Strategies and Information as You Prepare to Repay Your Student Loans

Transcription

1 Strategies and Information as You Prepare to Repay Your Student Loans Rob Smith Senior Client Relationship Manager Navient May 2015 EDS

2 As the nation's leading loan management, servicing and asset recovery company, Navient helps customers navigate the path to financial success. Servicing more than $300 billion in student loans, the company supports the educational and economic achievements of more than 12 million Americans. A growing number of government and higher education clients rely on Navient for proven solutions to meet their financial goals. Learn more at navient.com Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 2

3 Agenda Your Student Loans Relative Cost of a Student Loan Loan Repayment Healthy Credit Awareness Tips Summary Questions Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 3

4 Your Student Loans Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 4

5 It is Your Responsibility Know your loan portfolio loan types and relative cost Know your deferment and forbearance options Know the decision points and keep a calendar Know the cost before choosing a repayment plan Know your available resources Stay abreast of changes that might impact your loans Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 5

6 Loan Portfolios #1 - Know what types of loans you have Federal Student Loans - originated and funded by the US Government - Direct Subsidized Loans and Direct Unsubsidized Loans - Subsidized Federal Stafford Loans and Unsubsidized Federal Stafford Loans - Direct PLUS Loans and PLUS loans from the Federal Family Education Loan (FFEL) Program - Supplemental Loans for Students (SLS) - Federal Perkins Loans - Federal Nursing Loans Private/Alternative Loans originated and funded by non-government banks or businesses #2 - Identify your loan servicers What is a loan servicer and what do they do? Who is my loan servicer? Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 6

7 Types of Student Loans Federal Student Loans Federal Student Aid Visit the websites to find and view data on federal student loans and to identify your federal loan servicer. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 7

8 Types of Student Loans Private Student Loans Annual Credit Report Determine your private loan details, including identifying your loan servicer. Things to Consider Private loans are almost always unsubsidized for the life of the loan Interest rates and repayment terms vary; forbearances may be available Your private student loan may have required in-school payments; contact your servicer for more information Private education loans are not eligible for federal loan consolidation, but they may be taken into account when determining your maximum repayment period under certain repayment plans. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 8

9 Subsidized vs. Unsubsidized Loans Subsidized Loans Have no interest cost while student is in school, in grace (if applicable), or in a period of authorized deferment Unsubsidized Loans Borrower is responsible for interest that accrues from the time of disbursement EXAMPLES Direct Subsidized Loans* Perkins Loans Consolidation Loans- portion of underlying eligible subsidized loans Some institutional loans (see promissory note or aid office) EXAMPLES Direct Unsubsidized Loans PLUS Loan for Graduate Students Consolidation Loans- unsubsidized portion, which includes the unsubsidized Stafford loans, PLUS, and any Perkins Private Loans *Graduate or professional students are not eligible to receive Direct Subsidized Loans beginning on or after July 1, Note: The Consolidated Appropriations Act (Public Law ) eliminated the interest subsidy during the 6-month grace period on subsidized Stafford loans made from July 1, 2012 through June 30, Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 9

10 Your Loan Servicer(s) What is a loan servicer and what do they do? A loan servicer is an entity that collects payments on loans, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan (e.g., processing requests for a change in repayment plans). A federal loan servicer is a loan servicer for the U.S. Department of Education. You may have one loan servicer for your federal student loans and one for your private student loans It is important to always maintain contact with your loan servicer If your financial circumstances change at any time during the life of your loan, your loan servicer will be able to help Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 10

11 Your Loan Servicer(s) Buying and Selling of Students Loans Original lender may have sold a student s loan This means a student has a new loan holder and/or servicer For example, a FFEL loan may have been sold to the Department of Education who now holds the loan and is having it serviced by a federal loan servicers such as: Great Lakes FedLoan Servicing (PHEAA) Navient Nelnet Borrowers must be notified if the service provider of loan changes The terms of a federal loan, as specified in the promissory note, will not change if sold or transferred to another servicer Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 11

12 Your Loan Servicer(s) Three Critical Steps 1. Sign Up to Manage Your Account Online and sign up to receive communications. 2. Notify Your Servicer(s) if You Change Any Contact Information - phone numbers - street address or - address 3. Update Your Address After You Leave School after you leave school, you ll no longer have an.edu address; be sure you contact your servicer with your new address Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 12

