Private Student Loans - Nhheaf.org

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					It’s Not FREE Money
     For College:

The Basics for Repaying
Your Student Loans and
   Planning for Your
    Financial Future
                           Tori Berube
     AVP, College Planning & Outreach
           You Are Not Alone…
Nationally
• Average debt - $26,600
• 66% of all graduating students have student loan debt.
• 80% of all student debt is federal student loan debt; 20% private
  student loan debt


New Hampshire
• Average debt - $32,440
• 74% of all graduating students have student loan debt.




Source: Project on Student Debt – Student Debt & the Class of 2011
How Much Do Students Owe?
The Effect of Student Loan Debt
            Tonight’s Agenda
•   Types of Student Loans
•   Repayment Options
•   Deferment
•   Forbearance
•   Student Loan Consolidation
•   Loan Forgiveness Programs
•   Get Your Free Credit Report – Why?
It’s Not FREE Money For College!
• Repaying your student loan is a serious financial
  obligation.
• You are required to make your student loan
  payments even if you:
   – do not complete your education,
   – do not find employment, or
   – are not satisfied with the education you received.

• For those graduating in May 2013 with
  Stafford/Direct loans, first payments will begin in
  November/December 2013 – 6 month grace
  period.
 When You About to Graduate…
• Complete your Exit Counseling (for your
  federal student loans)!
• Ask your financial aid office on their preferred
  method on how to complete the counseling.

• Why?
  • Federal requirement as you have received
    federal student loans
  • Covers loan repayment information to
    make you a more informed consumer!
  Two Types of Student Loans
• Federal Student Loans
  – Stafford (FFEL)/Direct
  – Perkins
  – PLUS Loans (parents, graduate
    students)


• Private Loans
   What’s a FFEL & What’s a Direct?
                                                 UNH USED FFEL or DIRECT LOAN
          SCHOOL YEAR LOAN WAS
                                                   PROGRAM FOR STAFFORD
               TAKEN OUT
                                                            LOANS
                7/1/07 – 6/30/08                                 FFEL

                7/1/08 – 6/30/09                                 FFEL

                7/1/09 – 6/30/10                                 FFEL

                7/1/10 – 6/30/11                                DIRECT

                7/1/11 – 6/30/12                                DIRECT

                 7/1/12 – 6/3013                                DIRECT

FFEL – Federal Family Education Loan Program – private lender
DIRECT – William D. Ford Loan Program; direct from the federal government
      Locate Your Student Loans!
• If you need to locate all federal student loans, visit the National
  Student Loan Data System (NSLDS) at www.nslds.ed.gov or call
  them at (800) 4 FED-AID.

• To find all your alternative (private) student loans, contact your
  Financial Aid Office(s).

• Store the lender’s contact information and website information
  with your monthly bill paying information.
   – Keep your records accurate and organized.
   – Know the amount of your student loan payments and when they
     begin.
   – Read all information carefully.
   – Find copies of any promissory notes you signed; they tell you the
     total amounts borrowed and the names and addresses of the
     institutions from which you borrowed.
www.nslds.ed.gov
Financial Awareness Counseling
         Loan Servicers Names You
              May Encounter
Aspire                                   1-855-475-3335
Cornerstone Education Loan Services      1-800-663-1662
Direct Loan Servicing Center             1-800-848-0979
EdFinancial Services                     1-855-337-6884
EdManage                                 1-855-479-0490
FedLoan Servicing (PHEAA)                1-800-699-2908
Granite State Management and Resources   1-888-556-0022
Great Lakes Educational Loan Services    1-800-236-4300
Mohela                                   1-888-866-4352
Nelnet                                   1-888-486-4722
OSLA Servicing                           1-866-264-9762
Sallie Mae                               1-800-722-1300
   What This Means To You…
• You may have more than one student loan
  servicers (the payment people) for your
  federal loans as your loan enters repayment.
• Use NSLDS to find all your loan servicers for
  your federal loans.
• Consider federal student loan consolidation
  to simplify paying your federal student loans
  by having just one monthly payment for
  these loans.
What Does A Loan Servicer Do?
• Educate you as to the tools and options
  available to assist you as you management
  your student loans. Think customer service,
  online calculators and information, etc.
• Offer multiple repayment options tailored to
  your specific preferences.
• Provide self-service tools for you to use, as well
  as options for receiving bills and/or
  correspondence electronically.
Keep Your Servicer Informed!
• Let your servicer know if anything changes!
   – name
   – address (physical or e-mail)
   – telephone number
   – enrollment status
   – transfer to a new school
   – change your employer (or your employer's
     address changes)
   – change your Social Security Number
   – change your expected graduation date
Stafford (FFEL)/Direct Loans
       Stafford (FFEL)/Direct Loans

