Exit Loan Counseling Presentation - Office of Financial Aid - Spring 2018 - Quinnipiac University

Exit Loan Counseling
Presentation
Office of Financial Aid – Spring 2018

Why Do You Have to Be Here?
 Service design and you
                             Federal Regulations require
                              federal loan borrowers to
                              complete an “Exit Interview”
                              session prior to leaving
                              college

                             To learn about your:
                                   Responsibilities
                                   Rights
                                   Repayment Options

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Federal Loans
Interest paid by government
                              Interest paid by student
 while in school & in grace
                              in-school or accruing &
    period or authorized
                                     capitalizes
         deferment

         Direct                      Direct
       Subsidized                  Unsubsidized

                                     Graduate
         Perkins
                                      PLUS

Getting Organized –
                        Where Are My Loans?
  Federal Loans

                                          www.studentloans.gov
                www.nslds.ed.gov

Private Loans

                                       Or Lender’s Website(s)

From NSLDS.ED.GOV

Keep Track of Your Loans

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Your Responsibilities
   Complete Exit Loan Counseling
   Know the name and contact information of your loan servicer
   Notify servicer of changes in name, email, address,
    employment, etc.
   Make your monthly payments

Know Your Servicer

Tips When Contacting Servicers
 When reaching out to your servicer be sure to keep a record
  of your communications
 Create a log of all phone calls including:
       Date & Time
       Who you spoke to
       If they agreed to do anything for you (i.e. send paperwork, change
        repayment plan, etc.)
   Open your mail/emails and be sure to see if you are required
    to take any action (i.e. renewing paperwork for your payment
    plan)

You promise to repay even if you
   Don’t receive payment notices or reminders from your
    lender/servicer
   Unable to locate work after completing your program
   Are not satisfied with your education
   Don’t complete program of study

Know What You Owe
in Federal Loans
                   Undergraduate     Graduate           Graduate PLUS
                   Average Federal   Average Federal    Average Loan
                   Direct Stafford   Direct Stafford    Debt
                   Loan Debt         Loan Debt
   Amount          $23,510           $36,752            $34,992
   Borrowed
   Interest Rate   4.45%             6%                 7%
   Monthly         $244              $408               $406
   Payment                                             May 2018 Graduates

Understanding Your Federal Debt

Capitalized Interest
                                                                    $30,000
        $29,000
                                                                   Total Principal &
                      $1,000                                          Interest +
                                                                     New Interest
       Principal
         Loan        Interest
                       Loan

                                                  Capitalization is the addition of unpaid
    Interest accrues on most loans from
                                                    accrued interest to the principal balance of
    disbursement date
   Remains until enters repayment              
                                                    the loan
   Can payoff before repayment which saves $
                                                    Capitalization may occur more frequently for
                                                    certain loans at certain times

Your Rights
 Receive a copy of your MPN
 Receive a disclosure statement
 Receive notice if your loan is sold and the name of the new
  holder

Your Rights – Grace Period

Grace Period                                    Stopped Attending School
Time before you start paying on your
loans                                           (Exhausted Your Grace Period)

      Type of Loan                 Length          Type of Loan   When Repayment
                                                                      Starts
Subsidized/Unsubsidized   180 days (6 Months)
                                                Federal Loans     Right after
Graduate PLUS             180 days (6 months)                     Graduation
Perkins                   9 Months                                Within 30-45 days
Private Loans             Varies                Private Loans     Right after
                                                                  Graduation
                                                                  Within 30-45 days

Your Rights - Prepayment

You may prepay all or a          Any additional payment                 Option of requesting
portion of your loans            made above “required”                  shorter repayment
without penalty                  monthly amount due will                schedule
                                 reduce outstanding
                                 balance

                                 Must have all accrued
                                 interest paid

                                 Must not have late fees

              Be sure to consult with your servicer to ensure taking the correct steps
                    Once loan paid in full, right to have proof of zero balance
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Your Rights - Repayment Options

