Entrance

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Entrance Exit Loan Counseling
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Agenda

• Stafford Loans
• Graduate PLUS Loans
• Master Promissory Note
• Obligation to Repay
• NSLDS Access
• Sample Repayment Amounts
• Repayment Plans
• Federal Consolidation Loans

• Loan Sales
• Keep in Contact with your Lender
• Deferments Forbearances
• Delinquency Default
• Discharge Forgiveness
• Debt Management
• Tax Benefits
• Student Loan Ombudsman

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Stafford Loan Types

• Two Stafford loan types
• Subsidized
• Accruing interest is paid by the federal
  government during in-school, grace, and deferment
  periods
• You are responsible for paying accruing interest
  during repayment and forbearance
• Unsubsidized
• You are responsible for paying all accruing
  interest
• You can choose to make interest payments or have
  the interest capitalized (added to the loan
  principal) upon entering repayment

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Maximum Stafford Annual Loan Amounts
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Stafford Loan Interest Rates

• For Stafford loans first disbursed on or after
  July 1, 2006, the interest rate is a fixed 6.8
• Exception Interest rate on subsidized Stafford
  loans for undergraduate students drops each year
  through 2011-2012

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Stafford Loan Grace Period Repayment

• Upon graduation or otherwise dropping below a
  half-time enrollment status
• Loans will enter a 6-month grace period
• First payment will be due within 60 days after
  the grace period ends
• You will receive information from your lender(s)
  on repayment plan options, payment due dates, and
  payment amounts
• Contact your lender(s) if you have questions
  about repayment

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Graduate PLUS Annual Loan Amount

• The maximum Graduate PLUS amount you may borrow
  each year is the cost of education less other
  financial aid received
• You cannot have adverse credit
• Students are strongly encouraged to borrow the
  maximum available amount of Stafford loans before
  borrowing Graduate PLUS loans
• Better interest rates

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Graduate PLUS Interest Rate

• Graduate PLUS loan interest rate is fixed at
  8.50

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Graduate PLUS Repayment

• Loan enters repayment when fully disbursed
• First payment is due within 60 days after full
  disbursement
• Repayment may be deferred while you are enrolled
  at least half-time
• For loans first disbursed on or after July 1,
  2008, your repayment will be deferred for 6
  months after you are no longer enrolled at least
  half-time
• Aligns Stafford and PLUS Loan repayment
• Contact the lender or servicer to confirm that
  the deferment has been granted or to waive the
  deferment

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Master Promissory Note (MPN)

• The MPN is a binding legal document
• Your signature indicates your commitment to repay
  
• Single-year MPN versus multiple-year MPN
• Right to reduce the loan amount
• Right to cancel a loan
• Right to revoke an MPN
• Read and retain all of the materials provided in
  the MPN package, including the Borrowers Rights
  Responsibilities Statement

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Obligation to Repay

• You are obligated to repay the full amount of the
  loan plus interest and fees even if you
• Do not complete the program of study
• Do not complete the program of study within the
  regular time for completion
• Are unable to obtain employment
• Are otherwise dissatisfied with or do not receive
  the education or other services you expected to
  receive from the school

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How Much Do I Owe?

• If you are unable to answer this question, go to
  the National Student Loan Data System (NSLDS)
• www.nslds.ed.gov/nslds_SA
• NSLDS includes federal student loan records
• Loan type status
• Outstanding balance interest rate
• Lender/servicer and guarantor information
• Request a Personal Identification Number (PIN)
• www.pin.ed.gov

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Sample Payment Amounts - Standard

• These are examples only contact your lender for
  payment amounts specific to your loans
• Examples assume a fixed interest rate of 6.8 a
  repayment term of 10 years
• Examples do not include capitalized interest

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Sample Payment Amounts - Standard

• These are examples only contact your lender for
  payment amounts specific to your loans
• Examples assume a fixed interest rate of 6.8 a
  repayment term of 10 years
• Examples do not include capitalized interest

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Sample Payment Amounts - Standard

• These are examples only contact your lender for
  payment amounts specific to your loans
• Examples assume a fixed interest rate of 8.5 a
  repayment term of 10 years
• Examples do not include capitalized interest

