ENTRANCE

1
ENTRANCE
Counseling
2
Agenda

• Education funding options
• Federal Stafford loan types eligibility
• Rights responsibilities
• Borrowing tips
• Repayment
• Delinquency default

3
Funding Your Education

• Grants
• Scholarships
• Work-study
• Gifts from family friends
• Federal Stafford loans

4
Federal Stafford Loan Eligibility Requirements

• Be a U.S. citizen or eligible non-citizen
• Have a valid Social Security number
• Register with Selective Service
• Maintain satisfactory academic progress
• Enroll in an eligible degree or certificate
  program
• Enroll at a participating college at least half
  time
• Not have any defaulted student loans

5
Calculating Your Need

• Cost of Attendance
• Tuition fees
• Room board
• Books supplies
• Transportation
• Personal expenses
• Computer (rental or purchase)
• Student loan fees (if borrowing)
• COA - EFC Financial need

• Expected Family Contribution
• What you your family can reasonably be expected
  to contribute
• From the FAFSA

6
Subsidized Stafford Loans

• Need-based
• Federal government pays interest
• In school
• During grace period (six months)
• During deferments
• Repayment is not required while in school

7
Unsubsidized Stafford Loans

• Not need-based
• You pay interest while in school
• Interest begins accruing at disbursement
• Pay interest as you go
• Capitalize interest
• Unpaid interest is added to the principal
• Increases total debt monthly payment

8
Interest Rates Loan Fees

• Loans taken after July 1, 2006
• Fixed rate of 6.80
• Loans taken before July 1, 2006
• Adjusted annually even while in repayment
• Variable rate revised every July 1
• Interest rate cap of 8.25
• 1 percent origination fee
• 1 percent default fee

9
Interest Rates Loan Fees

10
Annual Stafford Loan Limits
New loan limits for undergraduate dependent
students (except students whose parents cannot
borrow PLUS) effective July 1, 2008.
New loan limits for undergraduate independent
effective July 1, 2008.
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Annual Stafford Loan Limits
Assumes 6.80 percent interest rate and 10-year
term
12
Aggregate Stafford Loan Limits
New loan aggregate limits for undergraduate
students effective July 1, 2008.
Assumes 6.80 percent interest rate and 10-year
term
13
Industry Key Players

• Financial aid office
• Federal government
• Lender
• Servicer
• Secondary market
• Guarantor

• Credit bureaus
• Experian
• Equifax
• TransUnion
• Ombudsman
• 1.877.557.2575
• www.ombudsman.ed.gov

14
Master Promissory Note

• Legal contract between you your lender
• Loan amount is not disclosed on the MPN
• Signing a new MPN
• Change of lender
• Transfer to new school
• After 10 years

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Your Rights

• Receive a copy of your signed MPN
• Receive a disclosure statement
• Receive a six-month grace period
• Prepay all or part of your loan without penalty
• Deferments forbearance, if eligible
• Written notice if your loan is sold
• Proof of discharge after repaying loan in full

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Your Responsibilities

• Repay your loan(s)
• Make on-time, monthly payments
• Read correspondence from lender
• Notify lender of changes within 10 days
• School enrollment status
• Name, address telephone number
• Complete exit interview before leaving school

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How Much to Borrow?

• Calculate your income sources
• Work, financial aid, savings outside assistance
• Calculate your expenses
• Tuition, books, housing, utilities, debt,
  transportation, food, clothing entertainment
• Determine the difference
• Borrower only what you need

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Financial Planning

• EDWISEOnline Financial Planning Guide
• Develop good money strategies
• Create a college spending plan
• Create a post-college spending plan
• Compare salaries
• Compare repayment options
• Find money saving tips
• www.edwise.org

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Borrowing Tips

• Borrow conservatively
• Borrow from one lender
• Payments to one lender
• Keep copies of all documents in one place
• Track how much you borrow
• National Student Loan Data System (NSLDS)
• www.nslds.ed.gov

20
The Grace Period

• One-time grace period
• Six months
• Begins after you graduate, leave school or drop
  below half time
• Monthly payments begin when your grace period
  ends

21
Repaying Your Student Loan

• Federal loans must be repaid
• Regardless of program completion or obtaining
  employment upon completion
• Four repayment plans
• Standard repayment
• Graduated repayment
• Income-sensitive repayment
• Extended repayment

22
Loan Repayment Chart
Interest rates on federal Stafford loans taken
after July 1, 2006 are at a fixed 6.80.
Loans taken before July 1, 2006 are
variable and adjusted annually every July 1 with
a cap of 8.25
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Money-Saving Benefits

• Interest rate reductions
• Consecutive, on-time, monthly payments
• Sign up for automatic payment
• Ask your lender for details
• Tax credits
• www.edfund.org
• www.irs.gov

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Avoid Delinquency Default

• Pay on time
• A payment received one day late is considered
  delinquent
• Delinquent payments are reported to national
  credit bureaus
• Always call your school or lender for help

25
Deferment

• Postponement of payments
• Not automatic
• You must apply receive approval from lender
• Primary reasons
• In-school
• Unemployment
• Economic hardship
• Military service

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Forbearance

• Temporary reduction or postponement of payments
• Not automatic
• You must apply receive approval from lender
• Primary reasons
• Poor health
• Residency program
• Financial hardship
• Interest will continue to accrue

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Loan Consolidation

• Combine loans into one single new loan
• You agree to new terms conditions
• One monthly payment
• Lower payment/longer repayment period
• Payments begin at consolidation
• Be informed
• www.finaid.org
• www.edfund.org

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Loan Cancellation

• In extreme extenuating conditions
• Total permanent disability
• Inability to complete course of study due to
  school closure
• False certification by school
• Death

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Consequences of Default

• Full amount of loan is due
• Including collection costs
• Subject to federal state offsets
• Wages and tax refund may be garnished
• Credit will be tarnished
• Lose deferment forbearance options
• Lose eligibility for future financial aid
• May lose eligibility for certain federal or state
  jobs
• May lose professional license

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Keys to Successful Borrowing

• Use other financial options before borrowing
• Understand your rights responsibilities
• Borrow conservatively
• Borrow from one lender
• Keep copies of all documents in one place
• Track your total student loan debt
• Build good credit with timely payments

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True or False

• F
• F
• T
• T

• I should borrow the maximum loan amount.
• I should borrow from more than one lender.
• I should repay my student loans even if I fail
• to complete my education.
• I should complete exit counseling before leaving
  school.

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Questions