13 Relative Cost of a Student Loan Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 13

14 Relative Cost of a Student Loan Interest Rate What the lender charges for the use of money The higher the interest rate, the more the loan will cost overall Capitalization The addition of unpaid accrued interest to the principal balance of a loan Borrower Benefits/Repayment Incentives Interest rate reductions Credits to loan balance Some benefits and repayment incentives impose eligibility requirements such as signing up for automatic debit or making a certain number of on-time payments Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 14

15 Federal Loan Interest Rates* Interest Rates for Direct Loans First Disbursed on or After July 1, 2013 Through July 1, 2015 Loan Type Direct Subsidized Loans Direct Unsubsidized Loans Borrower Type Loans first disbursed on or after 7/1/13 and before 7/1/14 Loans first disbursed on or after 7/1/14 and before 7/1/15 Undergraduate 3.86% 4.66% Undergraduate 3.86% 4.66% All interest rates shown in the chart are fixed rates for the life of the loan. Note: The interest rates for federal student loans are determined by federal law. Direct Unsubsidized Loans Direct PLUS Loans Graduate or Professional Parents and Graduate or Professional Students 5.41% 6.21% 6.41% 7.21% If there are future changes to federal law that affect federal student loan interest rates, your servicer will notify you. * Source and to learn more: Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 15

16 Interest Capitalization and Its Impact Interest on most loans accrues from the date funds are disbursed until the loan is paid in full The chart provides estimates, for a $5,000 Federal Direct Unsubsidized Loan with a 4.66% interest rate, of the monthly payments due at the end of a 12 month forbearance for a 10 year term Treatment of Interest During Forbearance Status Principal at Repayment Cap. Int. During Forbearance Principal at End of Forbearance Term Payment Amount Total Amount Repaid Total Interest Cost Interest is paid as it accrues $5,000 $0 $5, $52 $6,498 $1,551 Interest is capitalized at end of status $5,000 $233 $5, $55 $6,557 $1,610 Interest is capitalized quarterly and at end of status $5,000 $237 $5, $55 $6,562 $1,615 Tip For Students: If at all possible, pay off interest monthly. Ask for family assistance if needed. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 16

17 Borrower Benefits/Repayment Incentives Money-saving borrower benefits and repayment incentives were typically offered to borrowers by lenders in recent years They took the form of interest rate reductions, credits to loan balance and/or cash rebates and imposed eligibility rules such as making a specific number of on-time payments Borrowers should make sure to: Find out if any of their loans are eligible for borrower benefits or repayment incentives by contacting loan service provider or consulting lender s web site Research the terms to know and understand the eligibility rules Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 17

18 Loan Repayment Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 18

19 Grace, Deferment and Forbearance Grace - period of time after a borrower graduates, leaves school or drops to less than half-time - No payments required during this period - Usually six months, time varies based on loan type - Does not adversely impact credit Deferment - period when borrower who meets certain criteria may suspend loan payments - Common types of deferment: In-school, Economic Hardship, Military, Unemployment and Graduate Fellowship - Does not adversely impact credit Forbearance - typically sought for temporary repayment relief and provides temporary adjustment of no payments or reduced payments - Be careful to use because it adds expense - Can be very useful to help avoid delinquency and default - Does not adversely impact credit Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 19

20 Grace Periods Payments may not be required during this period No application required Loan specific, varies according to loan once used completely, it s gone - Stafford loans have a six-month grace period* - Perkins loans have nine-month grace - Perkins loans can also have a 6-month grace after deferment - Private and Institutional loans: check your promissory note Unsubsidized federal loans continue to accrue interest during the grace period Taking advantage of a grace period does not adversely impact credit *The Consolidated Appropriations Act (Public Law ) eliminated the interest subsidy during the 6-month grace period on subsidized Stafford loans made from July 1, 2012 through June 30, Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 20

