Loan
Repayment for
Graduating
Students
April 2014
The Truth about Repayment
All of your loans must be repaid
Important Loan Contacts
Post-Graduation
Servicers
• Stafford, Plus, Perkins
• Handles loan repayment issues on behalf of
your lender.
Campus
Partners
• Institutional Loans (Perkins, Etta
Newby, etc.)
• Handles loan repayment issues on
behalf of UNTHSC.
Guarantee
Agency
• If a loan enters default status, this
agency handles collections.
Know What you Owe
www.nslds.ed.gov
“Financial Aid Review”
or
studentloans.gov
• Check loan records for accuracy
• Verify your personal information with each servicer
• Make sure your address is correct with each servicer
*NSLDS does not include Alternative, PCL or LDS loans
Read the Fine Print
• Refer to your Promissory Note and Rights
and Responsibilities Statement.
• This governs the terms and conditions of your loan.
Keeping Track





Loans may have been sold
May receive information from a company you don’t know
Read ALL of your mail carefully
Keep track of correspondence and billing statements
Gather repayment info on private/alternative or institutional
loans
Exit Counseling
https://www.studentloans.gov
 Complete before you:
 Graduate
 Withdraw
 Enroll in less than ½ time
 Includes:
• Subsidized
• Unsubsidized
• PLUS Loans
Instructions for Exit Counseling
studentloans.gov
“Sign in”
“Complete
Counseling”
“Exit
Counseling”
Exit Counseling for other Loans
Institutional Loans
• Handled by a 3rd party servicer,
Campus Partners.
Perkins Loans
• Handled by a 3rd party servicer,
Campus Partners.
• Complete before graduation
Grace Period
Type of Loan
Repayment begins
Stafford and Grad
PLUS
6 months after graduation, withdraw, or enrolled
less than ½ time
Perkins
9 months after graduation, withdraw, or enrolled
less than ½ time
• Automatic, unless consolidated.
• If you do not hear from your servicer by the end of your grace
period, it is YOUR responsibility to contact them about your
repayment obligations.
Managing Repayment
• Think about your long term goals
•
•
•
•
Purchasing a home
Getting married
Further education
New car
• By managing student loans, you can meet your
responsibilities, avoid financial problems and help
ensure a clean financial record.
Repayment Options
Standard
Graduated
Extended
Income
Based
Standard Repayment
• 10 year repayment term
• Fixed payment amount, but payments will generally
be higher than other plans
• Repay the least amount in interest
• Pay off loan sooner
Graduated Repayment
• 10 year repayment term
• Payments are smaller at the beginning and increase
every 2 years
• Higher interest payments than with the standard
repayment
• If you expect your income to increase steadily over
time.
Extended Repayment
• Lengthen payments up to 25 years.
• Minimum loan balance of $30K to qualify
• Fixed or graduated payments
• Graduated payments increase every two years
• Interest costs will be higher over life of loan, although
payment may be lower.
Income Based Plans
Plans
• Income Based
Repayment
• Income Sensitive
Repayment
• Income Contingent
Repayment
• Pay as You Earn
General Plan Details
• Must apply annually and
prove financial hardship
• Expect payment to
change each year
• Each plan differs in
eligibility
i>clicker question
Which of these is NOT a repayment option?
a. Standard
b. Graduated
c. Extended
d. Pay If You Can
e. Income Based
Payment Examples
• Sally graduates with $47,063 in Federal
Unsubsidized Loans. Here are some examples of
what her monthly payment might look like:
•
•
•
•
Standard: $541.60
Graduated: $312.40 +
Extended: $266.69-326.65 +
Income Based Plans: varies,
• 10% of discretionary income* for PAYE, 15% for IBR, 20%
for ICR ex: $50,000 AGI,3 in HH - $19,530 poverty level,
$253-507/month
*Discretionary: your income minus poverty guidelines for family size
i>clicker question
Which statement below is true about the
Income Based Repayment Plan?
a. I pay more in interest over the life of the
loan.
b. My payments are higher than the
Standard Repayment plan.
c. Everyone qualifies for this plan.
d. I would not qualify for PSLF.
