence
• Minimum monthly payment of 50 but can be (and
  usually is) higher as it is based on the balance
  you owe

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Grad PLUS Loans (Graduate Student Borrowers)

• Fixed 8.5 interest rate
• Fixed 7.9 for Direct GradPLUS loans taken out in
  2008-2009
• No grace period (repayment begins immediately
  after no longer enrolled)
• Check with your lender to see if they will allow
  you to begin repaying Stafford and PLUS at the
  same time
• Can be Consolidated

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Federal Perkins, Health Profession, or Nursing
Loans

• Repaid to
• Northeastern Universitys Office of Student Loan
  Collections
• Transfer students who borrowed these loans at
  another school will want to contact their former
  school about repayment
• Repayment is up to 10 years
• Perkins Loans (blue handout) and Nursing Loans
  (yellow handout)
• 5 fixed interest rate
• 9 month grace period
• Health Profession Loan (gray handout)
• 5 fixed interest rate
• 12 month grace period

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Repayment Programs for Stafford and GradPLUS
Loans

• Standard
• Graduated
• Income Sensitive
• Only available on FFEL loans or FFEL
  Consolidation Loans
• Income Contingent
• Only available on Direct or Direct Consolidation
  Loans
• Extended
• Income Based
• New option that will be available after July 1,
  2009

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Standard Repayment

• Monthly payments are spread evenly over the life
  of the loan (10 years maximum)
• Minimum payment of 50 but varies depending on
  total amount borrowed
• Lowest long term cost of all options

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Graduated Repayment

• Maximum repayment of 10 years
• Payments start smaller than standard repayment
  and gradually increase higher than standard
  repayment
• Good alternative if you anticipate a large
  increase in income over several years
• Higher overall costs compared to standard
  repayment (more accrued interest)

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Income Sensitive Repayment

• Payments are adjusted annually based on a
  percentage of borrowers gross monthly income
• Must submit documentation of income annually and
  reapply each year
• Repayment can be extended up to 15 years
• Will cost more over the life of the loan compared
  to standard repayment
• For FFEL loans only (loans with lender and
  guarantor)

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Income Contingent Repayment

• Similar to Income Sensitive repayment but
  considers a smaller portion of your income in
  determining your monthly payment amount
• Extends repayment up to 25 years
• Payments adjusted annually based on income
• Only available through U.S. Department of
  Education (Direct Loans)
• Students with Stafford or PLUS loans from
  Northeastern University for 2007-2008 and prior
  would need to consolidate them with Direct Loans
  for this option
• Contact the U.S. Dept. of Ed. (Direct Loans) at
  (800).557.7392
• After 25 years of repayment, the remaining
  balance is discharged and considered taxable
  income for that tax year
• Public Service Forgiveness option is available

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Extended Repayment

• Available to borrowers who received all of their
  federal loans after October 7, 1998 and have more
  than 30,000 in federal student loan debt
• Maximum repayment term is 25 years
• Payments can be fixed or graduated
• Has higher long term cost to repay than standard
  repayment

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Income Based Repayment(Available after July 1,
2009)

• Available to both FFEL and Direct Loan borrowers
• Similar to Income Contingent Repayment but
  considers less income in determining a monthly
  payment amount
• Payments are adjusted annually
• After 25 years of repayment, remaining loan
  balance is forgiven and considered taxable income
  for that tax year
• Public Service Forgiveness option available for
  those with Direct Loans or Direct Consolidation
  Loans
• www.ibrinfo.org is an independent website that
  seeks to answer questions about this upcoming
  repayment plan

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Estimated Stafford Loan Monthly Payment Example

• Stafford Loans Total 23,000
• Standard Repayment (10 years/120 Payments)
• Approximately 264.68 per month
• Estimated overall cost of the loan with
  interest approximately 31,762.42

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Deferment

• You could qualify for a deferment if you
• Are enrolled in school at least half-time
• Are unemployed or suffer an economic hardship
• Enter into military service
• Perform certain volunteer work
• Others (check with your lender/servicer)
• Who is responsible for interest accruing during a
  deferment?
• Subsidized Stafford, Perkins, Health Professions,
  and Nursing Loans interest is paid by federal
  government
• Unsubsidized Stafford PLUS Borrower (you!)
• Please note that you must initiate a deferment
  request with your lender/servicer and complete
  the proper documentation to get approval

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Forbearance

• What is a Forbearance?
• Can be approved by your lender/servicer at your
  request (you must initiate this process!)
• Reduces or postpones payment for a period of time
• Borrower is responsible for all interest accruing
  on loans regardless of type
• Must complete proper documentation with
  lender/servicer to be approved