21 Federal Loan Deferments Application may be required depending on deferment type; recertification for subsequent deferment periods may also be required Direct Loan deferments are borrower specific, meaning eligibility is attached to the borrower and there is a maximum deferment time allotted for certain deferments The government pays interest on a borrower s behalf for subsidized loans during authorized deferment periods Unsubsidized loans continue to accrue interest for which the borrower is responsible Unless the interest is paid by the borrower, it may be capitalized (added to your principal balance) at the end of the deferment period. To keep your total loan cost lower, you may want to consider paying all or some of the interest that accrues during this time Common Types of Deferments: In-School Economic Hardship Unemployment Military Graduate Fellowship Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 21

22 Federal Loan Forbearances Interest continues to accrue on subsidized and unsubsidized loans during a forbearance period. Interest that accrues during the forbearance remains the borrower s responsibility. Unpaid interest may be capitalized as often as quarterly and at the end of the forbearance depending on the loan type and when the loan was disbursed. Additionally there is a max forbearance time allotted. Capitalization of interest increases the amount to pay back, and will result in a higher payment amount after the forbearance. To keep your total loan cost lower, you may want to consider paying all or some of the interest that accrues during this time. Tips: Forbearances can be a great tool to help you stay out of delinquency and default. But be careful, the use of forbearance adds expense! Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 22

23 Federal Forbearance During Residency Medical and dental school residents are eligible to receive a forbearance during their residency as long as the residency meets certain criteria such as being required for a degree, certificate, or licensing for professional practice or service. - Renewable on an annual basis in 12-month increments Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 23

24 Paying Loans Off Early Borrowers can always prepay federal and most private student loans without penalty. Be aware of the relative cost and make payments towards unsubsidized loans that have the highest rates and/or most frequent capitalization. This should save more money over time. Unless otherwise noted in the loan agreement, loan payments typically are applied first toward late fees, then interest, and finally principal. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 24

25 Delinquency and Default (Federal/Private Loans) Student Loan delinquency and defaults can adversely impact your credit history Delinquency Failure to make payment(s) when due Reported to credit bureaus; affects borrowers history Default Collection agencies may take over adding to cost Lender can take legal action School can withhold records Federal defaults could result in wage garnishment & withholding of federal loan tax refunds Student loans are rarely discharged in bankruptcy Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 25

26 Federal Repayment Plans Resource Sheet for Schools and Borrowers Direct Loan and FEEL Program Repayment Plans Navient helps borrowers navigate the path to successful repayment Online and downloadable content focuses on important steps to take We are committed to keeping students informed Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 26

27 Pay As You Earn Repayment Plan Eligible Loans Monthly Payment and Time Frame Details Direct Subsidized and Unsubsidized Loans Direct PLUS Loans made to students Direct Consolidation Loans that do not include Direct or FFEL PLUS Loans made to Parents Your monthly payments will be 10% of your discretionary income, the difference between your adjusted gross income and 150% of the poverty guideline for your family size and state of residence (other conditions apply), divided by 12. Your payments change as your income changes. Up to 20 years. You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, You must have a partial financial hardship. Your monthly payments will be lower than payments made under the 10-year standard plan. You ll pay more for your loan over time than you would under the 10- year standard plan. If you have not repaid your loan in full after you made the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven. You may have to pay income tax on any amount that is forgiven. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 27

28 Income-Based Repayment (IBR) Plan Eligible Loans Monthly Payment and Time Frame Details Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans All PLUS Loans made to students Consolidation Loans (Direct or FFEL) that do not include Direct or FFEL PLUS loans made to parents Your monthly payments will be 15% (10% if you are a new borrower*) of your discretionary income, the difference between your adjusted gross income and 150% of the poverty guideline for your family size and state of residence (other conditions apply), divided by 12. Your payments change as your income changes. Up to 25 years (20 years if you are a new borrower*) You must have a partial financial hardship. Your monthly payments will be lower than payments made under the 10-year standard plan. You ll pay more for your loan over time than you would under the 10- year standard plan. If you have not repaid your loan in full after making the equivalent of 25 years (20 years if you are a new borrower*) of qualifying monthly payments, any outstanding balance on your loan will be forgiven. You may have to pay income tax on any amount that is forgiven. *A new borrower for the IBR plan has no outstanding balance on a Direct or FFEL loan as of July 1, 2014, or has no outstanding balance on a Direct or FFEL loan when he or she obtains a new loan on/after July 1, Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 28