Standard                  Graduated                  Extended
Repayment                 Repayment                  Repayment
                                                     • Federal debt must
• Highest monthly         • Interest only payments     exceed $30,000 all
  payment                   initially                  within the same loan
• Lowest total interest   • Payments increase          program (DL or FFEL)
• 10 year repayment         incrementally every 2    • Lowest monthly
  term                      yrs                        payment
                          • 10 year repayment        • Highest total interest
                            term
                                                     • Up to 25 years to
                                                       repay

1. Standard                           2. Graduated
   Repayment                             Repayment
                                          Payments start out low & increase
  Payments stay the same for                 every 2 years for 10 years
          10 years

                                                                    $411
 $244            $244          $244               $278
                                      $137

3. Extended Repayment
         $237                           Extended Fixed
                          Borrowed at least $30,000 and payments will
                                  remain same for 25 years

$237      25       $237
         Years

  $237           $237          Extended Graduated (also available)
                          Payments will increase every 2 years for 25 years

Traditional Repayment Examples - Undergraduate
Repayment     First          Last            Total            Total Loan              Repayment
   Plan     Monthly        Monthly         Interest              Paid                  Months
            Payment        Payment           Paid

Standard       $244           $244          $5,728               $29,238                     120
Graduated      $137           $411          $7,178               $30,688                     120
Extended    Not Eligible   Not Eligible   Not Eligible        Not Eligible                   N/A
Fixed

                                                Based on a debt of $23,510 at an interest rate of 4.45%

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Traditional Repayment Examples - Graduate
Repayment                 First                     Last                       Total                 Total Loan               Repayment
   Plan                 Monthly                   Monthly                    Interest                   Paid                   Months
                        Payment                   Payment                      Paid

Standard                    $814                      $814                    $25,959                   $97,703                       120
Graduated                   $468                     $1,404                   $33,055                  $104,799                       120

Extended                    $484                      $484                    $73,417                  $145,161                       300
Fixed

           Total debt of $71,744 (Unsubsidized $36,752 at an interest rate of 6% & Graduate PLUS debt of $34,992 at an interest rate of 7%)

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Income Driven
Repayment Plans

Income Driven Repayment Plans
IDR plans are based on your income, family size, marital status and state

 of residence. Since these can change, annual updates are required to

           keep payments aligned with your current situation.

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Income Driven Plans
                                       Income Based
                           • Payments capped at standard 10 year amount
              IBR          • Must submit annual paperwork to determine
                             yearly payment
                           • Up to 25 years to repay
                           • FFEL & Direct Loan Program

        Pay As You Earn                               Revised Pay As You Earn
       • Payments capped at standard                  • Payment amount is10% of household income
         10 year amount                 REPAYE
PAYE                                                    without a cap
       • Must submit annual                           • Must submit annual paperwork to determine
         paperwork to determine                         yearly payment
         yearly payment                               • Up to 20 years to repay (Undergrad debt)
       • Up to 20 years to repay                      • Up to 25 years to repay (w/Grad debt)
       • Direct Loan Program Only                     • Direct Loan Program Only

Married
Eligibility   Loan Forgiveness   Borrowers

                                             27

IDR Repayment Examples - Undergraduate
Repayment     First         Last                     Total               Total Loan             Repayment
   Plan     Monthly       Monthly                  Interest                 Paid                 Months
            Payment       Payment                    Paid

IBR (New)    $183             $244                   $6,709                 $30,219                     122
PAYE         $183             $244                   $6,709                 $30,219                     133
REPAYE       $183             $331                   $6,401                 $29,911                     120

                      Based on a debt of $23,510 at an interest rate of 4.45%, AGI $40,000, 1 household, reside in CT

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IDR Repayment Examples - Graduate
Repayment               First                Last                  Total            Total Loan              Projected    Repayment
   Plan               Monthly              Monthly               Interest              Paid                   Loan        Months
                      Payment              Payment                 Paid                                    Forgiveness