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Stafford/PLUS Loan Forgiveness

• A portion or all of your loan may be forgiven
  for
• Teachers in certain specialties or who work in
  certain low income areas
• American Federation of Teachers has a list at
  www.AFT.org
• Child Care Providers in certain low income
  communities
• Depends on availability of federal funds (Not
  guaranteed)
• Public Service Employees
• Government, 501(c) corporation/non-profit, public
  interest law firm
• Direct Loans or Direct Consolidation Loans are
  forgiven after 10 years of income
  contingent/based repayment and employment at an
  eligible institution
• Not available on FFEL Stafford/PLUS loans, must
  consolidate into Direct Loans to receive this
  benefit
• Under current federal tax law, amounts forgiven
  are treated as taxable income the following tax
  year (with few exceptions)
• Contact your lender or servicer for exact
  requirements and more detailed information.
  (Also check with your employers Human Resources
  dept.)

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Perkins Loan Cancellation

• Special cancellation provisions for Perkins Loans
  exist
• Child or family service cancellation
• Early Intervention cancellation
• Head Start cancellation
• Law enforcement cancellation
• Public Service cancellation
• Military cancellation
• Nurse or Medical Technicial cancellation
• Teaching cancellation
• Volunteer Service cancellation
• Contact Northeastern Universitys Office of
  Student Loan Collections for more information

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Federal Loan Cancellation

• Federal Student Loans are NOT typically cancelled
  due to bankruptcy
• Loans can be discharged upon
• Death of the borrower
• Total and permanent disability of the borrower
• Requires certification from a physician and is
  subject to a conditional period of three years

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Federal Loan Consolidation

• Federal Consolidation Loans take previous federal
  loans and combine them into one larger loan
• New loan has a new fixed interest rate
• New interest rate is calculated as a weighted
  average of all interest rates associated with
  loans and then rounded up to nearest 1/8th of a
  percentage point, not to exceed 8.25
• Repayment extends up to 30 years based on the
  dollar amount of total federal student loan
  indebtedness
• No fees are charged to consolidate
• Cannot unconsolidate

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Possible Cons to Consolidation

• May be easier to have your loans serialized with
  a single lender
• Contact the lender you wish to work with and ask
  them to purchase your federal loans from other
  lenders
• Students with only fixed interest rate Stafford
  loans will get rounded up 1/8th of a percentage
  point if they consolidate
• Longer repayment terms mean smaller monthly
  payment but higher long term costs
• Some benefits with current loans may be lost
  (especially Federal Perkins Loans)

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Repayment Tips

• Know the amount of your loans
• Check with your lender/servicer on possible
  interest rate reductions for
• Consecutive on time payments
• Automatic payment withdrawals
• No prepayment penalties on Federal Student Loans
• Faster payoff time less overall costs
• Interest paid on student loans has tax benefits
• Visit www.irs.gov or contact your tax
  advisor/accountant

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Repayment Tips

• Create a monthly budget
• Needs vs. Wants
• Money in should be greater than money out
• Contact your lender/servicer!!! They will work
  with you and have options to assist you
• Deferments, forbearances, consolidation,
  forgiveness and cancellation options may be
  available to you

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Failure to Repay Federal Student Loans

• Lender and/or NU Loan collections reports status
  to credit bureaus within 30 days
• Delinquency
• Payment is 90 days past due
• Preclaim or pre-default
• Payment is 120 days past due
• DEFAULT
• Payment is 270 days past due

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Consequences of Default

• Bad Credit
• Affects credit history with credit bureaus
• Affects eligibility for mortgages, car loans, and
  other consumer credit
• Can affect employment options due to background
  checks
• Loss of eligibility of future aid, deferment
  options, and cancellation options
• Might be demanded to make immediate repayment of
  entire unpaid balance
• Account could be assigned to an outside
  collection agency and subject you to legal fees
• Possible loss of tax refunds (state and federal)
  or result in wage garnishment
• Suspension of professional licenses

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Important Information

• Department of Education Ombudsmans Office
• Resolves disputes from a neutral standpoint
  between borrowers and lender/servicers. They are
  NOT customer service
• Office of the Ombudsman
• U.S. Dept. of Education
• 4th Floor UCP 3/MS 5144
• 830 First Street NE
• Washington, DC 20202
• Phone [phone]
• www.ombudsman.ed.gov

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Other Lender Information

• Most lenders/servicers have online access to
• Update personal information
• Get billing information
• Make online payments
• Print and request deferment/forbearance forms
• Go to www.nslds.ed.gov to view your federal loan
  history (Stafford, Perkins, and PLUS only)
• Log in with your federal PIN used to file FAFSA
• Provides lender/servicer contact information
• 1-800-4-FED-AID

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Private/Alternative Student Loans

• These are NOT federal loans
• Contact your lender about your repayment options
• In most cases, it is better to try and pay off
  these loans first if you can
• Usually have a higher/variable interest rate
• Typically have less borrower benefits
• Never consolidate your federal and private loans
  together. This is NOT a Federal Consolidation
  Loan

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Private Loans Commonly Used by Northeastern
University Students

• Salliemae Signature
• (888).2.SALLIE
• www.salliemae.com
• Citiassist
• (800).967.2400
• www.studentloan.citibank.com
• MEFA
• (800).842.1531
• www.mefa.org
• TERI Loan Programs
• (866).266.3637
• www.teri.org
• Discover
• (877).728.3030

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Massachusetts No Interest Loan

• Massachusetts state funded loan
• Servicing and repayment is handled by ECSI
• Separate online exit counseling required
• See handout for information
• https//www.ecsi.net/bwr/borrower.html
• Online counseling must be completed for
  graduation clearance
• 0 interest rate, repaid over 10 years, 6 month
  grace period
• Mass NIL cannot be consolidated

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Nurse Faculty Loan Program

• Contact Northeastern University Loan Collections
  for information
• 3 interest rate (if Nursing Education program
  completed and employed as Nurse Faculty)
• Failure to provide proof of program completion
  and employment within 12 months will result
  interest rate being adjusted to prevailing market
  rate
• 9 month grace period
• Repaid over 10 years
• Repaid to Northeastern University Loan Collections

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Physician Assistant Loans

• Not a federal loan it is an institutional loan
• Contact Northeastern Universitys Office of
  Student Loan Collections with questions
• 7 Fixed Interest Rate
• 1 month grace period
• No deferment or cancellation options available
• Loan is paid back to NU Loan Collections Office

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Bernice Cohron Loan

• Not a federal loan it is an institutional loan
• Contact Northeastern University Loan Collections
  with questions
• 1 month grace period
• 10 year repayment
• 0 interest rate
• Can only be deferred if enrolled in Grad or Ph.D.
  program at Northeastern University

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Review of Perkins, HPL, Nursing Forms

• Final Truth-In-Lending
• Summary of your loan
• Student Loan repayment schedule
• Personal Data Sheet
• Reference info and updated contact info
• Understanding your Student Loan Statement

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Federal Perkins, HPL, Nursing Loan Billing
Statement

• Borrower will receive first notification 90 days
  after graduation
• Second notification is sent 150 days after
  graduation
• First bill is send 30 days prior to first payment
  due date
• Billing and repayment is handled by
• Northeastern University Office of Student Loan
  Collections
• (617).373.2160

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Required Exit Interview FormsPerkins, Health
Profession, Nursing, Physician Assistant Loans

• Sign your final truth-in-lending
• Keep one copy for your records
• Sign your repayment schedule
• Keep one copy for your records
• Complete your personal data sheet (white or blue)
• Sign and complete all information including two
  references near the bottom of the form.
• References you list must have two different
  addresses.

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Required Exit Interview Form for all Federal
Student Loan Borrowers

• Check off Exit Interview at top of form
• Fill in demographic information
• Two references must be completed in full
• Two different U.S. addresses
• Employer information (if known)
• Sign the form
• Estimated repayment chart on back of form for
  your reference
• White copy For Northeasterns Universitys
  records
• Yellow copy Keep for your records

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Reminders

• Stay organized open/read your mail
• Call your lender/servicer for info on your
  Stafford, GradPLUS, and/or Private Alternative
  loans
• Call Northeastern Universitys Office of Student
  Loan Collections with questions on
• Federal Perkins, Health Profession, Nursing,
  Nurse Faculty, Physician Assistant, or Bernice
  Cohron Loans
• You must call your lender/servicer if you
• Have trouble with repayment
• Change your name, address, phone number, or
  social security number
• If you dont receive a billing statement, contact
  your lender/servicer as it is still YOUR
  RESPONSIBILITY to pay your loans

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Northeastern University Contact Info
Office of Student Loan Collections 253 Richards
Hall 360 Huntington Avenue Boston, MA 02115 Phone
(617).373.2160 Fax [phone] Student
Financial Services 356 Richards Hall 360
Huntington Avenue Boston, MA 02115 Phone
(617).373.3190 Fax [phone]
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