29 Income-Contingent Repayment Plans Eligible Loans Monthly Payment and Time Frame Details Direct Subsidized and Unsubsidized Loans Direct PLUS Loans made to students Direct Consolidation Loans Payments are calculated each year and are based on the lesser of 20% of your discretionary income, the difference between your adjusted gross income and 100% of the poverty guideline for your family size and state of residence (other conditions apply) divided by 12, or 12-year standard payment multiplied by income percentage factor that is published annually by the Department of Education. Your payments change as your income changes. Up to 25 years. You ll pay more for your loan over time than under the 10-year standard plan. If you do not repay your loan after making the equivalent of 25 years of qualifying monthly payments, the unpaid portion will be forgiven. You may have to pay income tax on the amount that is forgiven. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 29

30 Standard Repayment Plan Eligible Loans Monthly Payment and Time Frame Details Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans All PLUS Loans Consolidation Loans (Direct and FFEL) Payments are a fixed amount of at least $50 per month. Generally up to 10 years (between 10 and 30 years for Consolidation Loans). You ll pay less interest for your loan over time under this plan than you would under other plans. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 30

31 Graduated Repayment Plan Eligible Loans Monthly Payment and Time Frame Details Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans Consolidation Loans (Direct and FFEL) All PLUS loans Payments are lower at first and then increase, usually every two years. Generally up to 10 years (between 10 and 30 years for Consolidation Loans). You ll pay more for your loan over time than under the 10-year standard plan. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 31

32 Extended Repayment Plan Eligible Loans Monthly Payment and Time Frame Details Direct Subsidized and Unsubsidized Loans Subsidized and Unsubsidized Federal Stafford Loans All PLUS Loans Consolidation Loans (Direct and FFEL) Payments may be fixed or graduated. Up to 25 years. Your monthly payments would be lower than the 10-year standard plan. If you are a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans. FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans. For both programs, you must also be a new borrower as of Oct. 7, You ll pay more for your loan over time than under the 10-year standard plan. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 32

33 Income-Sensitive Repayment Plan Eligible Loans Monthly Payment and Time Frame Details Subsidized and Unsubsidized Federal Stafford Loans FFEL PLUS Loans FFEL Consolidation Loans Your monthly payment is based on your monthly gross income. Your payments change as your income changes. Generally up to 10 years (between 10 and 30 years for Consolidation Loans). You ll pay more for your loan over time than you would under the 10- year standard plan. Each lender s formula for determining the monthly payment amount under this plan can vary. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 33

34 Loan Consolidation Provides the ability for borrowers to consolidate all of their federal loans into one new loan FFEL and Direct Loans, Perkins Loans and PLUS Loans may be consolidated Interest Rate: weighted average of the interest rates on the loans being consolidated rounded to the nearest higher one-eighth of one percent Multiple Repayment Options: Standard, Graduated, Extended, Income Contingent, Income Based and Pay As You Earn Benefits: - Possible longer repayment period - Potential lower monthly payment - Single servicer Application Process: Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 34

35 Federal Loan Repayment Comparison Undergraduate Example Assumes $27,000 in undergraduate Direct Loans ($19,000 in subsidized and $8,000 in unsubsidized loans) over a 4 year period. Subsidized interest rates ranged from 3.4% to 4.66% based on statutory limits for each AY. Unsubsidized Direct loans ranged from 3.86% to 6.8%. Plan Initial Monthly Payment Long-term Monthly Payment Total Interest Paid Years in Repayment Standard $ $6, Graduated $ $ $8, Extended - Fixed n/a n/a n/a n/a Extended - Graduated n/a n/a n/a n/a Income Based $ $ $6, Income Contingent $ $ $9, Pay As You Earn $ $ $8, Consolidation $ $ $14, Example based on adjusted gross annual income of approximately $40,000. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 35

36 Federal Loan Repayment Comparison Graduate Example Assumes $61,500 in graduate Direct Loans ($25,500 subsidized and $36,000 unsubsidized) over a 3 year period. Interest rates for subsidized Direct Loans were 6.8% and unsubsidized Direct Loan interest rates ranged from 5.41% to 6.8% based on statutory limits for each AY. Plan Initial Monthly Payment Long-term Monthly Payment Total Interest Paid Years in Repayment Standard $ $ $23, Graduated $ $1, $29, Extended - Fixed $ $ $64, Extended - Graduated $ $ $76, Income Based $ $ $40, Income Contingent $ $ $36, Pay As You Earn $ $ $44, Consolidation $ $ $81, Example based on adjusted gross annual income of approximately $40,000. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 36

37 Public Service Loan Forgiveness (PSLF) Program The PSLF Program is intended to encourage individuals to enter and continue to work full-time in public service jobs Under this program, borrowers may qualify for forgiveness of the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by certain public service employers Only Direct Loan Program loans are eligible for PSLF. Loans under the FFEL Program, the Perkins Loan Program, or any other student loan program are not eligible for PSLF If you have FFEL Program or Perkins Loan Program loans, you may consolidate them into a Direct Consolidation Loan to take advantage of PSLF Learn More: Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 37

38 Public Service Loan Forgiveness (PSLF) Program Additionally, borrowers must have: Made 120 on-time monthly payments beginning after October 1, 2007 during eligible public service employment. Payments must be made under one of the payment plans: Income Based, Pay As You Earn, Income Contingent or any payment equivalent to the 10-year standard payment amount. Worked full time in eligible public service employment for ten years after October 1, Must be employed in an eligible public service job at time remaining loan balance is forgiven. Learn More: Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 38

39 Private Loan Repayment Private loans are almost always unsubsidized for the life of the loan Repayment terms vary Choice of repayment plans may be available Residency and internship deferments may be available Tip: Forbearances may be available - Consult your loan servicer Tip: Refer to your promissory note and/or contact your private loan servicer to determine your available options Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 39

40 Healthy Credit Awareness Tips Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 40

41 Don t Borrow More than You Need Calculate your debt-to-income ratio: Minimum debt payments (including mortgage or rent) Monthly gross income Example: You earn $5,000 each month in gross income, and a yearly bonus nets you a $500 a month. Your total monthly income is $5,500. You pay $200 a month in student loans, $500 in rent, $150 on a car payment, and $150 on your credit card and other expenses. Your total monthly debt payments are $1,000. $1,000 (debt) divided by $5,500 (income) = a ratio of 18.2% Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 41

42 Know What You Owe Put together a snapshot of what you owe: Student loans $ Other loans: Credit card balance(s) +$ Automobile loan +$ Mortgage loan or rent +$ Other money owed: Utilities, cable, internet +$ Phone +$ TOTAL $ Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 42

43 Mistakes to Avoid With Credit Cards Overspending Spending just to earn more rewards Not paying your bill on time Using convenience checks or other cash advance features Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 43

44 Using Credit Cards Wisely Avoid Making Just Minimum Monthly Payments Example: If borrower has $2,000 financed at 19.8% and only makes the minimum monthly payment of $35; what happens? Borrower will take more than 17 years to pay off that $2,000 Borrower will pay more than $5,100 total (approx. $3,100 in interest) What could possibly be worth paying more than twice the amount originally financed? Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 44

45 Using Credit Cards Wisely YOU HAVE ONE OR MORE CREDIT CARDS NOW WHAT? Pay the highest-interest-rate card first Pay your bill as early as possible Pay more than the minimum whenever you can and aim to pay your bill in full every month to avoid interest rate charges Try to negotiate a better rate (a possibility if you make payments on time) Never be late for a payment or miss one entirely Keep a list of your credit card numbers in a safe place, in case your cards are stolen or lost Keep copies of sales slips and compare them to charges on your bill Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 45

46 Budgeting Every successful aspect or your life requires planning but personal financial planning is the most important of all. It can help secure your financial future Start by creating a realistic monthly budget that includes what money you take in, what you will spend and what you will owe Utilize resources such as our Navigating Your Monthly Budget interactive worksheet, available on navient.com Knowing exactly how money you have, how much you will earn and where your money is going each month can help you see potential financial related issues before they arise Include any loan payments you will have under various repayment options available to you you can determine the repayment plans that offer solutions you will be able to afford. Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 46

47 Budgeting Reality PROCESS Communicate with everyone affected by your budget process; you are not in this alone Set realistic goals Estimate actual income Estimate all expenses Balance the budget plan Put the budget into action every day of the week Keep track of income and spending Adjust the budget as necessary to keep on track Keep it simple TIPS Be realistic and build in a margin of safety Keep working until you find a system that works well for you Provide for personal allowances in your plan Don t try to use someone else s budget Distinguish between wants and needs Develop an emergency fund Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 47