Public Service Loan Forgiveness
• Eligible Loans:
• Only loans under the DIRECT LOAN PROGRAM are eligible.
• Loans NOT Eligible:
• Loans received under the FFEL Program, Perkins loans or any other student loan
program are NOT eligible.
• Consolidation:
• FFEL Loans, Perkins, and other federal student loans may become eligible under
consolidation.
For more information:
http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF.jsp
PSLF Eligibility
1. Make 120 eligible payments
2. Make payments on eligible loans (direct loans
only)
3. Payments made under eligible repayment plan.
4. Do both of those while working in eligible
employment
*Know that under current law, any forgiven money will be taxed as income
Other Loan Forgiveness
Programs
• Research Loan Forgiveness
• NIH Loan Repayment Programs
• lrp.nih.gov
• National Health Service Corps
• nhsc.hrsa.gov
• State Loan Forgiveness
• None in Texas
i>clicker question
True of False: If I qualify for Public Service
Loan Forgiveness, I do not have to make
any payments on my student loans.
a. True
b. False
Repayment Strategies: What’s your
Objective?
Option 1 (PSLF)
• Make FFEL Loans eligible by
consolidating to Direct Loans
• Apply for Income based plan
• Confirm employer is eligible for
PSLF with an Employment
Certification Form
• Continue to work for a nonprofit until all 120 payments are
made.
• Don’t overpay
Option 2 (Non PSLF)
• May consolidate
• Choose the plan based on your
goals.
1.
2.
3.
Pay off sooner?
Manage debt with life
expenses?
Strategies may change over
time.
Consolidation
• Allows you to pay only one servicer
• Averages all your interest rates
• Can only be used for federal loans
Visit:
loanconsolidation.ed.gov
i>clicker question
True of False: If I consolidate my loans, I
may lose my grace period.
a. True
b. False
Deferments vs Forbearance
• Deferment
• A right you have under Federal Regulation.
• No interest will accrue on Subsidized Stafford or Perkins
Loans.
• Must meet certain guidelines.
• Forbearance
 Don’t qualify for deferment but having difficulties making
payments.
 Interest will continue to accrue.
 Each servicer makes decision on request.
Common Types of Deferments
In-School
Unemployment
Economic Hardship
For more information visit
studentloans.gov
i>clicker question
True or False: All medical students qualify
for forbearance on their federal student
loans while in residency.
a. True
b. False
Default
Not making payments according to the terms of your MPN
AVOID DEFAULT AT ALL COSTS!
i>clicker question
After how many days of failing to make a
payment is a loan considered to be in
default?
a. 30
b. 90
c. 180
d. 270
e. 365
Consequences of Default
•
•
•
•
•
Damages your credit
Ability to receive federal student aid
Denial or suspension for professional licensing
Wage and tax return garnishment
You can be sued
Loan Incentives
Call your servicer about available
incentives.
Example: Interest rate reduction if you sign up for your monthly payments to
be auto-debited from your account.
Useful Links
 www.nslds.ed.gov
(Tracks ALL federal loans you borrowed)
 www.studentloans.gov
(Deferment and Exit Counseling)
 http://www.loanconsolidation.ed.gov/
(Consolidation)
 http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF.jsp
(Public Service Loan Forgiveness)
 http://studentaid.ed.gov/
(Loan repayment options)
i>clicker question
a.
b.
c.
d.
Within the next 30 days, I plan to
complete exit counseling at
studentloans.gov
decide which loan repayment plan meets my
needs and/or apply for a loan repayment
program
look up my loan servicer using
studentloans.gov or NSLDS
all of the above
Congratulations and Good Luck!
Financial Aid Office
EAD 247
[email protected]
817-735-2505