Federal Student Loans

Transcription

1 Federal Student Loans

2 After grants and scholarships, will you need to borrow a student loan? USCL is a fairly inexpensive school Tuition + Fees + Books + Supplies $ $515 + $ $200 Need Grants and Scholarships Scholarships Only Actual Costs $8,817 $8,817 $8,817 LIFE - $5,000 $5,000 $0 Pell - $5,815 $0 $5,815 Lottery - $0 $0 $1287 Need Grants Only Unmet Costs $0 ($1998 over) $3,817 $1,715

3 STAFFORD LOANS Direct Loans: Federal Government is the Lender Fees: %, out of each disbursement (up to 1.5%) Eligibility: Must file FAFSA No Credit Check Must sign Promissory Note Entrance Counseling Payments? None required while in college at least ½ time Payments start 6 months after stop attending college

4 STAFFORD LOANS, CONT Sub or Unsub? Subsidized: No interest while in school, based on need Unsubsidized: Interest always accrues, not need based Interest Rate: 3.76% (subsidized=no interest in school) Annual Stafford Loan Limits: $5500 ($3500 Subsidized Limit) Freshmen Sophomore $6500 ($4500 Subsidized Limit) Junior $7500 ($5500 Subsidized Limit) Senior $7500 ($5500 Subsidized Limit) Actual Subsidized Loan Portion is based on need. Can borrow another $4000-$5000 unsub if parent loan denied. Aggregate (Total) Loan Limits: Dependent student: $31,000 ($23,000 Sub limit)

5 Only borrow as much as you need You can decline what you don t want You can ask to reinstate declined loans later (while enrolled) Federal Loans are almost always better than private agency loans. You should always take Subsidized Loans before Unsubsidized Loans. Know what you need!

6 What are your costs? Per Semester: Tuition + Fees + Est. books & Supplies Per Month: Room + Food + Transportation costs + Personal Expenses Personal expenses: Household supplies, Medical costs, Clothing, Internet access One-time expenses: Computer

7 What is your actual need? Total Costs Grants and Scholarships = Remaining actual need How will you meet this need? How much must be paid up front (Tuition, Fees, books)? How much can be paid as you go (room, board, transportation, etc )?

8 South Carolina Teacher s Loans Apply early (available in February) Paid off when you teach in a high need area and/or high need program 8.80 % interest rate if goes into repayment TEACH Grant Federal Grant available at some 4 year colleges Must be admitted to education program Grants up to $4000 Must agree to teach in a high-need field at a low-income elementary or secondary school for at least 4 years within 8 years of completing degree. If fail to meet this requirement, grant reverts to an unsubsidized loan with back interest.

9 Parent Loans (PLUS) 6.84 % interest, up to 4.272% in fees Credit Check Required Goes into repayment immediately Leroy Springs Student Loan Application deadlines: May 1 st for Fall, Dec 1 st for Spring No Interest Requirements: FAFSA on file 1000 on SAT (Verbal and Math) or 21 on ACT Top 50% of graduating class and/or HS GPA of 2.75 on SC UGS Application, Letter of Recommendation, Interview Preference will be given to applicants who are residents of Lancaster County School District, Fort Mill School District #4 and Chester County School District. Must maintain a 2.75 GPA as a Full-Time student Pays Tuition, fees, Room, Board (up to $3,000) and books ($500)

10 Alternative Loans Private Banks and other Lending Agencies Variable interest rates, often higher than Stafford Loans Credit Check Required and Cosigner Are limited by the Cost of Attendance at the college Can be limited by lender USCL cannot recommend any particular private lender You can find a list of lending agencies at

11 There are 4 steps to complete: 1) The FAFSA 2) Accept awards on Self Service Carolina 3) Complete the Loan Entrance Counseling at 4) Complete the Mater Promissory Note at

12 Entrance Counseling is required before you can receive your loan funds. Entrance counseling provides important information you need to know about borrowing Federal Student Loans and makes you prove that you understand your responsibilities and how repaying loans will affect you.

13 Exit Counseling is required when you graduate, leave school, or drop below halftime enrollment. Exit counseling provides important information you need to prepare to repay your federal student loan(s). It will list all of the loans you have borrowed and help you determine your repayment plan.

14 You'll need to provide contact information for your closest living relative, two references who live in the U.S., and expected employer. name, address, address, telephone number current or expected employer (if known).

