Student Loans, Managing Your Debt & UCSF Need to Know s

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1 Student Loans, Managing Your Debt & UCSF Need to Know s Annie Osborne, MS, MA Resource Advisor UCSF Student Financial Aid (415)

2 Overview Reassess your loan portfolio Interest subsidy (and other) changes Loan repayment options - Loan forgiveness? Special Consolidation v- Traditional? Essential Resources

3 Reassess Your Loan Portfolio

4 UCSF Professional School Debt* School Average Debt 2011 Repayment Balance Standard Extended Dentistry $164,000 $190,000 Medicine $102,000 $113,000 Pharmacy $102,000 $113,000 Nursing** $36,000 $40,000 $2,200/mo $263K $1,300/mo $156K $1,300/mo $156K $460/mo $55K $1,300/mo $396K $800/mo $235K $800/mo $235K $300/mo $83K *UCSF Educational Debt Only ** Nursing Master s Class of

5 What options will you have? Repayment Standard 10-yr repayment New Income Based Repayment (15%) = $400-$500/mo. or Pay as you Earn (10%) - TBA Extended 25-yr repayment Forbearance both subsidized and unsubsidized accrue interest Loan forgiveness programs Public Service Loan Forgiveness, work for a 501(C)(3) (10 years total), remaining balance forgiven

6 Understand Each Loan Loan portfolio can be complicated Terms & conditions consist of: Federal, institutional, or private Subsidized or unsubsidized Interest rate fixed or variable Capitalization policy Borrower benefits Loan servicer Source: AAMC.org (2009)

7 Who must you repay? Create a spreadsheet for ALL of your loans You must repay your current loan servicer/lender Loan Type/ Account # Name: Loan Servicer Name: Lender Stafford PLUS Address: Phone Number: Website: Name: Address: Phone Number: Address: Phone Number: Website: Name: Address: Phone Number: Website: Website: Information about the current loan holder/servicer of your Title IV federal student loans is stored in the NSLDS at: Table courtesy of Jeff Hanson, Hanson Education Servicers, 2010

8 Finding Your Federal Loans To access, provide: SSN Date of Birth First 2 letters of last name FAFSA PIN ( Courtesy AAMC 2012

9 Finding Federal Servicers Contact FSA at: Or

10 UCSF (University) Loans ACS: CPS Division Campus Based Student Loan Program & UCSF Student Accounting Health Professions Loan, University Loan, Perkins Loan, Loan for Disadvantaged Students

11 Subsidized vs. Unsubsidized Subsidized Subsidized Stafford Perkins* University Loans Consolidation Loans (underlying eligible subsidized loans) *subsidy and deferment rights lost during consolidation Unsubsidized Unsubsidized Stafford Grad PLUS Private Loans Consolidation Loans (underlying unsubsidized loans) Source: AAMC.org (2009)

12 Interest Rates

13 Finding Other Loans Source: AAMC.org (2009)

14 Loss of Interest Subsidy

15 Subsidized Loans No federal Stafford subsidized loans on or after July 1, Impacts all graduate students nationwide Implemented to save PELL Grant Program Same Stafford loan limits Grad Academic, Nursing, & PT ($20,500) Most professional students ($33,000 $47,167) If your academic year begins before 7/1/12: Eligible for federal Direct Stafford sub for one more year If you enroll summer session, then take a quarter off

16 Subsidized Loans Over 4-year period borrowing $8,500/yr annually Results in additional $6,100 in accrued interest Existing subsidized loans Retain terms & conditions on MPN

17 Additional Changes Direct Stafford Loans < July 1, % origination fee 0.5% up-front rebate (net 0.5% origination fee) 0.25% deduction for ACH Direct Stafford Loans > July 1, % origination fee - No rebate - No deduction for ACH

18 Additional Changes Grad PLUS < July 1, % origination fee 1.5% up-front rebate (net 2.5% origination fee) 0.25% deduction for ACH Grad PLUS > July 1, % origination fee No upfront rebate No deduction for ACH

