Ten Things You Should Know
About Student Loans
1: BORROW ONLY WHAT YOU NEED
4: UNDERSTAND YOUR LOANS
There are several different kinds of loans.
Here are some key factors to be aware of:
Student loans are a great way
to help pay for school.
But student loans will eventually
have to be paid back...
...with Interest.
Take advantage of all grants, scholarships, and
work study available to you before you borrow
student loans. Your financial aid advisor can
help you only borrow what you need.
2: HAVE A PLAN
Even if you can only afford
SUBSIDIZED VS. UNSUBSIDIZED
Accrued interest for subsidized loans is
paid by the government while you’re in school.
Unsubsidized loans require immediate
interest repayment.1
FEDERAL VS. PRIVATE
Federal loans are funded by the federal
government while private loans are issued
by banks or similar institutions. They can help bridge any financial gap not covered by federal loans.
FIXED INTEREST VS. VARIABLE INTEREST
Minimize Loans As Much As Possible
7: MAKE PAYMENTS WHILE IN SCHOOL
(EVEN IF IT’S ONLY A LITTLE)
That’s only 1 latte
5 song downloads
Making small payments now will help reduce your principal and/or interest balance in the long run.
8: YOU HAVE REPAYMENT OPTIONS
Fixed rates are constant for the life of the loan, but variable interest rates are adjusted
annually on July 1.
Find more loan terminology at Nelnet.com/Terms-To-Know.
5: KNOW YOUR SERVICERS
Map out the cost of
your entire education and
how you’ll pay for it.
If you need to lower or postpone your payment,
or seek other repayment options, including
forgiveness or discharge of your student loan,
contact your servicer today.
9: REPAYMENT IS EASIER WHEN
YOUR OVERALL DEBT IS LOWER
For tools and resources to help you build a
healthy financial future, visit
Nelnet.com/Get-Financially-Fit.
Federal Loans are Managed by Loan Servicers: We’re Here to Help You.
3: CREATE AND FOLLOW
A MONTHLY BUDGET
Servicers send important loan info, collect
payments, and answer questions. To find out
who the loan servicers are for your federal loans, visit nslds.ed.gov.
During college, avoid racking up credit card debt
or purchasing unnecessary big-ticket items.
When you graduate, you can focus on paying
down your student loans instead of juggling
multiple (avoidable) monthly payments.
6: SET UP AN ONLINE ACCOUNT
10: KEEP IN TOUCH!
Before you graduate, create an estimated
onthly budget that factors in your future
m
monthly student loan payment. Several repayment plans are available to fit your budget.
Budget worksheets
and resources are available
t Nelnet.com/Get-Financially-Fit.
a
An online account with your servicer is an easy way to connect with them and keep your contact info current.
Stay in touch with your
servicers and ask questions as
your situation changes.
Visit your servicer’s website to create your online account today!
©2015 Nelnet, Inc. All rights reserved. Nelnet is a registered service mark of Nelnet, Inc.
First-time Direct Loan borrowers on or after July 1, 2013, are no longer eligible for the Subsidized Student Loan program if they are in school longer
than 150% of the published length of time necessary to graduate from an undergraduate degree program.
1
EDUCATION LOAN
SERVICING
Locating All Your Loans
To find out what loans you have and who they are payable to, there are two (2)
separate tasks that must be done:
1. To find information on your Federal (Title IV) Loans you may log on to the
National Student Loan Data System (NSLDS) at www.nslds.ed.gov. You will
need your FASFA pin number or your FAFSA User Name and Password to gain
access to this system. Once you are logged onto the NSLDS website, you will
see all of your Title IV Federal Loans (keep in mind that NO Private Loans will
appear on this website). If you click on the “Blue” numbered block next to each
loan, the system navigates to a page that tells you more details about the loan,
such as: who the servicer and lenders are, what the current status of the loan is,
etc.
2. To find information on Private/Alternative Loans, you will need to run a credit
report on ALL THREE (3) major credit bureaus (Equifax, Experian, and Trans
Union). You may do this free of charge at
www.annualcreditreport.com. WARNING: Be very careful not to sign up for any
unwanted services, OR YOU WILL BE CHARGED! This has happened to me in
the past, and very recently to one of my borrowers! If you are asked for your
credit/debit card information while on this site – YOU HAVE SIGNED UP FOR
SOME TYPE OF SERVICE.
Once you have your credit reports, check all loans listed on the reports
carefully. The Federal Loans will appear along with any Private/Alternative
Loans. Some loans may show up on one (1), of the reports while others may show
up on all three (3) reports. It is your job to weed through the accounts and
determine which loans are duplicates. When this is done properly, you should have
a listing of all the loans you have that are outstanding.
Spreadsheet to Organize Loans
You will find a Student Loan Spreadsheet in the Pre-Seminar Module in Canvas. This
spreadsheet will assist you with managing your loans. Please feel free to utilize it to help
organize your loans.
Consolidating Your Loans??
If you are interested in consolidating your federal loans, please contact the Federal Student
Aid Department at http://www.studentloans.gov. You will need to sign in using your FAFSA
User Name and Password. You may also use their consolidation loan calculator
https://studentloans.gov/myDirectLoan/whatYouNeed.action?page=repayEst to assist you
in determining the repayment plan that best suits your situation. Note: If you have a
1 of 2
defaulted federal loan, you will required to sign up for Income Based Repayment (IBR) or
Income Contingent Repayment (ICR).
Please feel free to contact us at any time before or after the seminar with any questions you
may have via email at [email protected] or by phone at 254-710-8244.
2 of 2
Payment Estimator (Government Website) – Tied to YOUR Specific Student
Loans via FAFSA Information)
http://ifap.ed.gov/eannouncements/051316MessagingStudentLoanBorrowersLe
avingSchool.html
General Payment Calculator – Use to run different scenarios to see “How
Much” or “How Soon” you can pay to payoff loans
http://www.hughcalc.org/missing.cgi
Sample: Enter this information….
To get this
information:
Trouble making payments?
Explore deferment or forbearance options.
If you find yourself falling behind on your student loans in the form of delinquency or default,
consider applying for a deferment or forbearance until you can properly resume payments.
Deferment
Forbearance
A deferment is a period when payment on the principal
of a loan is postponed. For subsidized Stafford loans and
all or a portion of a subsidized consolidation loan, interest
payments are made by the federal government.
A borrower who is willing but unable to make payments,
and does not meet the qualifications for a deferment, may
request forbearance. Forbearance allows you to temporarily
postpone your payment for a specified period of time. The
forbearance will eliminate any delinquency that currently
exists on the account, but won’t reverse any derogatory
credit information previously reported.
After the grace period (the six months after graduating
or dropping below half-time student status) has expired,
borrowers are entitled to a deferment if they meet regulatory
requirements. You should continue making payments on
your loan until you’re notified the deferment is approved.
Your eligibility for a deferment depends on when the loan
was made and the individual deferment’s requirements.
Eligibility for a deferment does not mean you are required
to take it—you may choose to continue making payments
on your student loan. Any unpaid interest on unsubsidized
loans will be capitalized (added to the principal balance)
at the end of the deferment period, likely increasing the
total balance and your monthly payments.
Most common types of deferments:
No fees are assessed for obtaining forbearance; however,
interest will continue to accrue on your loan(s) during the
forbearance period. Interest payments may be made at any
time during this time. Any unpaid interest at the end of the
forbearance period will be capitalized (added to the principal
balance). Capitalization of interest will increase the amount
that must be repaid and may result in an increased monthly
payment amount.
Most common types of forbearances:
•
Hardship
•
Reduced Payment
•
S
chool Deferment
•
Internship/Residency
•
U
nemployment Deferment
•
Student Loan Debt Burden
•
E
conomic Hardship Deferment
•
Department of Defense (DOD) Loan Repayment Program
•
E
ducation Related Deferment
•
•
S
ervice Related Deferments
orporation for National and Community Service
C
(CNCS) Loan Repayment Program/Hardship
•
O
ther Deferments:
Temporary Total Disability, Parental Leave, and
Public Service (See Nelnet.com for eligibility requirements
and additional available deferments.)
©2011 Nelnet, Inc. All rights reserved. Nelnet is a registered service mark of Nelnet, Inc.
EDUCATION LOAN
SERVICING
Comparison of Income-Driven Repayment Plans*
ICR
ORIGINAL IBR
NEW BORROWER IBR
PAY AS YOU EARN
REPAYE (to be offered
beginning in Dec 2015)
Eligible Borrowers Direct Loan (FFEL borrowers may qualify through consolidation) Direct Loan and FFEL Direct Loan new borrowers on/after 07/01/2014 Direct Loan new borrowers on/after 10/01/2007 who receive a Direct Loan on/after 10/01/2011 (FFEL new borrowers on/after 10/01/2007 may qualify through consolidation) Direct Loan (FFEL borrowers may qualify through consolidation) Eligible Loans All Direct Loan types except Parent PLUS and Direct PLUS Consolidation Loans made before 07/01/2006 Note: Direct Consolidation Loans made on/after 07/01/2006 that repaid Parent PLUS may be repaid under ICR All Direct Loan and FFEL loan types except Parent PLUS and consolidation loans that repaid Parent PLUS All Direct Loan types except Parent PLUS and consolidation loans that repaid Parent PLUS Same as New Borrower IBR All Direct Loan types except Parent PLUS and consolidation loans that repaid parent PLUS Must have partial financial hardship (PFH) to initially qualify and to continue making payments based on income Same as Original IBR Same as Original IBR None Income Requirement None to Qualify * Based on original Department of Education document and expanded by NASFAA
© 2015 National Association of Student Financial Aid Administrators
1 ICR
ORIGINAL IBR
PFH Definition N/A Annual amount due on eligible loans under 10‐
year standard plan must exceed 15% of discretionary income Monthly Payment1 PFH periods: 15% of discretionary  20% of discretionary income, divided by 12; income, divided by 12 Non‐PFH periods: or 10‐year standard plan  Amount repaid annually over 12 years payment based on amount owed when under standard amortization multiplied entered IBR by income percentage factor corresponding to AGI and marital status, divided by 12 Lesser of: Discretionary Income Difference between AGI and 100% of poverty line amount for family size and state Difference between AGI and 150% of poverty line amount for family size and state NEW BORROWER IBR
PAY AS YOU EARN
REPAYE (to be offered
beginning in Dec 2015)
Annual amount due on eligible loans under 10‐
year standard plan must exceed 10% of discretionary income Same as New Borrower IBR N/A PFH periods: 10% of discretionary income, divided by 12 Non‐PFH periods: 10‐year standard plan payment based on amount owed when entered IBR PFH periods: 10% of discretionary income, divided by 12 Non‐PFH periods: 10‐year standard plan payment based on amount owed when entered Pay As You Earn 10% of discretionary income, divided by 12, unless the monthly payment amount is adjusted under the “catch‐up” provision under 685.209(c)(4)(vii)(E) No 10‐year standard “payment cap” (i.e., payment can be higher than what it would be under the 10‐year standard plan) Same as Original IBR Same as Original IBR Same as Original IBR 1
Under the ICR Plan, if the calculated monthly payment is greater than $0, but less than or equal to $5, the required monthly payment is $5. Under the Original IBR, New Borrower IBR, Pay As You Earn, and REPAYE Plans:  If the calculated monthly payment is less than $5, the required monthly payment is $0.  If the calculated monthly payment is greater than or equal to $5, but less than $10, the required monthly payment is $10. © 2015 National Association of Student Financial Aid Administrators
2 ICR
Repayment Period Before Forgiveness Remaining balance forgiven after 25 years of qualifying repayment (includes periods of economic hardship deferment) ORIGINAL IBR
Same as ICR NEW BORROWER IBR
PAY AS YOU EARN
Remaining balance forgiven after 20 years of qualifying repayment (includes periods of economic hardship deferment) Same as New Borrower IBR REPAYE (to be offered
beginning in Dec 2015)
Remaining balance forgiven after:  20 years of qualifying repayment for borrowers whose loans being repaid under REPAYE include only loans received as undergraduate or a consolidation loan that repaid only loans borrowers received as undergraduate  25 years of qualifying repayment for borrowers whose loans being repaid under REPAYE include a loan received as graduate or professional student or a consolidation loan that repaid a loan received as a graduate or professional student © 2015 National Association of Student Financial Aid Administrators
3 ICR
ORIGINAL IBR
NEW BORROWER IBR
PAY AS YOU EARN
REPAYE (to be offered
beginning in Dec 2015)
Interest Subsidy None If payment does not cover interest on subsidized loans, government pays remaining interest for 3 consecutive years (excluding periods of economic hardship deferment) from repayment start date under plan Same as Original IBR Same as Original IBR Same as Original IBR, except following the 3‐
year period, ED charges 50% of the remaining accrued interest on subsidized loans during periods of negative amortization For all unsubsidized loans, including Grad PLUS, ED charges the borrower 50% of the remaining accrued interest during periods of negative amortization Interest Capitalization If monthly payment doesn’t cover all interest, unpaid interest is capitalized annually Amount capitalized under this condition limited to 10% of original principal balance at time borrower entered ICR Plan If monthly payment doesn’t cover all interest, unpaid interest is capitalized when borrower no longer has PFH or leaves plan No limit on amount that may be capitalized under these conditions Same as Original IBR Same as Original IBR, except that amount capitalized under these conditions is limited to 10% of original principal balance at time borrower entered Pay As You Earn Plan If monthly payment doesn’t cover all interest, unpaid interest is capitalized when borrower leaves plan except that amount capitalized under these conditions is limited to 10% of original principal balance at time borrower entered REPAYE Plan © 2015 National Association of Student Financial Aid Administrators
4 ICR
ORIGINAL IBR
Married Borrowers: Income Same as ICR Joint AGI used if borrowers file joint tax return Only borrower’s AGI used if spouses file separate tax returns Married Borrowers: Loan Debt Joint Direct Loan debt used in determining payment amount if borrowers choose joint ICR repayment option Married Borrowers: Family Size The borrower, spouse, and children, including unborn children, if the children receive more than half their support, and other individuals if they live with the borrower and receive more than half of their support from the borrower and will continue to do so NEW BORROWER IBR
PAY AS YOU EARN
REPAYE (to be offered
beginning in Dec 2015)
Same as ICR Same as ICR Joint AGI used if borrower files joint or married filing separately tax return, unless the borrower is separated from his or her spouse or is unable to reasonably access spouse’s income Joint eligible loan debt used to determine PFH status if borrowers file joint tax return. Only borrower’s loan debt used if spouses file separate tax returns Same as Original IBR Same as Original IBR Joint eligible loan debt used to determine borrower’s payment amount Same as ICR Same as ICR Same as ICR Same as PAYE, except family size does not include the borrower’s spouse for a borrower filing separately if the borrower is separated, or is filing separately and is unable to reasonably access the spouse’s income information © 2015 National Association of Student Financial Aid Administrators
5 ICR
Failure to Recertify Income and Family Size Borrower may remain in ICR ED assumes family size of one Maximum monthly payment amount is the amount the borrower would have paid under the standard repayment plan based on a 10‐year repayment period using the amount of the borrower’s eligible loans that was outstanding at the time the borrower began repayment on the loans under the income‐
contingent repayment plan ORIGINAL IBR
Same as ICR © 2015 National Association of Student Financial Aid Administrators
NEW BORROWER IBR
Same as ICR PAY AS YOU EARN
Same as ICR REPAYE (to be offered
beginning in Dec 2015)
Borrower is removed from REPAYE and placed in an alternative repayment plan with a monthly payment amount equal to the amount required to pay off the loan within 10 years of entry into the alternative plan, or by the end date of the 20‐ or 25‐year REPAYE repayment period, whichever is earlier Borrower may re‐enroll in REPAYE from alternative plan, but may be required to make “catch‐up payments” Payments made under the alternative plan do not count toward PSLF, but may count for income‐driven forgiveness if the borrower returns to an income‐driven plan 6 ICR
Leaving the Plan Borrower may change to any other plan for which he/she is eligible ORIGINAL IBR
NEW BORROWER IBR
Borrower must first be Same as Original IBR placed on Standard Repayment Plan May change to a different plan only after making at least one payment under the Standard plan, or one payment under a reduced payment forbearance PAY AS YOU EARN
Same as ICR REPAYE (to be offered
beginning in Dec 2015)
Same as ICR © 2015 National Association of Student Financial Aid Administrators
7