15 Your FSA ID If you are a new user or have forgotten your FSA ID, click here. Name(s) of the school(s) you wish to notify of counseling completion Useful Information to Have Any details on your income, financial aid, and living expenses. Some of this information can be found in: Your student account information Details on your future income, financial aid, and living expenses if known

16 If you have received a subsidized, unsubsidized or PLUS loan under the Direct Loan Program or the FFEL Program, you must complete exit counseling each time you: Drop below half-time enrollment Graduate Leave School

17 1. Log in to StudentLoans.gov using your FSA ID Select "Complete Counseling" on the left-hand navigation bar Under "Choose Counseling Type select Entrance Counseling or "Exit Counseling"

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19 Master Promissory Note: A binding legal document that you must sign before you may receive a federal student loan. There is one MPN for Direct Subsidized/Unsubsidized Loans and a different MPN for Direct PLUS Loans. William D. Ford Federal Direct Loan (Direct Loan) Program - Student loans provided by the U.S. Department of Education to enable a student to pay for education after high school. Eligible students borrow directly from the U.S. Department of Education to attend participating schools. Federal Family Education Loan (FFEL) Program - Federal student loans borrowed through private lenders and guaranteed by the federal government. FFEL Loans include the following types of federal student loans: Subsidized Stafford Loans, Unsubsidized Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans. You repay your FFEL Loan to the lender, secondary market, guaranty agency or the U.S. Department of Education.The FFEL Program ended June 30, 2010 and no new loans have been made under the FFEL Program since that date. Private Loans: If you took out student loans from a private lender such as a bank or a credit union, you may have to begin making payments while you're still in school. Contact that private lender immediately to arrange payment.

20 Principal - The loan amount plus any capitalized interest. During repayment, the principal is usually referred to as the outstanding (unpaid) principal balance. Loan Fee - A fee charged for each federal student loan you receive that is a percentage of the total loan amount you are borrowing (gross amount). Presently just over 1%. Interest - The cost to borrow money. Interest is calculated as a percentage of the outstanding principal balance. Capitalized Interest - Unpaid interest that has been added to the outstanding principal balance of a loan. Interest is then charged on the increased outstanding principal balance.

21 Loan Holder - The entity that holds your loan promissory note and has the right to collect from you. For Direct Loans, your loan holder is the U.S. Department of Education. Loan Servicer/Federal Loan Servicer- An entity that collects payments on a federal student loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a loan holder. Repayment - To pay back money you borrowed by making scheduled payments to the loan servicer. Repayment Period - The maximum time period over which you must repay your federal student loan. Normally 10 years.

22 Grace Periods for Federal Loans After you graduate or drop below half-time Federal Stafford Loans: 6 months. Federal Perkins Loans: 9 months When this grace period is exhausted you begin making payments. Summers: Periods of non-enrollment that span only the summer between two enrollment periods do not begin repayment. If you don t pre-register for the coming Fall you may receive notice that payment will come due. You can temporarily stop payments with Deferment and Forbearance. You can return to In-School Deferment when you re-enroll in any degree seeking program at least half-time.

23 Subsidized Direct Loans: When is interest Subsidized (not accrued)? While in-school at least half-time During the grace period (except those borrowed July 1 st, June 30 th, 2014) During deferment periods During certain periods of repayment under Income-Based and Pay-As-You- Earn Repayment Plans Interest accrues after you graduate or drop below half-time. Unsubsidized Direct Loans and PLUS loans: After the first disbursement and during all periods.

24 Federal student loans made after June 30, 2006 have fixed interest rates. The fixed interest rate changes every year for NEW loans. Refer to your NSLDS report and Loan Disclosures for your exact interest rates. The Current Interest Rate for Direct Student Loans for loans with a first disbursement date after June 30, 2016 and before July 1, 2017: Subsidized Loans: 3.76% (0% while in-school) Unsubsidized Loans: 3.76% Graduate Loans: 5.84% PLUS Loans: 6.84% Consolidating loans is one way to get a single fixed interest rate for all of your loans.

25 Direct Loans are "simple daily interest" loans. This means that interest accrues daily. The amount of interest that accrues per day is calculated by dividing the interest rate on your loan (as a decimal) by the number of days in a year, and then multiplying that by the outstanding principal balance. For example, on a $10,000 Direct Unsubsidized Loan with a 3.76% interest rate, the amount of interest that accrues per day is $1.86: ( / 365) * $10,000 = $1.03

26 If you don't pay the interest, it is capitalized (added to the outstanding principal balance). You will be charged interest on the increased outstanding principal balance. For example. If you are in a deferment or forbearance for 6 months, a $10,000 loan with a 3.76% interest rate will accrue interest totaling $186. You will be charged interest on the increased outstanding principal balance of $10,186. The amount of interest that accrues per day will increase to $1.05: ( / 365) * $10,186 = $1.05 Under most repayment plans, this capitalized interest will increase your monthly payment and the total amount you pay over the life of the loan

27 If you can, pay interest during your grace period or periods of deferment/forbearance to avoid having interest capitalized (added to your principal).

