Student Loan Bakery Financial Aid PLP Financial Aid

Student Loan Bakery Financial Aid PLP Financial Aid Office

KNOW YOUR LOANS • • • My Financial Aid Portal Access Federal Loans v. Private Loans Federal Loan Servicers Federal Loan Terms and Conditions Repayment Options – Standard, Graduated, Extended, ICR, IBR • Public Service Loan Forgiveness • Loan Consolidation • Payments

Student Financial Aid Portal Access through “Student Records Login” Or https: //finaid. wmitchell. edu/Net. Partner. Student/Logon. aspx Value: Real-time information on budgets, current aid awards, online acceptance of financial aid awards, date of aid disbursements

Federal v. Private Loans v. • Federal Loans – Originated and Serviced by Federal Government • Loans before 2010 may be serviced under FFEL Program and not the Direct Loan Program ***important for repayment and consolidation*** – Fixed Interest Rates, for loans after 2006 • Private Loans – Guaranteed by Private Banks or Credit Unions – Loan Terms and Conditions: Determined by Lender, all different! – Cannot be included in loan forgiveness, special repayment programs, or discharged after death or permanent disability

Loan Servicers: Federal Loans – Direct Loans William D. Ford Direct Loan Program (ACS) • Phone number: 1 -800 -848 -0979 • Website: www. myedaccount. com – Fed Loan Servicing (PHEA) • Phone number: 1 -188 -699 -2908 • Website: www. myfedloan. org – Great Lakes • Phone number: 1 -800 -236 -4300 • Website: www. mygreatlakes. org – Nel. Net Education Planning and Financing • 1 -888 -486 -4722 • Website: www. nelnet. com – Sallie. Mae Department of Education Loan Services • Phone number: 1 -800 -722 -1300 • Website: www. salliemae. com *** To Retrieve Information on Your Loan Servicer: www. nslds. ed. gov ***

Federal Direct Loan Terms and Conditions • Annual Maximum: $20, 500 • Lifetime Maximum: $138, 500 – Includes Undergraduate Studies – Effective July 2, 2012: Graduate students are not eligible for new subsidized loans • Subsidized Loans: Interest paid by Federal Govt. while student is enrolled at least half-time • Unsubsidized Loans: Interest accrues on loan while student is enrolled at least half-time • Interest Rate: Fixed 6. 8% • Loan Origination Fee: 1% – Loan Request: $1000, Funds Received for $990 • Grace Period: 6 months – begins once the student graduates, withdraws, or drops below halftime enrollment

Direct Grad PLUS Loans Terms and Conditions • Annual Maximum: Cost of Attendance minus all other aid • Other Aid: Scholarships, Perkins loans, Federal Direct Loans, and Work. Study • Lifetime Maximum: None- subject to credit approval • If denied: request credit report from www. annualcreditreport. com • Required: to fix credit problem and appeal credit decision or co-signer • Interest Rate: Fixed 7. 9% • Loan Origination Fees: 4% • Loan Request : $1000, Funds Received by Student: $960 • No interest subsidy, interest accrues immediately • Grace Period: None, but student requests a loan deferment • Loan deferment: ends after student graduates, withdraws, or drops below half-time enrollment • Student may request an additional 6 month deferment if disbursed on or after July 1 st, 2008

Repayment Plan Options • Standard Repayment (sliced bread) • Graduated Repayment: (sloped sliced bread) • Extended Repayment: (baguette) – Fixed or Graduated • Income Contingent Repayment (ICR) (unsliced artisan bread) • Income-Based Repayment (IBR) bread) (unsliced

Standard Repayment Plan • • Payment Amount: fixed, set by loan balance Minimum Payment: $50 Repayment Term: 10 years (plus deferments and forbearances) The good: • 10 years of loan payments • Least amount in interest paid • Ideal: high income v. loan balance • The bad: • Highest payment amount

Graduated Repayment Plan • • • Payment Amount: set by loan balance, increases with time Minimum Payment: Interest accrued between payments Maximum Payment: >3 x the minimum payment Repayment Term: 10 years (plus deferments and forbearances) The good: • 10 years of loan payments • Less interest than other alternative repayment options • Ideal: • high income v. loan balance • income increases with time • The bad: • Higher interest costs than standard

Extended Repayment Plan • Required: >$30, 000 in Direct Loan debt • Repayment Term: up to 25 years (plus deferments and forbearances) • Two payment options: 1. Fixed • Similar to standard payment • Pay same amount each month 2. Graduated • Similar to graduated repayment plan • Payments start lower and increase every 2 years • • The good: • More affordable payments with longer term • Ideal: • medium income v. loan balance • income increases with time The bad: • Higher interest costs (longer the term, the more interest)

Income Contingent Repayment Plan (ICR) • • Not available for: – Parent Plus loans – Consolidation loans used to repay Parent Plus loans – Why to bring up: if you take loans out for your children Minimum Payment: calculated annually, based on AGI, family size, and loan balance – Lesser of: • 20% of monthly discretionary income (based on AGI, family size, state’s income poverty level) OR • Value of: payments based on a 12 year repayment term multiplied by income percentage factor determined by annual income – If payments < accrued interest each month, the unpaid interest is capitalized once a year • Capitalization will not exceed 10% of original loan amount • Interest will continue to accrue, limit on compounding Repayment Term: up to 25 years (plus deferments and forbearances) Discharge: any unpaid balance after 25 years

