How To Get A Law Degree In D.L.A.S.D.U.S

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1 Office of Student Financial Management Kasia Palm, Director of Student Financial Management Lacey McFall, Student Financial Management Counselor

2 We advise prospective, current, and former Denver Law students on: General financial aid questions We do not process student loans, that s the Office of Financial Aid in University Hall Denver Law scholarship opportunities We manage the Named and Endowed Scholarship Process Financial literacy and debt management including: Budgeting Loan repayment & consolidation Loan forgiveness Loan Repayment Assistance Program/LRAP (Lacey)

3 College Cost Reduction and Access Act (CCRAA) Income-Based Repayment (IBR) program for federal student loan borrowers Public Service Loan Forgiveness program for those who are employed in qualifying public service jobs Signed into law in 2007 These provisions were effective July 1 st, 2009

4 Monthly loan payments can be reduced significantly for borrowers selecting the IBR option Payments can be as low as $0 Payments don t have to cover accruing interest Pay until balance is repaid OR until 300 payments have been made (25 years) Remaining balance is cancelled For those working in Public Service jobs, debt can be forgiven after 120 payments (10 years)

5 Payments are determined by: Adjusted Gross Income & family size, not loan balance Monthly Payment = 15% of (AGI 150% of federal poverty level) 12 For 2011, 150% of the federal poverty level for a family of 1 in the 48 contiguous states is: $16,335 To qualify for IBR, a borrower must have a partial financial hardship, meaning: IBR Monthly Payment < Monthly Payment on Standard Repayment Plan Generally speaking, a borrower qualifies if their AGI is less than their loan debt upon entering repayment

6 Which loans are eligible? All federally guaranteed student loans, except Parent PLUS loans and Federal Perkins Loans (except those Perkins Loans that have been consolidated) Are there employment requirements to qualify for IBR? No. IBR is available to anyone, regardless of what sector they work in.

7 Employment statistics for 2010 Denver Law graduates Just over 40% were employed in public service $50,860: average salary* $42,020: estimated monthly take-home pay $41,600: 25 th percentile* $35,075: estimated monthly take-home pay *Based on 60 reported full-time salaries

8 Average Denver Law Grad Debt = $118,500 Day Division 3yr Cost of Attendance = $157,000 AGI IBR Monthly Payment (family size = 1) 10 Year Monthly Payment $118, Year Monthly Payment $118, Year Monthly Payment $157, Year Monthly Payment $157,000 $40,000 $297 $1,394 $860 $1,864 $1,160 $50,000 $422 $1,394 $860 $1,864 $1,160 $60,000 $547 $1,394 $860 $1,864 $1,160 $70,000 $672 $1,394 $860 $1,864 $1,160 $80,000 $797 $1,394 $860 $1,864 $1,160 $90,000 $922 $1,394 $860 $1,864 $1,160 $100,000 $1,047 $1,394 $860 $1,864 $1,160

9 Borrowers paying under IBR may repay more, in the long run, because of accumulated interest Interest that accumulates on the loans is not capitalized, unless a borrower exits the IBR plan If income increases significantly, IBR payment will too. However, borrowers will never be required to pay more than the amount calculated on a Standard 10 year repayment plan, even if their IBR payment is calculated to be higher This is not the best plan for everyone. Borrowers with higher incomes or lower debt levels may benefit more from an extended repayment plan, especially if they are not pursuing public service employment

10 For married borrowers, the AGI used to calculate the monthly payment is whatever is reported to the IRS This could be significantly higher than the borrower s income alone A borrower can file married filing separately to use only his/her income However, this may have other tax implications (increased tax rate, limited deductions, etc.) Under current tax laws, any amount forgiven at the end of 300 IBR payments is considered taxable income The first borrowers won t be eligible for forgiveness until 2034, so this could change! You have to submit documentation (typically your tax forms) to your servicer every year, to qualify for IBR

11 Established by the CCRAA in 2007 Individuals working full-time in public service, and repaying their eligible loans under specific repayment plans can qualify to have their remaining debt (interest and principal) forgiven after 120 payments (10 years). What does that mean?

12 What does that mean? Working full-time The greater of: 30 or more hours per week, or whatever your employer considers full-time Can work in more than one job to meet 30 hr requirement in public service Government (local, state, federal) Government contractors DO NOT QUALIFY Organization that is tax exempt under 501(c)(3) of the tax code

13 What does that mean? Repaying eligible loans Federal Direct Stafford loans (subsidized and unsubsidized) Federal Direct PLUS loans Federal Direct Consolidation loans Loans may be from undergrad or grad/ law school Students who borrowed Perkins loans or loans through the bank-based FFEL program (ended in 09-10), must consolidate those loans to make them eligible for PSLF.

14 What does that mean? under specific repayment plans Standard 10-Year Plan Income Contingent Repayment Plan (ICR) Income Based Repayment Plan (IBR) after 120 payments 120 payments do not need to be consecutive Each payment must be made while meeting all the above requirements Payments must be separate, monthly payments (i.e. paying double one month would not count as 2 payments, only 1)

15 You must be able to prove that you qualify for forgiveness The Dept of Ed has created a Certification Form that borrowers can use to certify their employment Available at Can be filed annually It is not mandatory but we strongly recommend you use it! When you fill out the Certification Form for the first time, your eligible loans will be transferred to FedLoan Servicing (if they are currently with another servicer). FedLoan Servicing will inform you of how many qualifying payments you have made during the last year Be sure to keep copies of everything you send in!

16 To qualify for forgiveness, you must also be working full-time in public service when: You apply for forgiveness Your forgiveness is granted Amounts forgiven under PSLF do not count as taxable income Forgiveness is only granted after 10 years of working in Public Service No partial cancellations The 10 years of service doesn t have to be consecutive, you can take breaks but any payments made while not employed full-time in public service sector don t count toward 120 required for forgiveness

17 John graduates with $150,000 in loan debt with an interest rate of 7.6% and gets a job that pays $50,000 to start Standard 10-Year Payment: $1,788 Extended 25-Year Payment: $1,118 Initial Payment under IBR: $422 Assuming a 5% increase in income per year: IBR Payment after 10 years: $705 IBR Payment after 25 years: $1,603 Amount repaid: Standard 10-Year Repayment: $214,604 Extended 25-Year Repayment: $335,480 IBR (10 Year): $66,400 IBR (25 Year): $273,615 Amount forgiven (unpaid interest and principal): IBR 10 Years: $197,600 IBR 25 Years: $154,505

18 Make sure you have the right loans Go to Any loans labeled as Direct qualify for PSLF Any loans labeled not labeled as Direct, need to be consolidated before they will qualify All loans borrowed after July 1 st, 2010 are Direct loans

19 Consolidate if necessary You can consolidate after you finish school Go to to consolidate Consolidation takes at least 4-6 weeks to process Once you consolidate, your grace period ends and repayment begins May graduates should consolidate in September/October December graduates should consolidate in April/May

20 Sign up for Income Based Repayment Keep documentation of your qualifying employment Submit the Employment Certification Form annually You don t sign up for PSLF, you apply for it once you have met all the requirements

21 Purpose: To enable and encourage committed students to accept lower paying public interest legal positions by providing forgivable loans to help repay those students law school debt. Requirements: 501(c) (3); government Must be position that utilizes grad s legal skills AGI of $75,000 or less Graduated after May 2003

22 Awards are renewable for up to 5 years if still in qualifying employment Awards are competitive and an application must be submitted Application is available each January online Deadline is the 4 th Friday of January each year Applicants are encouraged (though not required) to be enrolled in IBR Website:

23 In addition to those scholarships offered at admission, continuing students have the opportunity to apply for our Named Scholarships. 2 Application periods February (most awards made) and September/October For the academic year, we had over $500,000 to award in supplemental scholarships About $150,000 of this goes to students who have a demonstrated interest in public service Scholarship criteria vary based on donor requirements but include: need, merit, interest in a particular field of law, participation in community, etc.

24 Budget Control Act of 2011 (August 2011) Congress eliminated subsidized loans for graduate students beginning with loans borrowed for the academic year. Does not affect current subsidized loans

25 Early Implementation of a more beneficial IBR plan Plan was scheduled to go into affect for students who first borrowed loans after 7/1/2014 This initiative moves up the implementation date to 2012 Details of who exactly will qualify have not been made available Should be available in the next couple of months New regulations are currently being negociated

26 To qualify for the new IBR plan, a student: Must not have borrowed a federal loan prior to 2008 Most likely, this will mean no loans borrowed prior to July 1 st, 2008 Must have at least one loan borrowed in 2012 Most likely, this will mean a loan borrowed after July 1 st, 2012 The specifics of who will qualify have not been established yet, so this information may change!

27 The new plan differs in 2 ways from the current IBR plan: Reduces the % of AGI that is paid toward student loans each year to 10% (from 15%) Payments reduced by 1/3 rd Cancellation of remaining debt is available after 240 payments/20 years (instead of 25 years) AGI Current IBR (family size = 1) New IBR (family size = 1) $40,000 $297 $198 $50,000 $422 $282 $60,000 $547 $366 $70,000 $672 $450 $80,000 $797 $533 $100,000 $1,047 $701

28 Loan Repayment and Consolidation Monday, April 16 th, 12-1pm and 4:45-5:30pm Tuesday, April 17 th, 12-1pm For event info go to: ww.law.du.edu/financial-aid

29 Student Financial Management: Income-Based Repayment & Public Interest Forgiveness: Loan Repayment Calculators: Loan Consolidation: Federal Student Loan History: Other Websites:

30 Contact us: Phone: Web: Hours: Monday Friday, 8:00am 4:30pm Current students, to set up an appointment with Lacey McFall: Login to your TWEN account Under My Courses select Financial Management Advising Under Navigation select Appointments With Lacey Select the week you would like to make an appointment (there are usually 2 up at a time) Select Sign-up for the time slot that works for you (these are typically 30 minute increments, if you need more time, sign up for additional time slots)