19 Understand Your Options

20 Grace Period Period of time following graduation when you are not required to make payments on your loans Automatic you do not have to apply Subsidized loans are interest free Unsubsidized loans continue to accrue interest Grace periods are loan specific Source: AAMC.org (2009)

21 Grace Period Direct or FFEL Stafford Loan 6 months Direct or FFEL Grad PLUS 6 mo. PED (contact) Health Professions Student Loan 1 year Loan for Disadvantaged Students 1 year Perkins 9 months University Loan 6 months Consolidated Loan None Loan previously in RP - None Source: AAMC.org (2009)

22 Capitalization Addition of unpaid interest to the principal Principal + Interest = Larger Principal

23 Repayment Plans Determines payment amount and interest cost Standard (Level) Graduated Income Contingent (Pay As You Earn)* Income Based Repayment (IBR) Extended Source: AAMC.org (2009)

24 IBR Repayment Plan Income Based Repayment (IBR) Annual eligibility required - partial financial hardship Payment based on household income/family size Most affordable payments of all repayment plans Unpaid interest paid on subsidized loans (first 3 years) Source: AAMC.org (2009)

25 IBR Approx. Maximum AGI Needed to Qualify for IBR at Specified Debt (2009 Poverty Guidelines) Debt AGI $5,000 $20,848 $10,000 $25,451 $15,000 $30,055 $20,000 $34,658 $25,000 $39,261 $30,000 $43,864 $35,000 $48,467 $40,000 $53,071 $45,000 $57,674 $50,000 $62,277 $55,000 $66,880 $60,000 $71,484 Debt AGI $65,000 $76,087 $70,000 $80,690 $75,000 $85,293 $80,000 $89,896 $85,000 $94,500 $90,000 $99,103 $95,000 $103,706 $100,000 $108,309 $105,000 $112,912 $110,000 $117,516 $115,000 $122,119 $120,000 $126,722 $125,000 $131,325 Assumptions: - Interest rate = 6.8% ; Household size of 1 residing in 48 contiguous states Source: Jeff Hanson, Hanson Education Services

26 IBR Approx. Maximum AGI Needed to Qualify for IBR at Specified Debt (2009 Poverty Guidelines) Debt AGI Debt AGI $130,000 $135,929 $180,000 $181,961 $135,000 $140,532 $185,000 $186,564 $140,000 $145,135 $190,000 $191,167 $145,000 $149,738 $195,000 $195,770 $150,000 $154,341 $200,000 $200,374 $205,000 $204,977 $155,000 $158,945 $210,000 $209,580 $160,000 $163,548 $215,000 $214,183 $165,000 $168,151 $220,000 $218,786 $170,000 $172,754 $225,000 $223,390 $175,000 $177,357 Assumptions: - Interest rate = 6.8% - Household size of 1 residing in 48 contiguous states Courtesy: Jeff Hanson, Hanson Education Services, 2010

27 IBR Plan Estimated PFH Monthly Payment in 2011 AGI Monthly Payment HH Size = 1 Monthly Payment HH Size = 2 $0 $0 $0 $10,000 $0 $0 $20,000 $46 $0 $30,000 $171 $99 $40,000 $296 $224 $50,000 $421 $349 $60,000 $546 $474 $70,000 $671 $599 $80,000 $796 $724 $90,000 $921 $849 $100,000 $1,046 $974 Assumes you reside in 48 states Source: Jeff Hanson, Hanson Education Services, 2011

28 Repayment Plans Estimated Monthly Payment Amounts

29 Consolidation Special versus Traditional

30 Consolidation Special and/or Traditional (1 st Year) FFEL Stafford sub/unsub Rate: 6.8% Servicer: Student Loan Corp Lender: Citibank (2 nd Year) FFEL Stafford sub/unsub (6.8%) FFEL Grad Plus (8.5%) Servicer: Great Lakes (DOE/Great Lakes) Lender: Discover (SOLD to DOE) (3 rd Year) Direct Stafford sub/unsub (6.8%) Direct Grad Plus (7.9%) Servicer: DOE/Great Lakes Lender: Department of Education (4 th Year) Direct Stafford sub/unsub (6.8%) Direct Grad Plus (7.9%) Servicer: DOE/Great Lakes Lender: Department of Education (Years 1-4) Institutional Loans Perkins (sub) 5% HPSL/LDS (sub) 5% University (sub) 5% Servicer: ACS (CPS) Lender: UCSF * Example is fictitious and not based on any individual student s loan portfolio ** Estimates from Dept. of Ed.