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Repayment Plans

• Repayment Plan Options
• Standard
• Level monthly payments over a 10-year term
• Graduated
• Increasing monthly payments over a 10-year term
• Extended
• Payments made over a 25-year term on a standard
  or graduated schedule when FFELP debt is more
  than 30,000

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Repayment Plans

• Repayment Plan Options
• Income-sensitive
• Payments based on your monthly gross income
  adjusted annually
• Income-based
• Plan available to borrowers with a partial
  financial hardship

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Repayment Plans

• Carefully consider which repayment plan you
  choose
• Consider the monthly payments, the interest you
  will pay, and the total amount you will pay under
  the different plans
• You have the option to
• Prepay your loan
• Pay the loan off early
• Change the repayment plan to another plan for
  which your are eligible

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Federal Consolidation Loan

• What happens why consolidate?
• Existing federal student loans are paid off to
  form a new single loan
• Multiple payments made to multiple lenders become
  a single payment made to one lender
• New terms conditions
• Fixed interest rate
• Maximum repayment period may be extended up to 30
  years based on total federal and private loan
  balance
• Lower monthly payments but increased interest cost

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Federal Consolidation Loan

• Why not consolidate?
• You may lose benefits on the loans being
  consolidated
• Example cancellation benefits interest
  subsidies
• By extending the years of repayment, you may be
  increasing the total amount you have to pay in
  interest

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Eligible Loans

• FFELP Subsidized Stafford, Unsubsidized Stafford,
  SLS PLUS Loans
• Direct Subsidized Stafford, Unsubsidized Stafford
  PLUS Loans
• Perkins Loans
• HEAL
• HPSL, including LDS Loans
• NSL Loans
• FISL Loans

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Consolidation Interest Rate

• Lock in a fixed interest rate for life of the
  loan
• Weighted average of the interest rates on the
  loans being consolidated rounded up to the
  nearest 1/8
• Maximum rate of 8.25
• If HEAL loans are included, the interest rate on
  the HEAL portion is different
• Variable rate based on the average 91-day
  Treasury bill plus 3
• Adjusted each year on July 1st
• No maximum rate

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Consolidation Repayment Period
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How Do I Consolidate?

• Loans must be in a grace, repayment, deferment,
  or forbearance status to consolidate
• Complete the Federal Consolidation Loan
  Application and Promissory Note
• For more information go to www.loanconsolidation.e
  d.gov

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Choosing a Consolidation Lender

• You may consolidate with any eligible lender
• Know who you are working withchoose a reputable
  lender
• Research the lenders experience commitment to
  a long-term customer relationship
• Find out what organization will be servicing your
  loan
• Find out if the lender will sell the loan soon
  after it is made
• Compare incentiveswhich lender offers the best
  benefits?

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Loan Sales

• Your loan may be sold to another lender
• Your rights responsibilities do not change

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Keep in Contact With Your Lender

• You must notify your lender of changes to your
• Name or Social Security number
• Address and/or telephone number
• In addition, you must let your lender know if
  you
• Withdraw from school or drop below half-time
• Transfer to a new school
• Graduate
• Change your employer or your employers address
  changes
• Have any other change in status that affects your
  loan

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Deferment

• If you are a new borrower on or after 7/1/93,
  you are entitled to defer repayment of your loan
  if you are
• Attending school at least half-time (no limit)
• Engaged full-time in a graduate fellowship
  program (no limit)
• Attending a rehabilitation training program (no
  limit)
• Unemployed (3-year limit)
• Experiencing an economic hardship (3-year limit)
• Note If you have loans made before 7/1/93,
  additional deferment options are available to you

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Deferment

• You may defer repayment if you are
• Serving on active military or National Guard duty
  during a war, military operation, or national
  emergency
• Interest that accrues during a deferment period
  on a subsidized loan is paid by the federal
  government
• You must request and provide supporting
  documentation to qualify for deferment

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Forbearance

• Your lender must forbear payments if you are
• Serving in a medical or dental internship or
  residency
• Performing AmeriCorps service
• Performing service that qualifies you for loan
  repayment by the Department of Defense
• Performing qualifying teacher or child care loan
  forgiveness service
• Having a monthly student loan debt burden equal
  to or exceeding 20 of your total monthly gross
  income