Income-Contingent Repayment Plan (ICR) • The good: • Limits loan payments to manageable payment amounts • Discharge: 25 years of payments OR 10 years for Public Service • Interest capitalization cap • Increases flexibility to move to different repayment program • Ideal: • low income v. loan balance • The bad: • Higher costs if no discharge • Discharged loan balance may be taxable • Spousal income is included in calculations ***You will need to consolidate loans to DL if you have FFEL loans***

Income-Based Repayment Plan (IBR) • Available for: all Stafford, Graduate PLUS, Consolidation loans (DL or FFEL) – Not available for: defaulted loans, Parent Plus loans, or consolidated Parent Plus loans • Minimum Payment: – calculated annually, documentation submitted annually – Set at 15% of discretionary income (AGI & family size) – Requires “partial financial hardship” • IBR payment > standard repayment – While payments are capped at the 10 -year standard repayment, payments are made for 25 years – If payments do not cover accrued interest, the federal government will pay interest on subsidized loans up to 3 years – Borrower is responsible for ALL accrued interest on unsubsidized loans – ALL interest will be capitalized if IBR is left or there is no partial financial hardship • • Repayment Term: up to 25 years (plus deferments and forbearances) Discharge: any unpaid balance after 25 years or 10 years for public service

Income-Based Repayment Plan (IBR) • The good: – Likely to be lowest payment – Ability to discharge loans after 25 years of payments – 10 -year public service loan forgiveness program – Ideal: • low income v. loan balance and public service work – Spouse student loans can be included in calculation • The bad: • Possibility of increased interest payments • No capitalization cap on interest • Documentation is submitted annually to servicer • Discharged value may be taxable • Spousal income is used in calculation

Public Service Loan Forgiveness Program • What: Discharge of Direct Loans – – DL Loans including Grad Plus loans Perkins loans, must be consolidated with DL Rehabilitated defaulted loans No FFEL loans: consolidate FFEL loans with DL • When: After 120 qualifying monthly payments – Qualifying payments need not be consecutive • Qualifying payments: made while employed FT by a public service organization – Qualifying employment need not be consecutive – Excluded: time spent in deferment or forbearance – Included: when calculated payment is zero • Pair with: IBR; ICR; Standard Repayment Plan; any other Direct Loan repayment plan • Waived balance is not currently taxable

Public Service Loan Forgiveness Program • Required: FT public service job with PSLF eligible employer • PSLF eligible employers: • Public sector employers • Federal, state, local, or tribal agency or entity • Private non-profit employers that is 501(c)(3) • • Except: partisan political organizations, labor unions, Except: organizations engaged in religious activities • If your job duties are related to religious instruction, worship services, or any form of proselytizing • So: individuals working at religiously-affiliated non-profit organizations who perform at least 30 hours of non-religious activities are eligible for PSLF • Private employer: if it is non-profit, is not an excluded group, and provides one or more public services • Examples: military, law enforcement, public interest, early childhood, public health, education

Consolidation www. loanconsolidation. ed. gov - Use: Centralize loans to 1 payment when there is multiple servicers or loan programs (DL and FFEL) - Loans: Stafford loans, Plus loans, Perkins Loans, SLS loans, old consolidation loans - PLUS loans: Graduate or Parent, if borrower is parent - Downside: loss of borrower benefits - Perkins loans: loss of interest subsidy in deferments, loss of cancellation benefits, decreased grace period - Principle rebates, interest rate discounts

Monthly Payment Plan Example Calculator Inputs: Interest Rate: 6. 8% Loan Amount: $165, 000 Adjusted Gross Income (AGI): $75, 000 Marital Status: Single Family size: 1 State of Residence: Continental U. S. Calculator Outputs: Repayment Plan Type Term in Years Initial Monthly Payment Total Payment (Interest + Principal) Standard 10 $1, 898. 83 $227, 859. 60 Extended -fixed -graduated 25 25 $1, 145. 22 $935. 00 $343, 566. 00 $372, 141. 74 Graduated 10 $1, 303. 79 $240, 166. 70 Income Contingent 15 $1, 068. 50 $280, 156. 14 Income Based 25 $735 *depends on interest accrual and capitalization

Interest Payments in School Year Loan Balance Interest Rate Accrued Interest Monthly Payment of Interest New Loan Balance, cumulative 1 L $20, 500 6. 8% $1, 161 ~$96. 75 $21, 661 2 L $20, 500 6. 8% $2, 556 ~$213. 00 $44, 717 3 L $20, 500 6. 8% $3, 950 ~$329. 17 $69, 167 Totals: $61, 500 $7, 667 Impact on Payments, Standard 10 year repayment plan: Loan Balance Payment Amount Total Cost $61, 500 $707. 74 $84, 924 $69, 167 $795. 98 $95, 517

Reminders • Live large now, live small later – Set realistic budgets, live like a student – Returning funds to the lender: • All funds returned within 120 days of disbursement, by the student or the school, have all interest and fees forgiven • Ideal: overestimated needs for aid • Student loans are not dischargeable in bankruptcy • Questions: Contact the Financial Aid office, even after you graduate!

Helpful Websites www. studentaid. ed. gov www. finaid. org www. nslds. ed. gov www. askheatherjarvis. com www. annualcreditreport. com IBR Website & Calculator http: //studentaid. ed. gov/PORTALSWeb. App/students/english/IBRPlan. jsp www. ibrinfo. org Repayment Plans & Calculator http: //studentaid. ed. gov/PORTALSWeb. App/students/english/Other. Forms. Of. Repay. jsp

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