Student Loans and Debt Management

Transcription

1 Student Loans and Debt Management Exit Interview Nicole Knight AAMC Spring 2014 Disclaimer: All information and estimates are based on AAMC interpretation of [should always contact their servicer(s) to discuss exact loan balances and repayment options.

2 Why am I here?

3 Oh, That s Why I m Here!

4 Agenda Know Your Loan Portfolio How to Postpone Payments Payments During Residency Other Considerations

5 Class of 2013 Indebtedness Refer to page 1 Median MD School Debt: $175,000 PUBLIC PRIVATE $168,000 $190,000 86% of class Got report Private having Loan educational Debt? debt 63% report see debt pages of $150, & or higher Source: AAMC 2013 Graduate Questionnaire (GQ)

6 Education Debt Class of 2013 Refer to page 1 Quillen COM ETSU Median Education Debt Education Debt $175,000 Non-Education Debt (avg) $ 17,000 Refer to page 48 Source(s): 2013 Graduation Questionnaire 2014 Association of American Medical Colleges. All rights reserved.and LCME I-B data

7 Have a Spending Plan Refer to page

8 Know Your Loan Portfolio

9 Finding Your Federal Loans Refer to page 4 To access, provide: SSN Date of Birth First 2 letters of last name FAFSA PIN (

10 Subsidized vs. Unsubsidized Refer to page 10 Subsidized Stafford Perkins* Primary Care Loans LDS Loans* Institutional Loans (some) Consolidations Loans (underlyng subsidized loans) Unsubsidized Stafford Direct PLUS Private Loans Institutional Loans (some) Consolidation Loans (underlying unsubsidized loans) Subsidized Unsubsidized *subsidy and deferment rights lost during consolidation

11 During Medical School Refer to page 12 Interest t Rates (before 13-14) DIRECT PLUS LOAN STAFFORD LOAN PERKINS LOAN* * PCL Loans and LDS Loans are also at a fixed 5%

12 During Medical School Refer to page 12 Interest t Rates ( loans) DIRECT PLUS LOAN STAFFORD LOAN PERKINS LOAN* * PCL Loans and LDS Loans are also at a fixed 5%

13 Capitalization Refer to page 12 Addition of unpaid interest t to the principal i Principal + Interest = Principal + Interest Larger Principal

14 Repayment Strategy Refer to pg 11 Pay the interest on your loans - before they capitalize! Voluntary Payments 1) Send as a Separate Payment - w/ Instructions to Apply NOW - & Specify the Loan to Apply To 2) Follow Up to Verify It Was Done

15 What Happens After Graduation

16 Grace Refer to page 14

17 Options During Residency Not Pay Pay

18 Which Option to Choose?

19 Postponement Options Refer to pgs 15-16

20 Postponement Options Refer to page 16 Medical Residency Forbearance Postpone payments in annual increments Interest accrues on all loans Continuous periods avoids capitalization* Request next increment 30-days before it is needed NOTE: For more details, or to request a deferment or forbearance, contact your servicer.

21 Forbearance Dr. Median s situation after a 4-year residency Balance after Grace Residency Interest Post- Residency Balance TOTAL $201K + $47K = $248K

22 Forbearance Dr. Median s repayment of $248K after residency: Plan Yrs. Monthly Payment Total Interest Total Repayment Standard d 10 $2,800 $163K $338K Extended 25 $1,700 $327K $502K

23 Debt Fact The lower the monthly ypayment, the higher the interest cost

24 Payments During Residency

25 Monthly Payment Estimator Refer to pgs 24-25

26 Repayment Plans Refer to pgs Traditional Standard Monthly payments for the entire repayment term are calculated Extended up-front and disclosed to you. Graduated $2,300/mo $1,400/mo $1,100/mo

27 Repayment Plans Refer to pgs Income-Driven Di $660/mo $420/mo $280/mo Income-Contingent Repayment (ICR) Monthly payments are based on your income Income-Based and other factors Repayment - (IBR) recalculated annually. Pay As You Earn (PAYE)

