Managing Student Loans

Transcription

1 2013

2 2 Managing Student Loans

3 What are Student Loans? 3 Loans are money borrowed to pay for higher education Loans are available through the federal government or private lenders Loans must be paid back on a monthly basis when you leave school, whether or not you complete your degree program Loans accrue (grow) interest, which must also be paid back

4 Public v. Private Loans 4 Throughout this presentation, we will talk mostly about federal loans. Private loans are also available, but you should try to apply for federal loans first. It s important to know whether you have federal loans and/or private loans, because they have different characteristics.

5 What are Scholarships and Grants? 5 Example: Scholarships and grants usually do not have to be paid back. Massachusetts Early Childhood Educators Scholarship Program Department of Early Education and Care Up to $4,500 per semester for undergraduate courses Agree to continue working in early childhood education after receiving your degree, or repay the money Cannot have any state or federal student loans in default status For more information, visit the MA Office of Student Financial Assistance at The deadline for applying for the ECE Scholarship Program is June 1 st!

6 Know the Details of Your Loans! 6 Know the name of the agency who manages your loan(s) Keep all paperwork associated with your loan(s) If you have federal loans, call the Federal Student Aid Information Center to find out your servicer (loan holder), total amount you owe, and current status of your loan: (800)

7 Avoiding Default 7 What is Default? Failure to pay loan payments on time, usually when a loan is unpaid for nine months or more Can affect your credit Can result in payments taken out of your paycheck directly Can prevent you from getting financial aid to go back to school How can I get out of Default? Rehabilitation Consolidation

8 If You re Having Trouble Making Payments: 8 Ask if you are eligible for income-based repayment. Call your servicer right away do not ignore it!

9 Income-Based Repayment (IBR) 9 For federal loans only Adjusted payments based on income and family size May lower your monthly payments! After 25 years of IBR payments, any remaining loans are forgiven.

10 A Case In Point 10 Maria, an early educator, is married and has a combined adjusted gross income of $45,000. She has two children and she owes $15,000 in federal direct student loans. If Maria uses income-based repayment, her estimated monthly payment is $130 Source:

11 A Case In Point 11 Jean is a single mother of one daughter. Her adjusted gross income is $22,000 and she has $10,000 in federal student loans. If Jean uses income-based repayment, her estimated monthly payment is $0 Source:

12 Public Service Loan Forgiveness Program 12 Only for federal direct loans You must make 120 monthly payments (10 years) while working continuously for a public service organization (for at least 30 hrs/week) Includes private and non-profit child care, Head Start, preschool You can change jobs at any time during 10 years Payments must be on time your loans cannot be in default status After 10 years, you will not have to pay back the remaining balance of your loan The program started in 2007, so forgiveness will begin in 2017 Sources:

13 Another Case In Point 13 Felicia is an infant/toddler teacher with two kids and she makes $27,000. She has $10,000 in federal student loans. She is eligible for income-based repayment and pays $0 each month. If her financial situation remains the same and she qualifies for a $0 monthly payment while working with any child care agency for 10 years, the remaining balance of her loans (the original $10,000 plus interest) will be forgiven (cancelled). Source:

14 Where can I find more information? 14 National Student Loan Data System (NSLDS) (To find information about your specific federal loans) Federal Student Aid Information Center (800) American Student Assistance Information on Income-Based Repayment FinAid

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