48 Budgeting Reality Keep Good Records Get all loan documents together: keep them on file! - Promissory notes - Disclosure statements - Award Letters - Exit interview information Open and READ student loan mail Bookmark loan servicer s websites and keep their phone numbers available Always notify loan servicer(s) of any name, home/ address, phone number changes Document your calls to you servicer(s) with date/time of call and the name of the person who handled your call Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 48

49 Budgeting Reality Recognize the First Signs of Financial Difficulties Financial problems, once started, tend to get worse if they are left unresolved Some warning signs of financial problems: - In order to pay bill, you have to wait for your paycheck or other income - Your credit cards are charged up to the maximum - The amount you owe gets bigger every month - You bounce checks - You've received letters or calls from creditors Actions you can take: - Review your spending plan/budget - Ask for assistance from parents or mentor - Consider credit counseling Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 49

50 Federal Student Loan Borrower Resources US Department of Education/Federal Student Aid or US Department of Education/Federal Student Aid Ombudsman Group or Your university s financial aid office Federal Loan Servicers: Navient.com Nelnet.com MyFedLoan.org MyGreatLakes.org Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 50

51 Summary Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 51

52 Key Tips for Managing Student Loans Understand your student loan portfolio - Know what types of loans you have - Know your lenders and servicers - Know how much you owe - Know what your interest rate is - Know what your total monthly payments will be - Know what borrower benefits are available to you Understand loan capitalization and its impact Know your grace, deferment and forbearance options Know your Federal and private loan repayment plan options Avoid delinquency and default Keep good records Know your resources Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 52

53 Questions? Rob Smith Senior Client Relationship Manager (t) (c) navient.com Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 53

54 Appendix Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 54

55 Income Based Repayment (IBR) Additional Details Program is designed for federal loan borrowers experiencing partial financial hardship Borrower qualifies if annual student loan payments exceed 15% of discretionary income - AGI minus 150% of Poverty Income Guidelines x 15% If eligible for IBR, borrower s monthly payment will be determined by a formula that takes into account household size and adjusted gross income Negative amortization may occur with this option because it allows minimum monthly payments to be less than accruing interest IBR provides for up to a 36-month interest subsidy period when a scheduled monthly payment amount on a subsidized loan is less than accrued interest Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 55

56 Income Based Repayment (IBR) Additional Details Payment can never exceed the amount needed to pay off balance of borrower s loan(s) when enrolled in IBR in 10 years; thus, after a while, increases in income may not affect the payment Unpaid balance may be forgiven after 25 years of scheduled monthly payments which includes periods of economic hardship deferment, but not other periods of deferment and forbearance IBR eligibility test is based on larger of: - Balance of IBR-eligible loans at beginning of repayment - Balance of IBR-eligible loans when enrolled in IBR Spouse loans are factored into the eligibility test if they file a joint tax return - Payment formula will take spouse s loans into account Example: If IBR payment is $750, borrower has $150,000 in loans and spouse has $75,000 in loans, borrower s share of the payment is $500 since borrower has 2/3 of the total loan balance Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 56

57 Income Based Repayment (IBR) Additional Details Effective for new borrowers July 1, 2014: Under the initial legislation, IBR limits for FFELP and Direct student loan payments to 15% of discretionary income, and provides for loan forgiveness after 25 years of payments Congress passed legislation in 2010 to change the IBR payment cap to 10% of discretionary income and to forgive all debt after 20 years of payments, effective for Direct Loans made to new borrowers on or after July 1, 2014 Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 57

58 IBR Eligibility Example Balance at start of repayment* $150,000 Total standard payments for IBR-eligible loans $1, months worth of payments $20,714 AGI $47,000 State of Residence Florida Household size Poverty Income Guideline $11, % of Poverty Income Guideline $17,505 15% Discretionary Income [0.15 * ($47,000 - $17,505)] $4,424 Is borrower experiencing partial financial hardship? Does a year's worth of payments exceed 15% discretionary income? Yes Initial Monthly Payment Under IBR $369 Confidential and proprietary information 2015 Navient Solutions, Inc. All rights reserved. 58

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