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									 Exit Loan
Counseling
 School Logo Here




                    1
     Why You Are Here...

• Federal requirement for the
  Stafford loan program
• To learn…
  – Your responsibility as a borrower
  – What to expect as you enter repayment
• Help with financial planning

                                            2
What Will We Be Talking About?
    •   Stafford Loans
    •   Who Are The Players?
    •   Rights and Responsibilities
    •   Grace Period
    •   Repayment
    •   Budgeting
    •   Staying Out of Trouble
                                      3
        Stafford Loans
• Subsidized
  – Federal government pays interest
    while:
    • In school
    • Grace period (six months)
    • Deferments
  – Need-based
  – Who is eligible
    • Dependent and independent
    • Undergraduate and graduate       4
                                        Stafford Loans



        Stafford Loans (cont.)
• Unsubsidized
  – Interest begins accruing at disbursement
    • capitalization -- to pay or not to pay
  – Not need-based
  – Who is eligible
    • Base unsub = dependent and independent
    • Additional unsub = independent, and
      dependent if parents are unable to borrow
      a PLUS loan
                                                         5
                                  Stafford Loans




• Interest rates
  – Interest calculated as a percentage of
    principal loan amount
  – The interest rate is variable
     • Based on the 91-day T-bill
     • Revised every July 1st
     • Adjusted annually even while in
       repayment
  – Interest cap (maximum interest rate) of
    8.25%
                                                   6
                                             Stafford Loans



      Aggregate Loan Limits

Program        Base       Additional        Total
 Level      (Sub/Unsub)    Unsub
Undergrad     $23,000      $23,000        $46,000

Graduate     $65,500*     $73,000*      $138,500*
                                           *including
                                       amounts borrowed
                                       for undergraduate
                                              study




How much have you borrowed in total?
How can you find out?
                                                              7
                                         Stafford Loans



     Know thyself (and thy debt)

• Know what you borrowed/what you owe
• How do I find out?
  – Your school’s Financial Aid Office
  – Your lender
  – National Student Loan Data System



                                                          8
                                       Stafford Loans


 National Student Loan Data System
              (NSLDS)
• Central database for student aid records
  – Track student loans from disbursement to
    pay-off
  – Get a total of what you owe, at any time
• http://nslds.ed.gov 24 hours a day,
  7 days a week


                                                        9
                                     Stafford Loans


             NSLDS (cont.)
• How do I access my information?
  – Request personal identification number
    (PIN) at http://pin.ed.gov
    • Receive your number via U.S. mail within
      7-10 days
    • Keep this number. It will be your access
      PIN from then on.



                                                      10
                                        Stafford Loans




              NSLDS (cont.)

– Go to http://nslds.ed.gov and key in:
  • your Social Security number
  • the first two letters of your last name
  • your date of birth and
  • your PIN number



                                                         11
                                      Stafford Loans




              NSLDS (cont.)

– You’ll see all the loans you have borrowed
  • the date you took out the loan
  • how much you borrowed and still owe
  • the interest rate
  • the status of each loan (in repayment, in
    deferment, delinquent, etc.)


                                                       12
    Who Are The Players?
•   Financial Aid Administrators
•   Federal Government
•   Lenders/Holders
•   Servicers
•   Secondary Markets
•   Guarantors
•   Credit Bureaus
•   Ombudsman (1-877-557-2575)     13
                                Who Are The Players?


        Most Valuable Player
• The Internet
  – Useful tool and important source of
    information for student loans
     • Online financial planning guides
     • Money management
     • Comparative data on loans and lenders
  – Available 24/7
  – Gives you the power to take control
                                                       14
  Rights and Responsibilities
• You have the right to:
  – receive a copy of your signed MPN
  – receive a disclosure statement
  – a one time six month grace period after
    leaving school
  – written notification from lender if loan
    is sold
  – deferments and forbearances, if eligible
  – proof of discharge after paying in full
                                           15
                              Rights and Responsibilities



• As a borrower, you agree to:
  – repay your loan(s)
  – make monthly payments on time
  – direct all correspondence to your
    lender/servicer
  – notify lender/servicer of any/all changes
    •   name
    •   address
    •   school or enrollment status
    •   phone number, etc.                                  16
   The Grace Period
• Begins the day after you graduate
  or drop below half time status,
  lasts for six months
  – If you re-enroll at least half time,
    request an in-school deferment
    from your lender
  – Can make payments during this time
     • Get in the habit of paying
     • Chip away at the debt
                                           17
                               The Grace Period