IBR (Old)                 $399                $814               $53,870             $125,614                    n/a        198
PAYE                      $266                $814               $47,887             $119,631                  $39,037      240
(IBR New)
REPAYE                    $266               $1,020              $86,512             $158,256                    n/a        282

  Total debt of $71,744, AGI $50,000, 1 Household residing in CT
  (Unsubsidized $36,752 at an interest rate of 6% & Graduate PLUS debt of $34,992 at an interest rate of 7%)

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Keep in Mind with IDR
•   Increased interest will accrue and may have negative amortization
•   Unpaid interest will capitalize at some point
•   Monthly payments could change
•   All IDR payments except REPAYE will cap at the standard 10 yr amount
•   Must select an IDR plan if seeking public service loan forgiveness (PSLF)

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Thinking Public Service Loan Forgiveness
    Need to make 120 qualifying payments under the IDR plan on your Federal Direct
     Loans
    Work for a non-profit organization full-time for the 10 years of payments
    Any remaining loan balance after the 120 payments will be forgiven but are not
     taxable

                           Eligible
 Eligible Loans          Employment             Eligible Payments                  Forgiveness

        Plan          1st payment     Last payment     Total Paid       Total
                                                                        Forgiven
        IBR (New)     $266            $460             $42,746          $75,544
                                                     Graduate Unsub. and GPLUS debt $71,744

PSLF – Primary Servicer is FedLoans

                                      Learn more www.saltmoney.org

Understanding Your Federal Debt

Borrower Benefits

Contingent Benefits

   .25% Interest Rate
    Reduction for Auto-Debit

   12 on-time payments* for
    loans disbursed before July
    1, 2012

   Possible rebate Programs

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Having Difficulty Repaying Loans?
Contact servicer regarding possible
options/rights:
    Adjustment of Repayment Plan
    Deferment
    Forbearance
    Cancellation
        Specific terms apply

Your Rights - Deferment
   In-School part-time or more
   The economic hardship deferment has a
    complicated set of eligibility criteria, contact
    your servicer for specifics
   Military service
   Peace Corp
   Federal government pays the interest on
    subsidized Stafford loans, Perkins loans and
    on the portion of a consolidation loan that
    paid off a subsidized Stafford loan

Your Rights - Forbearance
   Temporary time when you are not
    making loan payments and considered
    in good standing
   Must be approved before stopping
    payment
   Total of 36 months for the life of your
    loan, generally receive 6 months at a
    time
   Interest is still accruing during a
    forbearance or you may pay on it

Your Rights – Loan Cancellation or Discharge
 There are a few situations in which your loan may be
 discharged, cancelled or forgiven:
    Your death
    You become totally or permanently disabled (and meet certain
     additional requirements)
    Your school falsely certified your loan eligibility
    A loan was taken in your name falsely as a result of identity theft
    Your school failed to refund required loan funds to your lender on your
     behalf
    You are unable to complete your program of study due to the closing of
     your school

Your Rights - Loan Forgiveness Programs
 Full or partial
 Volunteer work
       AmeriCorps
       Peace Corps
       Volunteers in Service to America
        (VISTA)
 Military Service (ex. Army National Guard)
 Teaching in High Need or Underserved Area
 Legal Area (ex. Public interest or Non-profit)
 Medical (ex. Health & Human Services,
  Hospitals, Private Healthcare Org)

Delinquency & Default
Don’t let this happen to you!
   Delinquency
     Lender has not received payment by the stated due date

     Could lose benefits in repayment

   Default is the worst case scenario
     270 days delinquent

     Responsible for Attorney & Collection fees

     Affects credit score

     Garnished wages

     Tax refunds withheld

     Ineligible for financial aid

Unresolved Federal Loan Issues

       Office of the Ombudsman
           U.S. Department of Education
             FSA Ombudsman Group
                   P.O. Box 1843
                 (P) 877-557-2575
                 (F) 606-396-4821
    www.studentaid.gov (search for Ombudsman)

Consolidation

What About Federal Consolidation?
   Can only consolidate Federal loans together
    (Stafford/Direct, Graduate PLUS, Perkins)
   Provides ability to secure a fixed interest rate
      Interest rate based on the weighted average of the
       interest rates on the loans being consolidated,
       rounded up to the nearest eighth of a percent and
       capped at 8.25%
   Need to apply for consolidation & no fees charged
   www.studentloans.gov for Federal Loan Consolidation
    Application

Consolidation

Pros                                 Cons
 Creates one loan versus multiple      Lengthens time of repayment,
  loans with different servicers         increases amount interest paid
 Reduces monthly payment by            Possible increase to interest rate
  extending years to repay              Lose original borrower benefits
 Possible interest rate reduction      Lose grace period (repayment will
  uses averages                          begin within 45 days)
 Can select your Federal Loan
  Servicer

Consolidation
Repayment
Example

                https://myfedloan.org/manage-account/consolidation/estimator.shtml   Lower Payment More Yrs
                                                                                        Based on 20 yrs

Private / Refinance Consolidation
Pros                                       Cons
 Creates one loan with one company           Create new loan where loss of
  with the one interest rate versus
  multiple loans with different interest       repayment benefits may occur
  rates & servicers                           If include federal loans all
 Can elect to only consolidate private        repayment benefits lost
  educational loans
                                              Longer repayment time, increases
 Could reduces monthly payment by
  extending years to repay                     amount of interest paid
 Possible interest rate reduction            Possible increase to interest rate
  depending upon credit score                  or changing from fixed to variable
 Ability to remove or change co-signer

Now That You are Done with School What Happens
                   Next…..

Moving onto Graduate School
   Notify your Servicer that you are returning to
    school
       Generally will not accept deferments unless currently
        enrolled

   File for In-School Deferment, if attending at least
    part-time (be sure to check with your school how
    they define part-time)

Private Alternative Loans
 Remember not part of this discussion
 Things to consider and remember
 Research about repaying your Private Alternative Loans

Repayment Example

                    Loan Amount   Interest Rate   Loan Term   Monthly Payment

 Sub./Unsub.        $23,510       4.45%           10 years    $244
 Direct Loan
 Private            $40,000       8% variable     15 years    $382
 Alternative
 Loan

Managing Your Debt
   Make the most of your grace period
     Use this time to get your finances in order

     Get yourself organized

     Consider making a “spreadsheet” of all your debt not just student loans and start
      looking at the types of debt and benefits or drawbacks of each
   Develop monthly budget including all expenses
       Consider using www.paycheckcity.com to help determine your take home paycheck

   Take the time to be realistic when looking at your expenses

   Keep your payments current – Affects your credit
       Landlords, insurance companies, potential employers, licensures may be affected

BEWARE…..
Debt Relief Organizations

                            Check Reliability

                            Too Good to be True – Question It
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Your Personal Credit
Free Annual Credit Report www.annualcreditreport.com

Trans Union www.transunion.com or 1-800-888-4213

Experian www.experian.com or 1-888-Experian

Equifax www.equifax.com or 1-800-685-1111

Tax Benefits To Consider
                 Now That You are Working
                          http://www.irs.gov/pub/irs-pdf/p970.pdf

   American Opportunity Credit

   Lifetime Learning Credit

   Student Loan Interest Deduction

SALT
             www.saltmoney.org
Quinnipiac believes you should have the knowledge & skills
 to successfully navigate the financial world. $ALT offers
several tools to help you gain these skills & Quinnipiac has
             provided the membership for you.

Now What?
 Check  www.nslds.ed.gov to see your loan servicers
 Get organized using our “Student Loan Checklist”
 Save money – use automatic debit to make payments
 Make payments on time to build a good credit rating
 Consider paying a little extra each month to reduce the total cost of
  the loan
 Seek help at the first sign of financial difficulty

Thank You

Contact
Financial Aid Staff

Office Undergraduate Financial Aid
203-582-8750

Office Graduate Financial Aid
203-582-8588