MBA Fall 2008 Financial Aid Workshop
Repaying Your International Student Loan
AGENDA
– – – – – – – Loan Features Repayment Option Forbearance Borrower Benefits Online Services Private Loan Consolidation Final Tips
Loan Features
Interest Rates Most Private Loans have a variable interest rate. Most interest rates, such as CitiAssist, are reset quarterly. Lenders typically use two types of instruments along with a rate spread to determine interest rates: Prime Rate Interest rate charged by banks to their creditworthy customers. The rate is almost always the same amongst major banks. Adjustments to the prime rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis. • • Example: Private Loan is based on Prime Rate + 2.00% (Current prime rate is 5.00%, therefore, current rate is 7.00%).
LIBOR Rate Stands for "London Inter-Bank Offered Rate." It is based on rates that contributor banks in London offer each other for inter-bank deposits. Rate calculations are complex as they incorporate variables such as time, maturity and currency rates. • • Example: Private Loan is based on 1 month LIBOR Rate + 3.25% (Current 1 month LIBOR Rate is 4.14%, therefore, current rate is 7.39%).
Loan Features
• Billing
– If you have more than one private loan with the same lender, you will receive one bill for all loans due – be sure to verify your accounts with your lender
• Grace Period and Repayment
– Your grace period is 6 or 9 months depending on the lender and year (CitiAssist has 6 months) – Graduate students have 15-20 years to repay the loan depending on the lender and year. (CitiAssist has 15 years) – Longer repayment terms MAY be available – check with your lender
Repayment Options
• Level Repayment – Pay the same amount for the duration of your repayment period; payment changes only when the variable interest rate changes. Interest-Only Repayment – Also known as Graduated Repayment. You pay only the monthly interest that accrues on your account, or $50.00 whichever is greater for 24 or 48 months. – After the “Interest-Only” period ends your loans are automatically set up for Level Repayment Plan.
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Repayment Options
• Capitalization
– Unpaid interest that accrues while you are in school and during your grace period once you graduate will be capitalized at repayment. Unpaid interest that accrues during any forbearance period will be capitalized at the end of any forbearance period. Paying interest during in school, grace, and forbearance periods will greatly reduce the amount of principal you pay back! Important to check with your lender to determine the specifics regarding capitalization.
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Managing Debts
– If you think you will have a financial problem repaying your loans at any time during repayment – contact your lender immediately. – Lenders will help you explore all of your options to avoid delinquency. Lenders can offer possible options such as reduced monthly payments or a temporary postponement of payment otherwise known as a “Forbearances”.
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Forbearance
Forbearance enables you to temporarily postpone making principal payment if you are experiencing financial difficulties.
Important Facts
• Forbearances are at the discretion of the lender. • You must apply for a forbearance – it is not automatically granted. • Your original repayment schedule remains in effect until a decision has been made so you need to continue payments. • Apply at least 30 days before you want the forbearance period to begin. • Forbearances are offered for a limited time for the life of loan repayment. Use them wisely!
Borrower Benefits
Most lenders reward borrowers who are responsible about paying back their student loans. Look for special borrower benefits such as: • Interest rate reduction for automatic payments from a U.S. checking or savings accounts.
CitiAssist offers a 0.25% interest rate reduction for auto-debit of loan payments.
• Interest rate reduction for consecutive, initial on-time payments over a specified period of time.
CitiAssist offer a 2.00% interest rate reduction after making 48 on-time consecutive payments.
Online Services
Online Account Access - Make a payment - View balances - View electronic statements - Select a repayment option - Apply for forbearances Other - Repayment calculators - FAQs and additional loan information
Online Services
Making payments outside of the U.S. • Pay online with your own credit card
Citibank customers: www.studentloan.com/paybycreditcard
• No currency issues, no conversion delays • Usually free but may incur credit card conversion fees. • Automatic payment borrower benefit may not apply if you use this option. • Contact your lender for more details about the repayment services offered.
Private Loan Consolidation
Private Loan Consolidation can help you reduce your monthly costs
by consolidating multiple private student loans into one new loan with an extended repayment period. You may also be able to convert to a fixed rate options.
Things to consider: • More interest may be paid over the life of the loan. • You may be offered a higher rate than on your existing private loans. • You may incur additional loan fees. • Not all private loans may be eligible to consolidate. • Most require applicant to be a U.S. Citizen or Permanent Resident to apply without a co-signer.
Final Tips
• Identify all student loans borrowed. • Come up with repayment strategy that best suits your needs. • Register for online account access from your lender website(s) to review all your student loans. • Always update mailing addresses and other contact information. • Use loan calculators to estimate monthly payments. • Sign up for Auto-Debit payments if you maintain a U.S. bank account. • Call your lender
Questions?
If you have general questions about Financial Aid please contact us at (212) 998 0790 or by email at fin-aid@stern.nyu.edu. You may also visit our website www.stern.nyu.edu/finaid for private loans options.
If you have a CitiAssist loan and want to know the specifics about your loan account please contact Citibank customer service at (800) 967-2400.