31 Normal 4 th Yr Loan Portfolio Loan Servicers (4) Grace Periods (4) (1) Student Loan Corp Stafford/Un. Loans (6 months) (2) Great Lakes Cons. (none) (3) DOE/Great Lakes Perkins (9 months) HPSL/LDS (1 year) UCSF Loan Servicer: (4) ACS (CPS) Lenders (3) Interest Rates (3) Dept. of Ed. (Direct) Stafford > 06: 6.8% Citibank Grad PLUS: 8.5% & 7.9% UCSF Perkins/HPSL/LDS/Un: 5%

32 Consolidation Special Servicer contacts you Select group of loans Entered RP, Grace, FB, or deferment Deadline June 30 th 0.25% rate reduction on FFEL loans only 0.25% rate reduction (ACH) Loss of grace period Traditional Initiated by borrower Loanconsolidation.ed.gov You determine loans consolidated Time consolidation 2-3 mo. prior to repayment Weighted average rounded up 1/8 th % Loss of grace period

33 Special Direct Consolidation Available January, 2012 thru June 30, 2012 Must have loans owned by Direct Loans Must have loans owned by a FFEL lender Do NOT initiate a consolidation online Federal servicers will contact eligible borrowers studentaid.ed.gov/specialconsolidation

34 Traditional Consolidation When to consider consolidation: Variable rates are low Multiple servicers to repay To obtain Public Service Loan Forgiveness (DL) To make Perkins or LDS loans eligible for IBR

35 Loan Forgiveness Do I Qualify?

36 New Loan Forgiveness Public Service Loan Forgiveness Must make 120 payments to Direct Loans Must work 10 years in Public Service Does not have to be continuous work Source: AAMC.org (2009)

37 Public Service Loan Forgiveness What is considered Public Service? 501(c)3 non-profit employers Federal, state, or local government Military Service Public schools and colleges Source: AAMC.org (2009)

38 Public Service Loan Forgiveness Available on:

39 Position Yourself Wisely Strategically plan ahead

40 While You Are a Student Borrow only what you need You may decline loans that exceed your need Develop and stick to a budget Beware of hidden fees, annual fees, late fees Build your credit score

41 Borrow Wisely Credit Card Private Loans Grad PLUS Loans Stafford Loans Perkins Loans and Grants Source: AAMC.org (2009)

42 Build Your Credit Score Type of credit used New credit 10% 10% Payment history 35% 15% 30% Length of credit history Utilization rate (amount owed) myfico.com Source: AAMC.org (2009)

43 Improve Your Credit Score To improve your score, be sure to: Pay bills on time Pay down debt on credit cards Apply for credit sparingly Source: AAMC.org (2009)

44 Preparing to Graduate Find your student loans & identify all loan servicers Federal loans - nslds.ed.gov Institutional loans ACS & UCSF Student Accounting Perkins/University Loans/HPSL/LDS Private loans, consumer debt annualcreditreport.com Register online with servicer & update contact info Balance, accrued interest, interest rates, grace period When does repayment begin? If possible, pay off accrued interest before repayment

45 Make Sound Decisions Research your repayment options Loan servicer websites (calculators to compare repayment plans) (DOE IBR, consolidation, and calculators) (IBR and PSLF) If interested in IBR, file income taxes for 2011? Investigate deferment options Special and/or traditional consolidation Pay off expensive debt more aggressively Consider ALL debt in loan portfolio

46 Support Along the Way Loan Servicers & Websites UCSF Financial Aid Office Finaid.ucsf.edu IBRinfo.org Finaid.org NSLDS.ed.gov Annualcreditreport.com Studentaid.ed.gov U C S F A N U C C E E D I N A N C I A L L Y