• Subsidized Stafford/Direct Loan
   – Interest on the loan is paid by the federal government while
     you are in school, during your grace period, and during
     authorized periods of deferment.
   – During periods of forbearance, you will be responsible for
     interest that accrues on your subsidized loans.

• Unsubsidized Stafford/Direct Loan
   – You are responsible for paying the interest on your loan from
     the date of disbursement.

• Interest Rate will never exceed 8.25% fixed.
                   Grace Period
• A period of time when you don't have to make principal
  payments.

• You will receive a repayment schedule, which includes
  the interest rate and monthly payment amounts for all
  your loans.

• During the grace period, no interest accrues on your
  subsidized Federal Stafford/Direct loans. Interest does
  accrue on unsubsidized Federal Stafford/Direct Loans.

• You can pay the interest as it accrues, otherwise it will be
  added to your loan balance.
           Student Loan Repayment
                  Schedules
• Standard (FFEL & Direct)
   – Fixed monthly payment, 10 year term, repaid in shortest time with least
     interest
   – Selected by default if the borrower does not select a repayment plan

• Graduated (FFEL & Direct)
   – Payments start out low and increase every two years, 10 year term
   – No payment is ever greater than three times the smallest amount

• Extended (FFEL & Direct)
   –   Pay a fixed annual or graduated amount for up to 25 years, minimum
       $30,000 in FFEL or Direct loans to qualify, pay more in interest over time

• Income-Sensitive (FFEL only)
   – Payments increase/decrease along with earnings, annual certification, total
     interest costs may be greater
   – Can be used for up to 5 years during the life of the loan; max term is 10 years
Two Additional Student Loan Repayment
               Schedules
Income-Based Repayment                   Income Contingent
(FFEL & Direct)                          Repayment (Direct)
• Must have a “partial financial         • Anyone may choose ICR
  hardship” to qualify                   • Amount of loan debt is
• Amount of loan debt is not               considered in determining
  considered in determining                payment
  payment                                • Borrowers are responsible for
• Government pays accrued                  paying all of the interest that
  interest on subsidized loans up to 3     accrues on their loans –
  consecutive years from time they         capitalized annually
  begin repaying loans under IBR         • Required monthly payment under
• Interest capitalized only if they no     ICR is generally higher than under
  longer have a “partial financial         IBR, and may be higher than the
  hardship” or if you choose to leave      monthly payment amount under
  IBR Plan                                 a 10-year standard repayment
                “Pay as You Earn”
Provides many recent and soon-to-be college graduates with
monthly payments tied to their income.

• Monthly payments should be lower than currently available in
  IBR or ICR

• Loan forgiveness after 20 rather than 25 years of payments.

• Would cap student loan borrower’s payments at 10% of their
  discretionary income

To be eligible for Pay-As-You-Earn:
• Borrowers must have taken out their first federal student loan
   after September 30, 2007 and at least one after September 30,
   2011.
        Standard Repayment Plan
Estimated Total Adjusted Gross Income:            $35,000
Estimated Total Student Loans:                    $50,000
Estimated Average Interest Rate:                  6.8%

According to the information provided, this borrower would pay
$575 per month for 10 years. Over the course of one year, this
borrower would contribute $6900 from his/her income to repay
his/her student loan.
Use A Repayment Calculators
    Income-Based Repayment Plan
Estimated Total Adjusted Gross Income:               $35,000
Estimated Total Student Loans:                       $50,000
Estimated Average Interest Rate:                     6.8%
Family Size:                        1

Based on this information, the borrower is eligible for IBR and would
have a monthly payment of $235. Over the course of one year, this
borrower would need $2820 from his/her income to repay his/her
student loan.
 Income-Based Repayment Plan
Estimated Total Adjusted Gross Income:               $35,000
Estimated Total Student Loans:                       $50,000
Estimated Average Interest Rate:                     6.8%
Family Size:                                         2

