School of Public Health Exit Counseling

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School of Public HealthExit Counseling

• April 22, 2010

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Why do I need to attend?

• Federal regulations require schools to provide
  exit counseling for students who have borrowed a
  Stafford or Grad PLUS loan and who are graduating
  or have dropped below half-time.

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Master Promissory Note (MPN)Borrower
Responsibilities

• Agreement to pay back loan(s)
• Multi-year feature vs. new promissory note per
  year
• Used for subsidized and unsubsidized Stafford
• Subsidized need-based loan government pays
  interest while enrolled
• Unsubsidized non-need based loan student
  responsible for all interest
• Also used for Grad PLUS
• Borrower rights responsibilities detailed on MPN

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When Repayment Begins

• Stafford loans have a grace period first payment
  due six months after student graduates,
  withdraws, or drops below half-time.
• Grad PLUS loans have a deferment period first
  payment due six months after student graduates,
  withdraws, or drops below half-time enrollment
• Lender will advise you of your first payment due
  date during your grace/deferment period. If you
  don't receive this information, contact your
  lender.

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Borrower Responsibilities

• Borrowing money is a serious matter and all loans
  must be paid back.
• Not receiving billing statement is not an excuse
  for not making payments.
• Even if you did not complete your program, didn't
  complete your program within the regular time for
  program completion, are dissatisfied with quality
  of education, or cant find a job, you must pay
  back the loan(s).

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Consequences of Default

• Loss of federal financial aid eligibility
• Withholding of federal income tax refunds
• Inability to renew professional license (e.g.
  lawyer, doctor)
• Negative credit history (will affect credit
  purchase of house, car, etc.)

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Consequences of Default

• Wage withholding
• May be sued
• Collection fees and attorneys fees assessed
• Enforcement of delinquent debt collection
  procedures

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Repayment Options

• Standard plan
• Graduated plan
• Extended plan
• Income-sensitive plan
• Income-based repayment plan (IBR)

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Repayment Options

• For all repayment plans, student can
• prepay loans without penalty
• pay on a shorter schedule, and
• change repayment plans

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Standard Repayment Plan

• Lowest total loan cost
• Regular payments of both principal and interest
  are due monthly, excluding periods of deferment
  and forbearance
• Minimum monthly payment is 50
• 10-year repayment term

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Graduated Repayment Plan

• Monthly payments are smaller at the start of the
  repayment period and gradually increase
• 10-year repayment term
• Total amount paid in interest will be greater
  than under the standard repayment plan

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Extended Repayment Plan

• Lengthens repayment term up to 25 years
• Available to borrowers with more than 30,000 in
  federal student loans
• Total interest costs may be higher over life of
  the loan, although payment amount may be lower

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Income-Sensitive Repayment Plan

• Monthly payment varies according to gross monthly
  income
• Monthly payment covers at least monthly accruing
  interest
• Must reapply annually
• Total interest costs will be higher over the life
  of your loan than with standard repayment

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Income-Based Repayment

• Borrowers may qualify for lower monthly payments
  as determined by income, indebtedness level, and
  family size
• May forgive any remaining debt after 25 years of
  eligible payments
• Must reapply annually
• Determine eligibility at www.ibrinfo.org
• Calculator at www.ibrinfo.org/calculator.php

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Income based Repayment (contd.)

• Borrowers who can benefit from IBR
• Individuals entering careers with relatively high
  loan debt compared to starting salaries, such as
• Medicine
• Law
• Elementary/secondary education
• Social work

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Ineligible Loans to include in IBR

• Parent PLUS loans
• Consolidation loans that include Parent PLUS
  loans
• Private (or "alternative") student loans
• State loans
• Other loans not guaranteed by the federal
  government
• Defaulted loans

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Partial Financial Hardship

• Borrowers monthly loan payment using the
  standard 10-year repayment plan
• is greater than
• 15 of borrowers AGI minus 150 of poverty line
  amount / 12
• Based on family income and size

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Examples Single borrowerwith no dependents Married borrower with two children (and no spousal income or spousal student loan debt) Single medical resident borrowerwith no dependents
Eligible student loan debt 40,000 80,000 150,000
Interest rate 6.8 6.8 6.8
Adjusted Gross Income 30,000 60,000 45,000
10-year standard plan monthly payment 460 920 1,726
Estimated monthly payment under IBR plan 170 340 359
Reduction in monthly payment amount 290 580 1,367
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Repayment terms

• Once in IBR, repayment can extend beyond 10 years
  regardless of the amount of the eligible debt
• Borrower can elect to remain in IBR even when he
  or she no longer meets PFH
• Borrower is not locked into IBR, but could have
  consequences if he or she voluntarily leaves plan

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Comparison of Sample Repayment Options

• ATTACHMENT B

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Loan Balance 60,000, Interest Rate 6.8




Standard Income Based Graduated Income Sensitive Extended
Monthly Pmt 690 170 Yr 1 340 Yr 2-10 812 Yr 1 340 Yr 2-11 690 416
Term 10 years 25 years 10 years 11 years 25 years
Total Interest 22,858 81,981 26,118 26,938 64,933
Total Paid 82,858 98,564 86,118 86,938 124,933
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Loan Balance 81k, interest rate 6.8
Standard Income Based Graduated Income Sensitive Extended
Monthly Pmt 932.15 234.44 Yr 1-2 459 Yr 3-10 1096 Yr 1 459 Yr 2-11 932 562
Term 10 years 25 years 10 years 11 years 25 years
Total Interest 30,858 70,332 35,260 36,366 87,660
Total Paid 111,858 151,332 116,260 117,366 168,660
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Consolidation Loans