• This is a critical time
  – Keep in touch with lender during
    this time
     • Read your mail!
  – Know your total loan debt (NSLDS)
  – Know what your monthly payments
    will be and when they begin
  – If you’re unsure of anything, ask
    your lender
                                                  18
            Repayment
• Begins after 6 month grace period
• Required monthly payments for up
  to 10 years
• Flexibility to change payment plans
• May opt to extend repayment period
  beyond the 10 years

                                        19
                                      Repayment



• Repayment plan options
  – Standard = basic plan, fixed monthly amount
  – Graduated = payments begin low and
    gradually increase every few years
  – Income-sensitive = payment amounts set
    according to income, adjusted every few
    years
  – Extended = allows borrower up to 25 years
    to repay loans, required minimum loan
    balance $30,000                               20
                                      Repayment




• Consolidation- weigh your options
  – Several loans can be merged into one loan
  – Warning -- lower payments = more to
    payback (more interest accrues)
  – New interest rate and new loan terms set
    by the holder
  – Consolidated repayment options
    (standard, graduated, income-sensitive)


                                                  21
                                          Repayment



• Incentives and rewards -- save some
  money
  – Reduction of interest rate after 48
    consecutive on-time payments
    (typically 2 points)
  – Another reduction for signing up for direct
    pay (typically 1/4 point)
  – Tax credits from government
• No prepayment penalty
  – Tip: Pay slightly more per month ($10)
    and reduce the total amount to pay back           22
                                                                           Repayment



                             Repayment Chart
                      # of               Monthly                                Total
Debt Amount                                                   Total Interest
                    Payments             Payment                               Payback
       $2,625                   63                  $51                $618        $3,243
       $4,000                 108                   $50              $1,817        $5,817
       $6,000                 120                   $74              $2,736        $8,736
       $8,000                 120                   $98              $3,774        $11,774
     $10,000                  120                  $123              $4,718       $14,718
     $15,000                  120                  $184              $7,077       $22,077
     $20,000                  120                  $245              $9,437       $29,427
     $25,000                  120                  $307             $11,796       $36,796
     $30,000                  120                  $368             $14,155       $44,155
Amounts based on Standard repayment plan at 8.25% interest.                            23
                                                                           Repayment



                             Repayment Chart
                      # of               Monthly                                Total
Debt Amount                                                   Total Interest
                    Payments             Payment                               Payback
     $35,000                  120                  $429             $16,514       $51,514
     $40,000                  120                  $491             $18,873       $58,873
     $45,000                  120                  $522             $21,233       $66,233
     $50,000                  120                  $613             $23,591       $73,591
     $60,000                  120                  $736             $28,310       $88,310
     $70,000                  120                  $859             $33,028      $103,028
     $80,000                  120                  $981             $37,747       $117,747
     $90,000                  120                $1,104             $42,465      $132,465
    $100,000                  120                $1,227             $47,183      $147,183
Amounts based on Standard repayment plan at 8.25% interest.                            24
                               Repayment



• Deferments and forbearances are
  payment postponements
• Not automatic -- must be requested
  from lender
• Deferment options
  – Deferment is a temporary
    postponement of loan payments
    • In-school
    • Unemployment
    • Economic hardship
                                           25
                                    Repayment




• Forbearance options
  – Forbearance is a temporary
    postponement of principle payments -
    - interest is still accruing
    • Poor health
    • Residency program
    • Loan payment exceeds 20% of
      monthly income

                                                26
                                           Repayment




• Loan discharge (cancellation)
  – Permanent and total disability
  – Loan was falsely certified by school
  – Death
• Loan forgiveness programs
  (government repays a portion of loans)
  – Programs for both teachers and child care
    providers
  – Certain restrictions may apply, contact your
    lender or EDFUND for more information
                                                       27
                                   Repayment



        Who is Your Lender?
• Keep your lender’s name, address, and
  Web site handy!
• If you don’t remember your lender:
  – See Financial Aid Office or
  – Contact guarantor (EDFUND)
• Check out your lender’s Web site for
  up-to-date information on incentives
  and benefits
                                               28
                 Budgeting
• Calculate your income
  – Work, savings, outside assistance
• Calculate and subtract your anticipated
  expenses
  – Housing, utilities, debt, transportation, food,
    clothing, entertainment, student loan
    payment
• Determine what is left over
• Ask yourself: What are some ways I
  can save money?                                     29
                                      Budgeting



• EDWISE is a useful tool
  – Online financial planning guide
  – Comprehensive sections for after
    school:
     • Loan Repayment
     • Post-College Budget
     • Summary Report
  – Easy to use!

  – www.edwise.org                                30
                                       Budgeting




• Interested in knowing what
  salary you’ll be making?
  – EDWISE includes
    average salaries for
    various jobs and career types

• Wondering how you’ll pay your bills?
  – EDWISE will walk you through the
    budgeting process
                                                   31
                                            Budgeting



               Cost Saving Tips
• Carpool
• Entertain at home with friends
• Don’t grocery shop when hungry
• Reduce electricity and fuel costs by lowering the
  thermostat in the winter (wear a sweater)
• Share living costs with a roommate or two
• Go to matinee movies rather than paying full price
• Leave credit cards at home when running errands

   Find these and other tips at
   www.edwise.org
   your online financial planning guide!                32
     Staying Out of Trouble
• Payment is one day late = delinquent
• What can you do?
  – Can you afford a smaller payment?
  – Do you qualify for a deferment?
  – Do you qualify for a forbearance?
  – Contact your lender/servicer
  – Contact EDFUND at
    www.edfund.org or 1.877.2EDFUND
                                         33
                                Staying Out of Trouble




     Consequences of Default
• Default = nine months of no payments
  – Full amount of loan becomes due, including
    collection charges at 18.5%
  – May be sued by federal government
  – Subject to Federal Offset (wages and tax
    refund may be garnished)
  – Credit will be tarnished
  – Lose deferment/forbearance options
                                                         34
                                  Staying Out of Trouble



Consequences of Default (cont.)
– Lose eligibility for additional financial aid!
– Belongings may be repossessed in order to
  repay loan debt
– May lose eligibility for certain federal or
  state jobs
– May lose professional license



                                                           35
                               Staying Out of Trouble



             Ask for Help
• Contact your lender/servicer
  – Ask about options before it gets to this
    level

• The Key: Simply keep in touch with
  your lender/servicer. They want to
  help!


                                                        36
                              Staying Out of Trouble



            Credit Reports
• Include personal, credit, and legal
  information
• Yes, student loans are included on
  credit reports
  – Even one late payment will affect your
    credit score!
• All lending agencies have access
• You are responsible for checking
  accuracy
                                                       37
                               Staying Out of Trouble



      Credit Reports (cont.)
• Important to keep it clean! How?
  – Make all payments on time
  – Periodically check reports for
    mistakes
  – Contact:
     • Experian 888.397.3742
     • Trans Union Corp. 800.888.4213
     • Equifax 800.685.1111                             38
                                Staying Out of Trouble




        Credit Reports (cont.)
• Student loans can help create a
  great credit rating
  – Keep in touch with your lender
  – Always make payments on time
  – It will reflect positively on you




                                                         39
                                  Staying Out of Trouble



            Credit Reports (cont.)
• The following may be based on your credit:
   – Apartment rental
   – Cell phone service
   – Offers of employment
   – Personal loans, home loans, car loans
   – Credit card offers
• The better the credit, the better the interest
  rate will be on future debts (save yourself
  some money)
                                                           40
                           Staying Out of Trouble




• Being responsible now will save
  time, money, and frustration in the
  future!




                                                    41
  Putting It All Together...
• Now you know:
  – What repayment options you have
  – Why it is important to keep in
    contact with your lender
  – Being responsible while in
    repayment will be a great asset
    to you in the future

                                      42
Putting It All Together…(cont.)
• As you enter your grace period, think
  about:
  – How much you have borrowed and what
    the payments will be
  – Budgeting wisely
  – What repayment plan will be best for you
    based on
     • your expected income
     • your loan debt                      43
Questions…?



Thank you for attending
 Exit Loan Counseling!


                          44

								
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