Based on this information, the borrower is eligible for IBR and would
have a monthly payment of $160. Over the course of one year, this
borrower would need $1920 from his/her income to repay his/her
student loan.
                             Deferment
• A deferment is a period of time during which your school or
  lender temporarily suspends your regular payments.
• If your loans were made on or after July 1, 1993, you may be
  eligible for the following deferments:
   – At least half-time enrollment at an eligible school
   – Graduate fellowship program
   – Rehabilitation training program
   – Military service (active duty during a war or other military
     operation or national emergency; post-active duty)
   – Unemployment
   – Economic hardship
   – Peace Corps
       For loans disbursed after 7/1/93        # of years for deferment
   In-school                              Unlimited
   Unemployment                           3 years
   Economic Hardship                      3 years
  Thinking About Going Back to
            School?
• Your federal student loans will be deferred through
  an in-school deferment if you enroll at least half-time
  at an eligible Title IV institution.

• Your private student loans may be deferred –
  individualized by lender.

• To obtain additional federal student loans, remember
  to file the Free Application for Federal Student Aid
  (www.fafsa.ed.gov)
   – You will now be considered an independent student;
     no parent information will be required!
                Forbearance
                Forbearance
• A period of time during which your loan holder
  temporarily reduces or suspends your regular
  payments.

• Usually given during Medical internship/residency,
  National Community Service/Americorps, etc.

• You may request forbearance if you are willing but
  unable to make your full payment and are not
  eligible for a deferment.

• You are responsible for the interest that accrues
  during the forbearance period. You may pay the
  interest as it accrues.
Federal Student Loan Consolidation
• Consolidates all federal loans for student
  (Stafford/FFEL or Direct and Perkins) into one loan
  with a fixed interest rate for subsidized and one
  fixed interest rate for unsubsidized loans.
• No private loans can be included.
• Reduces monthly loan payment & extends loan
  term; but can increase the total cost of the loan.
• Increases convenience if you have multiple student
  loan servicers; single statement billing.
• Only the federal government consolidates student
  loans at this time - www.loanconsolidation.ed.gov
 When Consolidation Might Not Be
         Right For You
• Borrower has eligible federal student loans with FIXED
  interest rates
• Borrower qualifies for Extended Repayment
• Borrower qualifies for on-time payment incentives on
  current Federal Stafford/Direct Loans which will be
  lost if they consolidate
• Borrower anticipates having loans forgiven through
  various federal loan forgiveness programs
• Best Bet – Use a loan consolidation calculator, or
  contact the US Department of Education, to
  determine if loan consolidation is right for you.
Forgiveness Programs for Federal Loans
• Most popular – teacher loan forgiveness, public
  service forgiveness
• Under certain circumstances, a Stafford, Direct or
  Perkins student loan, or a portion of the loan, may
  be cancelled, forgiven, or discharged.
• Americorps, Peace Corps and military service all
  offer student loan forgiveness options.
• http://studentaid.ed.gov/repay-
  loans/forgiveness-cancellation
• Borrowers should continue to make payments
  until they receive written notification that their
  loan has been cancelled from each servicer, if
  applicable.
         Teacher Loan Forgiveness
• Full-time teacher for 5 consecutive years in a
  designated elementary or secondary school or
  educational service agency serving students from low
  income families
• Up to $5000 of the total loan amount outstanding
  after completion of the 5th year (up to $17,500 for
  elementary/secondary special education teachers
  and secondary math and science teachers)
• Under the Direct and FFEL Consolidation Loan
  programs, only the portion used to repay eligible
  Direct or FFEL loans qualifies for loan forgiveness
• PLUS loans are not eligible for forgiveness
• http://studentaid.ed.gov/repay-loans/forgiveness-
  cancellation/charts/teacher
     Public Service Forgiveness (PSLF)
• In 2007, Congress created the Public Service Loan
  Forgiveness Program to encourage individuals to
  enter and continue to work full-time in public service
  jobs.
• Borrowers may qualify for forgiveness of the remaining
  balance due on their eligible federal student loans
  after they have made 120 payments on those loans
  under certain repayment plans while employed full
  time by certain public service employers.
• Direct Loan Program Only; if you have FFEL or Perkins
  Loans, would have to consolidate them into a Direct
  Consolidated Loan (only payments made to the
  consolidated loan count towards the 120 required)
• http://studentaid.ed.gov/repay-loans/forgiveness-
  cancellation/charts/public-service
Loan Cancellation or Discharge for
         Federal Loans
• Death
• Total & Permanent Disability