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Forbearance

• Your lender may, but is not required to, forbear
  payments if you are
• Experiencing a financial hardship
• In poor health
• You must request and provide supporting
  documentation to receive a forbearance
• You are responsible for paying all interest that
  accrues during a forbearance period
• Unpaid interest will be capitalized (added to
  the principal balance)

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Delinquency

• Loan is delinquent if you fail to make a full
  payment by the due date
• Lender may assess a late fee if payment not made
  within 15 days of the due date
• You will receive telephone calls and letters from
  the lender advising of the past due amount
• Delinquency will be reported to at least one
  national consumer reporting agency
• Derogatory information on your credit report
  negatively impacts your ability for future
  borrowing

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Lender Incentives

• Many lenders offer incentives for making timely
  payments
• Example Interest rate discounts
• Missing a payment can result in the loss of an
  incentive
• Consider making payments via auto-debit from your
  checking or savings account to ensure timely
  payments
• Know your incentive!
• How do you earn it?
• How can you lose it?

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Default

• If your loan becomes 270 days past due, you are
  in default!
• The lender will demand the full loan amount be
  paid immediately
• If you fail to pay the full loan amount
• The guarantor will purchase the loan from the
  lender
• Your credit report will be adversely affected
• Legal action may be taken against you
• Your wages may be garnished
• Your federal or state tax refunds may be seized
• Other federal or state payments may be lost

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Default

• Your professional license may be lost
• You will no longer be eligible for the federal
  student assistance programs
• The default will be reported to all national
  consumer reporting agencies
• Legal fees collection charges may be assessed
• You will no longer be eligible for deferments or
  forbearance

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Loan Discharge

• Your loan may be eligible for discharge if
• You become totally permanently disabled
• You die
• Your school closes while you are still in
  attendance
• Your school falsely certifies your eligibility
• Your school fails to make a refund of a portion
  of the loan amount
• You are a victim of identity theft
• Important note Federal student loans are
  typically not dischargeable if you file
  bankruptcy.

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Loan Forgiveness Programs

• You may qualify for loan forgiveness if you teach
  at a low-income elementary or high school for at
  least 5 consecutive years
• Other forgiveness options exist in the law but
  are currently not funded
• Refer to the U.S. Department of Education
  publication titled, Your Federal Student Loans
  Learn the Basics and Manage Your Debt for a
  complete list of discharge and forgiveness
  provisions for Perkins, Stafford, and PLUS loans

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Debt-Management Strategies

• Keep track of how much you are borrowing
• Make a budget and spend less while in school
• Budgeting
• You may be looking forward to buying a new car or
  a new house
• Before making these purchases, you need to make a
  budget
• Remember to include your student loan payment as
  a fixed monthly expense, just like your electric
  bill, rent, car payment, etc.

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Tax Benefits

• Internal Revenue Service (IRS) tax credits
• Hope Tax Credit
• worth up to 1,650 per student
• available for first- and second-year students
  enrolled at least half-time
• Lifetime Learning Tax Credit
• tax benefit equal to 20 of a familys tuition
  expenses, up to 10,000
• Applies to undergraduate, graduate, and
  professional degree students and even for less
  than half-time study

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Satisfactory Academic Progress

• Schools Policy
• GPA requirements
• Progression/completion rate
• Appeals process

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Withdrawal Policies

• Schools withdrawal policy
• Return of Title IV
• Schools tuition refund policy

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Student Loan Ombudsman

• If you have any concerns or disputes related to
  your student loan, it is very important that you
  immediately contact the servicer of your loan. If
  after working with your servicer, lender, and
  guaranty agency, you are still unable to resolve
  the dispute, you may contact the U.S. Department
  of Education's Office of the Ombudsman at
• E-mail fsaombudsmanoffice_at_ed.govOnline
  assistance http//www.ombudsman.ed.govTelephone
  1.877.557.2575 (toll-free) or 202.377.3800Fax
  202.275.0549MailU.S. Department of
  EducationFSA Ombudsman830 First Street,
  N.E.Washington, D.C. 20202-5144

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Questions?