28 What s the catch? Refer to page 18

29 PAYE & IBR Eligibility Partial Financial Hardship (PFH) Standard $2,300/ mo * Payment > $420 PAYE (IBR)* or or IBR $280 Payment (PAYE)* Must have PFH for first year in IBR or PAYE Can remain in IBR or PAYE in subsequent years, even without a PFH Must submit annual documentation Max payment is the Standard amount

30 PAYE Eligibility Refer to page 21 Additional requirements for PAYE No outstanding t loans on October 1, 2007 (or paid-off all outstanding loans before receiving a new loan on or after 10/1/07) AND Received a Direct Loan disbursement on/after October 1, 2011

31 IBR and Pay As You Earn aamc.org/first studentloans.gov nslds.ed.gov Determine Amount by Calculating with Online Calculators 15% (IBR) or 10% (PAYE) of income that exceeds 150% of the poverty line for a borrower s family size

32 Benefits of PAYE/IBR Refer to pgs Benefits IBR Pay As You Earn Lowest payments Partial subsidy ($2,500) A maximum payment Forgiveness (20-Yr/ PSLF) Limited tedand ddeayed delayed capitalization Low payments Partial subsidy ($2,100) A maximum payment Forgiveness (25-Yr/ PSLF) Delayed capitalization

33 Pay As You Earn & IBR Refer to pgs To enter Pay As You Earn or IBR, you must Meet eligibility requirements Contact each servicer individually to request Give access to household AGI* (tax records) Annually inform servicer(s) of family size *As reported to the IRS. Annual verification is required of both AGI and family size.

34 Pay As You Earn & IBR Dr. Median s Post-Residency balance: $228K $236K Monthly Total Total Total Plan Yrs Payment Interest Repayment* Forgiven PAYE 15 $1,800-2,300 $210K $385K $0K IBR 12 $2,300 $177K $352K $0K *starting salary $200,000

35 The FIRST Stop Refer to page 3 Medloans Organizer and Calculator A tool for graduates!!

36 Other Considerations

37 Loan Forgiveness Refer to pgs Eligible Loans + Qualifying Payments + Qualifying ing Work Public Service Loan Forgiveness

38 Dr. Median and PSLF Dr. Median pursues Public Service: Pediatrician at a community health center IBR for 10 years, 3 during residency, 7 after Has PFH for the all 10 years Qualifies for Public Service Loan Forgiveness

39 Loan Forgiveness (PSLF) Dr. Median s loans after 10-years of public service: Total Paid (IBR)...$160K* Total Forgiven (IBR)...$186K Total Paid (PAYE)...$107K* Total Forgiven (PAYE)...$223K *starting salary $130,000

40 Loan Forgiveness (PSLF) Refer to pgs Want to know more? aamc.org/first

41 Repayment Assistance Information on other programs: aamc.org/stloan lrp.nih.gov nhsc.hrsa.gov AAMC National Institutes of Health National Health Service Corps

42 Reasons to Consolidate Refer to pgs Reduce # of Servicers Eligibility for PAYE Eligibility for PSLF Eligibility for IBR

43 Should You Consolidate? Refer to pgs 46-47

44 Taxpayer Relief Act of 1997 Refer to page 48 Full Deduction Single $60,000 or less Partial Deduction Married $120,000 or filing Jointly less, NO Deduction $60,001 to $75,000 or $74,999 more $120,001 to $149,999 Limited To: First 60 months of repayment $150,000 or more Student loan interest deduction max: $2,500/year May be eligible: Voluntary payments & capitalization

45 The Next Steps page 51 Refer to page 51

46 An investment in knowledge always pays the best interest - Benjamin Franklin

47 Questions? Follow us on Like us on Facebook: facebook.com/aamcfirst

48 Support Along the Way Refer to page 6 studentaid.ed.gov/repay-loans/disputes Financial Aid Office & Residency Programs Medloans Organizer & Calculator StudentLoans.gov