28 Direct/FFEL Federal Student Loans: After your Grace Period 6 months after you graduate or drop below half-time enrollment PLUS Loans: PLUS Loans enter repayment when they are fully disbursed (paid out), but your loan will be placed into deferment while you are in school at least half-time and for an additional 6 months after you graduate or drop below half-time status.

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35 REPAYMENT PLANS Borrowed Maximum $31,000 Annual Income $30,000 Standard Repayment Plan= $324 per month Repayment Plan # Years Monthly Payment Initial to Final Amounts Interest Paid Total Amount Paid Standard 10 $324 $7,913 $38,913 Graduated 10 $183 $549 $9,931 $40,931 Extended 25 $176 $21,754 $52,754 Ext. Grad. 25 $121 $294 $26,662 $57,662 IBR 20 $104 $324 $21,158 $52,158

36 Plan Standard Graduated Extended Fixed Repayment Period Extended Graduated 10 years 10 years 25 years 25 years Payment Type Fixed Payments Payments start low, then increase every 2 years. Conditions and Payment Guidelines Payments of $50 or more Payments must be at least equal to monthly interest due. No single payment will be more than 3 times greater than any other payment. Fixed Payments Payments of $50 or more. More than $30,000 in Loans. Payments start low, then increase every 2 years. Payments must be at least equal to monthly interest due. No single payment will be more than 3 times greater than any other payment. More than $30,000 in Loans.

37 BEST Pay-As-You Earn/Income Based Repayment Plan for New Borrowers If your loan debt is greater than your yearly income. Payment is based on annual income and family size Payment is 10% of your discretionary income and will never be more than the 10-year standard repayment amount. After 20 years of qualifying repayments (240 payments) any unpaid amount will be forgiven. New Borrowers are those who borrowed loans on or after July 1 st, 2014.

38 2 nd Best Income Based Repayment Plan for Prior Borrowers (IBR) Have NO NEW loans since July 1 st, If your loan debt is greater than your yearly income. Payment is based on annual income and family size Payment is 15% of your discretionary income and will never be more than the 10-year standard repayment amount. After 25 years of qualifying repayments (300 payments) any unpaid amount will be forgiven.

39 3 rd Best Income Contingent Repayment (ICR) No income requirement Payment is based on annual income and family size and Direct Loan Debt Payment will not exceed the lesser of: What you would pay on a 12-year standard repayment plan multiplied by a factor that is based on your income; or 20% of discretionary income After 25 years of qualifying repayments (300 payments) any unpaid amount will be forgiven.

40 SENSITIVE Worst No income requirement Payment is based on annual income Payments are made for a maximum of 10 years

41 If you work in public service Even if you have reduced payments under Pay As You Earn, IBR or ICR; and After 120 qualifying monthly payments Payment was required (ie: not in school) Payments after Oct 1 st, 2007 full due amount paid; no more than 15 days late Do not need to be consecutive After 10 years of full-time work (30+ hours/week) in a public service job: Government organizations at any level (federal, state, local, or tribal) Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code Other types of not-for-profit organizations that provide certain types of qualifying public services The balance remaining could be forgiven.

42 If you teach full-time at certain elementary or secondary schools or educational service agencies that serve low-income students. Up to $5,000 for 5 consecutive years as a highlyqualified teacher. Up to $17,000 for 5 years as a highly-qualified teacher in certain subjects.

43 Interest Rate Reduction for Automatic Withdrawal Payments: receive a 0.25% interest reduction for Auto Draft. Up-Front Interest Rebate: Loans before July 1 st, 2012 had an interest rebate which is kept by making your first 12 full-monthly payments on time (no more than 6 days late). FFEL Benefits: If you have still have loans under the FFEL program your lender may offer other incentives

44 You must make payments on your federal student loan even if you do not receive a bill or repayment notice. You are responsible for staying in touch with your loan servicer and making your payments, even if you do not receive a bill!

45 Each Direct Loan you obtain is assigned to a federal loan servicer, for handling payments and other administrative functions. In the FFEL Program, you may send payments to and interact directly with your loan holder, or your loan holder may have assigned your federal student loan to a loan servicer. SEE YOUR NSLDS HANDOUT FOR THE NAMES AND CONTACT INFORMATION OF YOUR LOAN SERVICERS! Loan Servicer Contact CornerStone FedLoan Servicing (PHEAA) Granite State GSMR Great Lakes Educational Loan Services, Inc HESC/Edfinancial MOHELA Navient Nelnet OSLA Servicing

46 Answer questions about your loan Send you your bill Process your payments Call you when your payments are late Help you when you can t make your loan payment Process In-School Deferments, Economic Hardship Deferments and Forbearances. Help you change your payment plans. Put your loans on deferment if you are called to Active Duty

47 When you drop below Half-time or withdraw When you graduate When you transfer schools When you change your name, address or phone number When you are having financial difficulties and can t make your payment When you want to change your payment plan Whenever you have a question about your loan LOAN SERVICES ARE THERE TO HELP YOU!