• Allows borrowers to combine one or more federal
  education loans
• Original loans are paid-in-full
• New loan for the combined balances is issued
  with new terms, including a new interest rate
  that is fixed for the life of the loan

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Consolidation Factors to Consider

• Negatives
• Total interest paid may be greater
• May extend repayment period
• May lose benefits (e.g., grace period, deferment,
  forgiveness, and cancellation)
• Borrower benefit programs may vary among lenders

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Consolidation Factors to Consider

• Positives
• May significantly lower monthly payments
• Simplifies repayment one monthly payment
• May prepay or change repayment plans without
  penalty

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Consolidation Tips

• Compare and weigh all options
• Start with your financial aid office

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Tax Benefits

• For students and parents
• Student loan interest deduction
• reduces the taxable income based on the amount
  of student loan interest paid.
• Tuition and fees deduction
• reduces the taxable income based on college
  tuition and fees paid during the tax year

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Tax Benefits

• For students and parents
• Hope and Lifetime Learning tax credit
• a credit against federal income taxes for college
  tuition and fees paid during the tax year
• See IRS publication 970, at www.irs.gov, for
  more information.

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Debt Management Strategies

• Make a budget
• Loan payments are a fixed cost like utilities and
  rent
• Be realistic about expected earnings for your
  major
• Stick to one credit card. Keep in mind that
  credit cards are loans!
• www.aie.org/moneytips

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Accessing your loan information

• National Student Loan Data System (NSLDS)
• U.S. Department of Education's (ED's) central
  database for student aid
• NSLDS receives data from schools, guaranty
  agencies, the Direct Loan program, and other
  Department of ED programs
• To access loan records visit www.nslds.ed.gov
• Students will need their PIN for access

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Reminders!

• Keep copies of all correspondence
• Sent to you
• You send
• Keep lender informed of status changes
• Going to graduate school
• Change of address

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Problem Resolution Process

• Federal Student Aid Ombudsman of theDepartment
  of Education
• helps resolve disputes
• when you have  done all you can do yourself  and
  havent been able to  reach a solution, the
  ombudsman provides a  process and resources  to
  assist student.
• http//www.ombudsman.ed.gov/

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Deferments Forbearance
Deferments Economic Hardship Unemployment Military Deployment Enrollment in School Internship National Service Forbearance Lets you suspend or reduce your student loan payments under certain circumstances and for specified periods of up to one year at a time
Bottom Line If you are ever unable to make the
payments on your loans, contact your lender to
request assistance through deferment, forbearance
or revised repayment plan!!
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Public Service Loan Forgiveness

• Public Service Loan Forgiveness is a new program
  for federal student loan borrowers who work in
  certain kinds of jobs. It will forgive remaining
  debt after 10 years of eligible employment and
  qualifying loan payments
• Only Federal Direct Student Loans are eligible
  for this program so consolidation of FFEL loans
  is necessary.

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Public Service Loan Forgiveness

• To be eligible for forgiveness
• Borrower has to have made 120 payments on the
  loan after October 1, 2007
• Loan must not be in default
• Borrower must be employed in public service job
• During the period in which each of the 120
  payments were made
• At the time forgiveness is applied

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Eligible Public Service Jobs for Loan Forgiveness

• Employment, in any position, by a public service
  organization
• Service in a position in Americorps or the Peace
  Corps
• Employment or service must meet the definition of
  full-time

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Definition of Public Service Organization

• A Federal, State, local, or Tribal government
  organization, agency, or entity
• A job in government excludes time served as a
  member of the United States Congress
• A public child or family service agency
• A non-profit organization under section 501(c)(3)
  of the Internal Revenue Code that is exempt from
  taxation under section 501(a) of the Internal
  Revenue Code
• A Tribal college or university

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Definition of Public Service Organization (contd.)

• Public service organization is a private
  organization that provides public services
• Emergency management
• Military service
• Public safety
• Law enforcement
• Public interest law services (legal advocacy
  may be provided on behalf of low-income
  communities at a nonprofit organization rather
  than strictly in low-income communities at a
  non-profit organization

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Definition of PublicService Organization (cont.)

• Public service organization is a private
  organization that provides public services
• Early childhood education (including licensed
  or regulated health care, Head Start, and
  statefunded
• pre-kindergarten)
• Public service for individuals with
  disabilities and the elderly
• Public health (including nurses, nurse
  practitioners, nurses in a clinical setting, and
• full-time professionals engaged in health care
• practitioner and health care support occupations)

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Definition of PublicService Organization (cont.)

• A private organization is not
• A for-profit business
• A labor union
• A partisan political organization or
• An organization engaged in religious activities
  unless activities are unrelated to religious
  instruction, worship services, or any form of
  proselytizing

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Public Service Loan Forgiveness

• For more information about PSLF access
  http//studentaid.ed.gov/PORTALSWebApp/students/e
  nglish/PSF.jsp
• Check out several PSLF QAs at the same link

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You may wonder??

• Q How can I benefit from the PSLF if I pay off
  my loans in 10 years??
• A You cannot reconsider your repayment
  strategies by incorporating IBR to extend your
  repayment thus allowing you to benefit from PSLF

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Check List

1. Graduate!
2. Find a job
3. Organize all federal loans
4. Consolidate all FFEL (bank) and previously
   consolidated loans into a Direct Loan
   (www.loanconsolidation.ed.gov/). Take into
   consideration grace period on existing loans
   (consolidating eliminates grace).
5. Contact repayment servicer(s) requesting IBR
6. Maintain employment records to qualify for PSLF