Loan Repayment Planning Worksheet

Transcription

1 Lan Repayment Planning Wrksheet Date: Think f yur federal student lans as yur EDUCATION MORTGAGE. It is the financing yu ve brrwed t make this imprtant investment in yurself. The gd news is that this mrtgage is flexible and shuld nt prevent yu frm being able t btain a cnventinal mrtgage t buy a hme if yu are STRATEGIC abut planning fr repayment f this unique frm f debt. Federal Student Lans (Direct/FFEL) are a very flexible frm f credit. Yu shuld never have t miss a payment r default n FFEL/Direct Lan(s). Payment relief ptins exist (including pstpning repayment temprarily using a deferment r frbearance, r reducing yur mnthly payment) that prvide financial safety nets if yu are experiencing financial hardship. Simply cntact yur lan servicer BEFORE yu miss the scheduled payment and explain why yu need help. Payments can be less than 15% f yur husehld s mnthly Adjusted Grss Incme (AGI) if yu chse the repayment plan that wuld give yu the lwest pssible mnthly payment. Payments culd be less than 10% f yur husehld s mnthly AGI if yu are a new brrwer and, therefre, eligible fr the Pay As Yu Earn (PAYE) r new 10% IBR repayment plans. Flexible payment ptins are available fr FFEL/Direct student lans including incme- driven repayment plans: Pay As Yu Earn (PAYE) Incme- Based Repayment (IBR) bth the new 10% ptin and the riginal 15% ptin Incme- Cntingent Repayment (ICR)] These incme- driven plans base yur mnthly lan payment n a percentage f yur husehld s adjusted grss incme (AGI), NOT the amunt f yur student lan debt. N ther frm f credit ffers this flexibility. As such, these incme- driven ptins can limit the pssible mnthly debt- t- incme rati impacts that culd reduce yur ability t brrw mney fr ther purpses such as buying a hme. Federal student lan debt culd be gne within 25 years r less even if it is nt fully repaid. Prtin f debt culd be frgiven if nt fully repaid if using an incme- driven repayment plan. Prtin f qualifying debt culd be frgiven in 10 years if wrking in a qualifying public service psitin. There are NO penalties fr prepayments n federal student lans. Yu have the right t make payments befre they are required r t pay extra amunts withut any penalty if yur gal is t reduce the ttal interest paid and/r t get the debt paid ff mre quickly. Remember, n ther frm f credit ffers this much flexibility r financial safety during repayment. Cnsider hw yu can LEVERAGE the flexibility and financial safety nets built int yur federal student lans in rder t successfully repay yur educatinal debt withut sacrificing yur career aspiratins r pstpning the achievement f yur ther financial gals. Nte that it may nt be in yur best interest financially t pay ff yur federal student lans as fast as pssible if yu have better alternative uses fr yur extra funds frm an OPPORTUNITY COST perspective. Saving and/r investing thse extra funds fr the future culd be a better use f that mney due t the unique nature f federal student lans (FFEL/Direct). S be strategic! Think abut yur FINANCIAL GOALS and estimate yur mnthly BUDGET s that yu can determine hw much yu can affrd t pay n yur lans each mnth. Then use the fllwing fur steps t help develp yur lan repayment plan. SAVE TIME AND MONEY Sign up fr Aut- Pay The U.S. Department f Educatin currently ffers t reduce the interest rate by 0.25% n Direct Lans and any ther federal student lans it wns if yu sign up with yur lan servicer t have yur mnthly lan payments n these lans autmatically deducted frm a checking r savings accunt. Nte that all infrmatin prvided here is advisry and subject t change in federal law/federal regulatin. STEP 1. Review yur lan histry Yu shuld knw the fllwing infrmatin abut each student lan yu have brrwed: Type f student lan Interest rate Amunt wed (principal lan balance + accrued interest) Nte that interest is accruing as SIMPLE interest until lan enters/re- enters repayment- - it is nt cmpunding, i.e., interest is nt accruing n the accrued interest, while in schl. Accrued interest capitalizes (i.e., is added t principal lan balance) when lan enters/re- enters repayment. Lan servicer and hw t cntact them Date lan will enter r re- enter repayment and current status f the lan Available repayment ptins (if any) and hw much yu wuld have t pay each mnth under each available plan Yu can btain this infrmatin abut yur FEDERAL student lans frm the Natinal Student Lan Data System at: NSLDS.ed.gv. Check yur credit reprt at: Annual Credit Reprt.cm fr infrmatin abut any PRIVATE student lans yu may have brrwed.

2 STEP 2: Determine when repayment begins (Mre infrmatin is available at: StudentAid.gv and at StudentLans.gv.) Expected graduatin/separatin date: LOAN TYPE START OF REPAYMENT COMMENTS Direct Student/Staffrd (Subsidized and Unsubsidized) AUTOMATIC 6- MONTH GRACE PERIOD befre lan repayment begins. Grad PLUS Lans NO GRACE PERIOD. (1 st disbursed n/after 7/1/2008) Lan enters repayment when it is fully disbursed. It is in an autmatic in- schl deferment while yu are in schl. Lan becmes eligible fr an autmatic 6- mnth pst- enrllment DEFERMENT nce yu are n lnger enrlled at least half time t align repayment f the lan with that f the Direct/Staffrd Lans yu brrwed during the same perid f enrllment. Servicers currently are allwed t apply this pst- enrllment deferment autmatically (withut a request frm yu). Yu may want t cntact yur lan servicer just prir t graduatin t verify that yu will receive this deferment autmatically. Interest cntinues t accrue n yur Grad PLUS Lans as simple interest until the end f this deferment and then is capitalized (added t the principal lan balance). Perkins AUTOMATIC 9- MONTH GRACE PERIOD befre lan repayment begins. Als has 6- mnth pst- deferment grace perid (cntact servicer fr details). HPSL/LDS/NSL/PCL AUTOMATIC GRACE PERIOD OF mnths. Cnslidatin NO GRACE PERIOD. Lan enters repayment as sn as it is fully disbursed. It is in an autmatic in- schl deferment while yu are in schl. Repayment resumes n the lan when yu graduate and in- schl deferment ends. See belw fr payment relief ptins. Other federal Institutinal Private What if yu cannt affrd t make yur minimum mnthly lan payment? Yu shuld nt have t miss a mnthly payment n yur federal student lans. Payment relief ptins likely are available if yu cannt affrd t pay what is due. Yu must TAKE ACTION immediately cntact yur lan servicer befre yu miss the payment and explain why yu cannt affrd t make that payment. This will allw them t evaluate what ptin will best prvide the needed payment relief. If yu fllw all required steps in btaining payment relief it shuld nt negatively impact yur credit histry nr shuld it prevent yu frm getting payment relief at sme future pint in time, if needed. Cntact yur lan servicer(s) fr mre infrmatin. PAYMENT RELIEF OPTIONS Allws yu t: T apply: When t apply: Temprarily pstpne repayment r reduce the amunt yu are required t pay each mnth nce yur lan is in repayment, if eligible. DEFERMENT temprarily pstpnes mnthly payments, if eligible. Six deferment ptins currently are available t brrwers as f 7/1/2003. Subsidized lans typically are subsidized during perids f deferment. FORBEARANCE is an ptin when experiencing financial hardship if yu dn't qualify fr a deferment. Payments are pstpned r reduced. N interest subsidy. Chse r switch t a different repayment plan Fr example INCOME- BASED REPAYMENT (IBR) r PAY AS YOU EARN (PAYE) may prvide the payment relief yu need withut using deferment r frbearance if yur husehld adjusted grss incme (AGI) is lw. Yu may receive sme interest subsidy n subsidized Staffrd Lans if the amunt f yur required mnthly IBR r PAYE payment des nt cver all the interest accruing n yur subsidized Staffrd Lans during the first 3 cnsecutive years yu are in repayment. Cntact the lan servicer BEFORE yu miss a payment and explain WHY yu need payment relief t determine what ptin best meets yur needs. Cmplete required applicatin materials. Cntinue making required mnthly lan payments until ntified therwise by lan servicer. As sn as yu realize yu need payment relief (and befre yu miss a scheduled payment).

3 STEP 3: Estimate mnthly payments and select yur repayment plan (Mre infrmatin is available at: StudentLans.gv.) Estimate yur mnthly payments n yur federal student lans using the Repayment Estimatr at: StudentLans.gv. Yur lan servicer(s) will cntact yu apprximately 30 days befre yur lan(s) are scheduled t enter/re- enter repayment with infrmatin abut the repayment ptins. Yu then must infrm them f the plan yu want t use. If yu d nt d s, they must autmatically put yur lans n the Standard 10- year (fixed) Repayment Plan. Yu have the right t change frm ne plan t anther at least every 12 mnths, if needed, by cntacting yur lan servicer(s). Yu als have the right t make prepayments withut penalty. Cntact yur lan servicer(s) fr mre infrmatin. Fllwing chart describes the current repayment plans available fr repaying Federal Direct/Staffrd Student Lans, Federal Grad PLUS Lans and Federal Cnslidatin Lans. Mre details als are available frm yur lan servicer(s). Based n DEBT Based n INCOME REPAYMENT PLANS Staffrd/Direct Student, Grad Plus and Cnslidatin Lans Standard (fixed payments) Graduated (graduated payments) Extended Fixed (fixed payments) Extended Graduated (graduated payments) Pay As Yu Earn (PAYE) 1 (And new 10% IBR plan fr new brrwers as f 7/1/14) (Direct Lans nly) Incme Based (IBR) 1 Incme Cntingent (ICR) 1 (Direct Lans nly) MAXIMUM PAYMENT PERIOD 120 mnths 120 mnths 300 mnths 300 mnths 240 mnths* (20 years) 20 years is cancelled (amunt cancelled is 300 mnths* 25 years is cancelled (amunt cancelled is 300 mnths* 25 years is cancelled (amunt cancelled is PLAN DESCRIPTION Fixed payments based n amrtizing ttal debt ver 120 mnths. Servicer must put lans n this plan if yu d nt chse a different repayment ptin. Results in the highest initial mnthly payment f all available plans but als has the lwest ttal amunt f interest paid. Payments are adjusted incrementally ver time based n amrtizing debt ver 120 mnths. Payments start ut lw, but ultimately are higher than under the Standard Plan. Fixed payments based n amrtizing ttal debt ver 300 mnths. Payments tend t be abut 30% less than under the Standard 10- year repayment plan. Payments are adjusted incrementally ver time based n amrtizing debt ver 300 mnths. Initial payments equal interest- nly amunt, but end up higher than Extended Fixed Plan. Yu must be a New Brrwer as f Octber 1, 2007 and have had a disbursement f a Federal Direct Lan n r after Octber 1, 2011 t be eligible fr PAYE (must be new brrwer as f 7/1/ 2014 fr new 10% IBR plan). Payments based n 10% f yur husehld s annual Discretinary Incme as defined by the U.S. Department f Educatin. Adjusted annually based n the fllwing fur (4) factrs: Husehld AGI (includes spuse s incme nly if yu file a jint federal tax return) Husehld size Federal pverty guideline established annually by the U.S. Department f Health and Human Services (HHS) State f residence Must have a Partial Financial Hardship (PFH) t initially enter PAYE r 10% IBR plan. PAYE and 10% IBR plans can nly be used t repay Federal DIRECT Lans. They cannt be used t repay FFELP, Perkins, HPSL, LDS r NSL student lans (but these lans can be cnslidated in the Direct Cnslidatin Prgram t make debt eligible if yu therwise meet the new brrwer requirements f the assciated plan). Payments based n 15% f yur husehld s annual Discretinary Incme as defined by the U.S. Department f Educatin. Adjusted annually based n the same fur (4) factrs used in PAYE and 10% IBR plans. Must have a Partial Financial Hardship (PFH) t initially enter this plan (same as abve). N new brrwer eligibility requirements. Payments typically are equal t n mre than 20% f yur husehld s annual Discretinary Incme as defined by the U.S. Department f Educatin. Adjusted annually based n the factrs similar t thse used fr PAYE and IBR. Yu d NOT need t have a Partial Financial Hardship (PFH) t enter the plan. N new brrwer eligibility requirements. 1 T apply fr PAYE, IBR r ICR, yu must cmplete the Incme- Driven Repayment Plan Request at StudentLans.gv n mre than 30 days prir t when the lan(s) enter r re- enter repayment if yu want t use ne f these incme- driven repayment plans t repay yur eligible federal student lans. Yu als must reapply fr the incme- driven plan yu are using every 12 mnths. REPAYMENT PLAN Perkins, HPSL, LDS, NSL, PCL Standard (fixed payments) MAXIMUM PAYMENT PERIOD 120 mnths PLAN DESCRIPTION Fixed payments are equal t the greater f: amrtizing the ttal lan amunt wed ver 120 mnths, r minimum mnthly payment requirement fr that prgram. Estimated payment(s) =

4 STEP 4: Evaluate if yu need t cnslidate any f yur federal lans (Mre infrmatin is available at: StudentLans.gv.) Cnslidatin is the REFINANCING f ne r mre existing federal student lans (nt the COMBINING f lans). Yu are brrwing a new educatin lan a Federal Direct Cnslidatin Lan t pay ff ne r mre f yur existing federal student lans when yu cnslidate federal lans. All federal student lans except the Primary Care Lan (PCL) are eligible t be refinanced thrugh the Federal Direct Cnslidatin Prgram. Private lans currently cannt be cnslidated in this prgram. Cnslidatin, hwever, des nt get yu a better interest rate r lwer the cst f the debt. Interest rate is fixed Equals weighted average f interest rates f lans being cnslidated then runded up t nearest 1/8 th percent. The runding up f the weighted average calculatin will increase the interest expense n the debt by a small amunt; yu als may end up paying mre ttal interest ver the life f repayment if yu take lnger t repay the lans yu cnslidate. Apply fr a Federal Direct Cnslidatin Lan nline at: StudentLans.gv Lans being cnslidated must be in grace, repayment, deferment r frbearance. Yu must include at least ne Federal Family Educatin Lan (FFEL) r Federal Direct Lan in the cnslidatin. As such, if yu are cnslidating Perkins/HPLS/LDS/NSL lan(s) yu must include at least ne FFEL r Direct lan in the cnslidatin. Yu will be asked t select the cmpany yu want t use t service yur new Federal Direct Cnslidatin Lan (ptins are FedLan Servicing, Great Lakes, Navient r Nelnet) when cmpleting the applicatin suggest yu use the same servicer that is currently servicing yur existing Federal Direct Lans. The lan servicer yu chse will prcess yur cnslidatin applicatin. Prcessing f yur applicatin culd take up t 60 days. Yu can pt t delay funding f yur new cnslidatin lan until near the end f any remaining grace perid. Yu can brrw multiple cnslidatin lans, but must apply fr them ne at a time and can nly have ne applicatin in prcess at a time. Yu can add eligible federal lans t an existing Federal Direct Cnslidatin Lan during the first 180 days after the cnslidatin lan has been funded; cntact the servicer f yur Cnslidatin Lan fr mre infrmatin. Cnslidatin lans enter repayment as sn as they are funded; they d NOT have a grace perid. Repayment ptins are the same as fr Direct Student (Staffrd) and Grad PLUS Lans. CONSOLIDATION Refinancing ptin fr eligible federal student lans Allws yu t: A. Refinance multiple eligible federal student lans int a new, single federal student lan with a single lender and single servicer fr increased cnvenience during repayment. B. Refinance nn- Direct [e.g., FFEL/Perkins lan(s)] in the Federal Direct Lan Prgram s that the debt can qualify fr PAYE/10% IBR as well as the Public Service Lan Frgiveness (PSLF) prgram. C. Refinance Staffrd lan(s) brrwed prir t July 1, 2006 that have a VARIABLE interest rate int a FIXED- rate Federal Direct Cnslidatin Lan. D. Obtain a lnger repayment perid than wuld therwise exist based n yur ttal student lan debt if yu need t reduce the mnthly payment and n ther repayment ptins wrk fr yu (including the Extended Repayment Plan). E. Release an endrser frm an existing Grad PLUS Lan by refinancing that lan with a Federal Direct Cnslidatin Lan (apprval f a Cnslidatin Lan is nt subject t the adverse credit criteria f the Grad PLUS Lan). F. Refinance Federal Direct Lans brrwed befre 10/1/2007 s that the debt is nw part f a Federal Direct Cnslidatin Lan that was disbursed after PSLF became available n 10/1/2007. G. Refinance Perkins Lans s that yu can take advantage f the 0.25% interest rate reductin that currently is ffered t brrwers wh repay their Direct Lans using the AUTO- PAY feature. T apply: G t: StudentLans.gv When t cnslidate: When lan(s) are in grace, repayment, deferment r frbearance.

5 Interest Rate Chart Federal Student Lans (Mre infrmatin is available at: StudentAid.gv and at StudentLans.gv.) LOAN TYPE UNDERGRAD/GRAD- PROF DATE OF 1 st DISBURSEMENT INTEREST RATE Subsidized/Unsubsidized Direct/FFEL (Staffrd) Lans Undergrad/Grad- Prf July 1, June 30, 2006 VARIABLE RATE (Effective 7/1/2014 thru 6/30/2015) 1.73% (in- schl, grace, deferment) 2.33% (in repayment, frbearance) Subsidized Direct/FFEL Undergrad July 1, 2006 June 30, % (fixed) (Staffrd) Lans July 1, 2008 June 30, % (fixed) July 1, 2009 June 30, % (fixed) July 1, 2010 June 30, % (fixed) July 1, 2011 June 30, % (fixed) Unsubsidized Direct/FFEL Undergrad July 1, June 30, % (fixed) (Staffrd) Lans Subsidized and Unsubsidized Undergrad July 1, 2013 June 30, % (fixed) Direct (Staffrd) Lans July 1, 2014 June 30, % (fixed) Subsidized Direct/FFEL Grad- Prf July 1, 2006 June 30, % (fixed) (Staffrd) Lans Unsubsidized Direct/FFEL Grad- Prf July 1, June 30, % (fixed) (Staffrd) Lans July 1, 2013 June 30, % (fixed) July 1, 2014 June 30, % (fixed) FFEL Grad PLUS Lans Grad- Prf July 1, 2006 June 30, % (fixed) Direct Grad PLUS Lans Grad- Prf July 1, June 30, % (fixed) July 1, June 30, % (fixed) July 1, June 30, % (fixed) Direct/FFEL Cnslidatin Lans ALL ALL FIXED RATE Weighted average f interest rates f lans being cnslidated runded up t nearest 1/8 th percent. Perkins Lans (subsidized) ALL ALL 5.0% (fixed) HPSL, LDS, NSL, PCL (subsidized) ALL ALL 5.0% (fixed) Other Useful nline resurces prvided by the U.S. Department f Educatin: StudentAid.gv Infrmatin abut federal student aid prgrams ffered by U.S. Department f Educatin StudentLans.gv Repayment Estimatr Federal Direct Cnslidatin Lan applicatin IBR/Pay As Yu Earn (PAYE)/ICR repayment plan applicatin NSLDS.ed.gv Listing f all U.S. Department f Educatin federal student lans brrwed t date Infrmatin abut current lans including: Amunt wed (principal + accrued interest) Interest rate Date lan enters r entered repayment, and current lan status Lan servicer (including website address and tll- free phne number) PIN.ed.gv Allws yu t: Request duplicate Federal Student Aid (FSA) PIN Re- establish FSA PIN Change FSA PIN StudentAid.ed.gv/publicservice Infrmatin abut Public Service Lan Frgiveness (PSLF) prgram Emplyment Certificatin fr Public Service Lan Frgiveness frm Frequently Asked Questins (FAQs) abut PSLF 2015 by Jeffrey Hansn Educatin Services. All rights reserved. HansnEdServices@gmail.cm