48 You can make additional payments whenever you want While in a deferment period a payment will not kick you into repayment. Accrued interest must be paid before the principle. But, any payments payed over interest will apply to the principle.

49 Change your payment plan Ask for a Deferment Ask for a Forbearance Remember you MUST continue making payments until you have been notified your deferment or forbearance is approved.

50 Allows you to temporarily stop making payments on your federal student loans. In most cases, you are not charged interest on subsidized loans during deferment. Interest will continue to be charged on your unsubsidized and PLUS loans, and on Direct Subsidized Loans that have lost interest subsidy. If you do not pay this interest during the deferment, it will be capitalized at the end of the deferment.

51 In-School at least half-time Full-time in a graduate fellowship program Unemployed and unable to find full-time employment (up to 3 years) Experiencing Economic Hardship Service in the Peace Corps Active Duty military service (and up to 180 days after) A few other rare circumstances

52 Allows you to temporarily stop making payments or reduce your monthly payment. Interest will continue to be charged. If you do not pay this interest during the forbearance, it will be capitalized at the end of the forbearance.

53 Financial hardship Illness Medical or Dental internship or residency Total monthly student loan bill is more than 20% of your total monthly gross income (up to 3 years) Serving in an AmeriCorps position Serving in a teaching position that qualifies for Teacher Loan Forgiveness Active Duty in the U.S. Armed Forces

54 Falling behind on your payments. If you fall behind contact your servicer and they can retroactively defer or forbear your payments. Get back on track with your payments to avoid default.

55 If you fail to make payments for 270 consecutive days you will Default on your student loan. Default means your loan can become due in full ( acceleration ) You will lose eligibility for deferments, forbearance and repayment plans. Additional late fees and collection costs can start being added. Your wages can be garnished Your tax refunds can be withheld and be applied towards your loan payment You will lose many federal benefits including future Financial Aid eligibility. It WILL affect your credit severely. Getting out of default is long and difficult

56 THERE IS NO REASON TO DEFAULT Take advantage of the options the government gives you. Income Based Repayment Plans Deferments Forbearances All will help you avoid default. Just talk to your servicer!

57 If you have multiple federal student loans, you can consolidate them into a single Direct Consolidation Loan. A Direct Consolidation Loan will simplify repayment if you are making separate loan payments to different loan servicers, as you'll only have one monthly payment to make. There may be tradeoffs, however, so you'll want to learn about the advantages and possible disadvantages of consolidation before you consolidate. More Direct Consolidation Loan Information is available on StudentAid.gov

58 Total or Permanent Disability If you become totally and permanently disabled as defined in federal regulations and meet certain other requirements. Death If you die. If you are a parent borrower of a PLUS loan and the student for whom you obtained the loan dies. School Related Discharge If your school: Closed before you could complete your program. Falsely certified your loan eligibility. Did not have your authorized signature. Failed to refund all or a portion of your federal student loans to the loan servicer, when it was required by law to do so. Or if your federal student loan was falsely certified as a result of identity theft.

59 Federal student loans are not generally eliminated as part of personal bankruptcy. Contact your federal loan servicer to discuss your federal student loan repayment options.

60 If you think there might be an issue with your federal student loan, first collect and review all of your loan paperwork, then identify and document what you think the problem is. Call your loan servicer to discuss the issue. As a last resort, if you are unable to resolve the issue by working with your loan servicer, you may contact the Federal Student Aid (FSA) Ombudsman for assistance. StudentAid.gov/ombudsman If you would like additional information to guide you through the problem resolution process, please visit the Resolving Disputes section of StudentAid.gov.

61 Your Loan Servicer Department of Federal Student Aid Federal Student Loans website The National Student Loan Data System The USCL Financial Aid Office EdManage

62 USCL Contracts with EdManage to provide additional assistance to students who have borrowed loans while attending our institution. What EdManage does: Provides Financial Literacy Education Provides Student Loan Default Prevention Contacts borrowers in their Grace Period to make sure they are ready for repayment Contacts students who have fallen behind on payments to help them take advantage of Deferments, Forbearances and Income Based Repayment Plans. Helps you talk to your servicer and helps you know what to say or ask. What EdManages does not do: Collect payments (they are there to help, not take money) Provide any form of financial assistance (they don t make payments for you). Report you to anybody (they are there to help you) IF EDMANAGE CALLS, PLEASE ANSWER! (800)

63 When you do your Exit Counseling online there will be a section entitled Make Finances a Priority. Please read this section carefully. You can also complete Financial Literacy online session at

64 Kenneth T. Cole Director Jeannie Mackey Counselor Starr Hall 127 Financial Aid Office USC Lancaster PO Box 889 Lancaster, SC Ashley Barber Counselor Phone: Fax: