Exit Loan Counseling

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Exit Loan Counseling
School Logo Here
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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

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What Will We Be Talking About?

• Stafford Loans
• Who Are The Players?
• Rights and Responsibilities
• Grace Period
• Repayment
• Budgeting
• Staying Out of Trouble

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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

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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

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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

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Stafford Loans
Aggregate Loan Limits
How much have you borrowed in total? How can you
find out?
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Stafford Loans
Know thyself (and thy debt)

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

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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

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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.

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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

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Stafford Loans
NSLDS (cont.)

• Youll 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.)

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Who Are The Players?

• Financial Aid Administrators
• Federal Government
• Lenders/Holders
• Servicers
• Secondary Markets
• Guarantors
• Credit Bureaus
• Ombudsman (1-877-557-2575)

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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

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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

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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.

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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

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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 youre unsure of anything, ask your lender

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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

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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

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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)

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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

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Repayment
Repayment Chart
Amounts based on Standard repayment plan at 8.25
interest.
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Repayment
Repayment Chart
Amounts based on Standard repayment plan at 8.25
interest.
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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

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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

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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

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Repayment
Who is Your Lender?

• Keep your lenders name, address, and Web
  site handy!
• If you dont remember your lender
• See Financial Aid Office or
• Contact guarantor (EDFUND)
• Check out your lenders Web site for up-to-date
  information on incentives and benefits

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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?

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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

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Budgeting

• Interested in knowing what salary youll
  be making?
• EDWISE includes average
  salaries for various jobs
  and career types
• Wondering how youll pay your bills?
• EDWISE will walk you through the budgeting process

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Budgeting
Cost Saving Tips

• Carpool
• Entertain at home with friends
  
• Dont 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!
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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

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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

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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

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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!

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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

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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

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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

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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)

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Staying Out of Trouble

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

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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

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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

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Questions?
See ya!
Thank you for attendingExit Loan Counseling!