• Federal student loans are not cancelled or
  discharged due to bankruptcy in most
  cases.
Private Loans
         Private Student Loans
• Repayment start date usually aligns with Stafford
  (i.e., six month grace period)
• If you have a co-borrower for your private loan,
  determine which one of you will be making the
  payments as you are both jointly liable
   – One gets reported to the credit reporting agencies for
     being late on a student loan, so does the other
• May offer some deferment or forbearance options
• May have a repayment fee that is affixed to your
  account when it converts to repayment
• Cannot be discharged in bankruptcy
        Private Student Loan
            Consolidation
• Two possible lenders:
  – Wells Fargo Private Consolidation Loan
  – SunTrust Private Student Loan Consolidation
    Program
  – Variable or fixed interest rates
  – Requires a credit check
• Easy way to consolidate all private loans with
  one lender
• Cannot combine federal loans with private
  loans
Tips For Managing Student Loan
          Repayment
  Helpful Tips for Repaying Your
          Student Loans
1. Understand your rights and responsibilities regarding
   your repayment obligation as well as your
   repayment options.
2. Stay organized. Keep all records regarding your
   loan. Make copies of all letters, canceled checks,
   and any forms you sign.
3. Notify your lender or service company when you
   have a change of address, phone number, or
   name, or if you change schools or your enrollment
   status.
4. Make loan payments on time.
5. Stay up-to-date on student loan updates in the
   news!
Give Yourself Credit!
 Student Loan Payment Impact on
   Credit Score/Long Term Credit
• Usually in the month you reach 60 days past due on
  your student loans, the delinquency will be reported to
  credit bureaus and your servicer will begin due
  diligence and collection actions against you if you fail
  to make full, timely payments.
• Even if the account is brought current, the former
  reported delinquency remains on your credit report as
  a reported delinquency for seven years.
• With creditors using tightened credit qualifying
  standards, being delinquent on student loans could
  easily impact your future borrowing.
Defaulting on a Student Loan Can:
• Damage to your credit rating, which could impact your ability to
  borrow (for example, you may be denied a car loan);
• Refer of your account to a collection agency and collection
  costs;
• Garnishment of your wages;
• Withholding of your state or federal Treasury payments (including
  federal tax refunds, Social Security benefits, etc.);
• Civil lawsuit, including court costs and legal expenses;
• Loss of deferment and forbearance entitlements and flexible
  repayment options;
• Loss of eligibility for further financial aid.

     Federal Stafford/Direct Loans will default after 270 days without a payment.
       Private loans usually default between 120 & 180 days if a payment is not
                                made; lender discretion.
 Get Your Own Free Credit Report
            Today!
• Log on to www.annualcreditreport.com or call 877.322.8228!
   – You’ll Need:
        • Your name, SSN, date of birth, current address – and your most recent
          credit information – i.e., amount of a car payment, balance on a credit
          card, bank, etc.
    – This central site allows you to request a free credit report, once
      every 12 months from each of the nationwide consumer
      credit reporting companies: Equifax, Experian and TransUnion.

• How Long It Takes
   – Online: Immediate!
   – Call: Within 15 days
• Pay a nominal fee should you want to know your actual credit score
  (about $10).
   – Note: The credit score you will receive is a CONSUMER FICO score –
     not the FICO score a credit bureau will pull for you – just order the
     Credit Report!
www.annualcreditreport.com
      The Good & Bad News…
• Generally, negative information stays on
  your credit report for seven years--10 in the
  case of some bankruptcies.

• Positive information stays on indefinitely.

• Inquiries stay on for six months to two years,
  depending on the type of inquiry.
          Remember: What You Do Today Does Matter For Your
                                    Future Financial Plans!
Credit Bureau Contact Information

 • Equifax
   – www.equifax.com
   – (800) 685-1111
 • Trans Union
   – www.transunion.com
   – (800) 916-8800
 • Experian
   – www.experian.com
   – (888) 397-3742
        Questions?

           Tori Berube
AVP, College Planning & Outreach
       tberube@gsmr.org
      800.525.2577, ext. 117

				
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