Understand federal loan programs and types. Know where and how to find your loan history. Understand how interest accrues and is calculated

Transcription

1

2 Understand federal loan programs and types Know where and how to find your loan history Understand how interest accrues and is calculated Know what repayment options are available Understand borrower benefits and entitlements Options for postponement Forgiveness Incentives

3 Three federal loan programs Federal Family Education Loan Program (FFELP) William D. Ford Direct Lending Program (Direct) Federal Perkins ***While there are many repayment options, postponement options (i.e forbearance & deferment) and other borrower benefits that are the same across the federal student lending programs, each program also has program specific options.***

4 Six Federal loan types Subsidized: Only available to undergraduate students who qualify based on need.* The student is entirely responsible for paying back the loan. The government pays the interest while the student is in school at least half-time, while in periods of deferment and while in grace.** *Loans were available to a graduate student until 6/30/2012. **Loans originated between 7/1/2012 through 6/30/2014 did not receive the grace period subsidy. Unsubsidized: Available to undergraduate and graduate students. The student is entirely responsible for paying back the loan. The government does not pay for ANY interest on the loan at ANY time. Parent PLUS: Available to parents of dependent undergraduate students. The parent is solely responsible for the loan and responsibility cannot and will not be transferred even through the process of consolidation. The loan is unsubsidized in nature and is awarded based on credit. Graduate PLUS: Available to graduate students. The student is solely responsible for the loan. The loan is unsubsidized in nature and is awarded based on credit. Consolidated: Available for all federal loan types that are under the same borrower s name and responsibility. May be subsidized or unsubsidized dependent upon the loans included in the consolidation. Perkins: Available to undergraduate and graduate students who demonstrate EXCEPTIONAL NEED. The student is solely responsible for paying back the loan. The loan is subsidized in nature.

5 Log into If you do not already have your PIN you will need to retrieve it from FFELP Direct

6 Contracted by the lender to provide the billing and customer service for a loan Some lenders will service their own loans U.S. Department of Education contracts four main federal student loan servicers Sallie Mae (soon to become Navient) Great Lakes PHEAA/Fed Loans Nelnet

7

8 Accrues daily Capitalizes after periods of Grace, Deferment and Forbearance* *Perkins loans are the only exception Outstanding Principal Balance Interest Rate = Yearly Interest Accrual Yearly Interest Accrual days = Daily Interest Accrual

9 Fees Including late fees, processing fees, etc. Interest Any interest accrued up to the day of the payment Principal Remainder of the payment, if any, after all fees and interest are paid

10

11 Available for FFELP & Direct Subsidized/Unsubsidized, Graduate PLUS, Parent PLUS, Consolidated and Perkins loans 10 year maximum repayment period* *Consolidated loans may have a repayment period up to 30 years depending on the amount of the original consolidation Monthly payment amounts are the same each month All loans enter repayment in this plan unless you request otherwise One of the shortest repayment periods if all payments are made as scheduled Usually results in the least amount of interest being paid over the life of the loan

12 Available for FFELP & Direct Subsidized/Unsubsidized, Graduate PLUS, Parent PLUS and Consolidated loans 10 year maximum repayment period* *Consolidated loans may have a repayment period up to 30 years depending on the amount of the original consolidation Payments start lower and increase every two years Minimum payment will never be less than estimated monthly interest accrual Payment increases will never result in a payment amount being higher than three times the amount of any other payment installation More interest will be paid over the life of the loan

13 Available for FFELP & Direct Subsidized/Unsubsidized, Graduate PLUS, Parent PLUS and Consolidated loans 25 year maximum repayment period Must be a new borrower as of October 7, 1998 Must have $30,000 in outstanding Direct or FFELP loans SEPARATELY Payments amounts can be equal each month or can be graduated payments* *Extended Graduated Repayment Plan More interest will be paid over the life of the loan

14 Available for FFELP & Direct Subsidized/Unsubsidized, Graduate PLUS, Consolidated* loans *Consolidated loans cannot contain Parent PLUS loans 25 year repayment schedule ending in forgiveness Payments based on total federal loan debt, family size, previous year s Adjusted Gross Income (AGI) and 150 percent of poverty line. Annual amounts of payments due are no more than 15 percent* of the difference between your AGI and 150 percent of poverty line based on family size *New borrowers on or after July 1, 2014 have a maximum annual payment of 10 percent MUST recertify annually

15 . 15 AGI 150% poverty line = Max Annual Payment Amount Max Annual Payment Amount 12 Months = Monthly Payment Amount The monthly payment can never be higher than the standard or permanent standard ten year payment amount. If your AGI falls below 150 percent of the poverty line based on family size you will automatically qualify for a $0 payment. The government will pay the difference between what is accruing in interest and what you pay in interest on subsidized loans only. Only occurs for first three consecutive years

16 ONLY available for Direct Subsidized/Unsubsidized, Graduate PLUS and Consolidated loans FFELP loans can be consolidated as a Direct loan Direct Consolidation loans that have an application date on or after July 1, 2006 can contain Parent PLUS loans 25 year repayment schedule ending in forgiveness Payments are the lower of: 1. Payment amount based on 12 year loan term 2. 20% of your monthly discretionary income 3. Outstanding Principal Balance x Income Percentage Factor MUST recertify annually Interest capitalizes yearly and the government does not pay for any interest accrued. Will stop capitalizing after the amount of capitalization reaches 10% of the original principal balance

17 Available for Direct Subsidized/Unsubsidized, Graduate PLUS, Consolidated* loans *Consolidate loans cannot contain Parent PLUS loans All prior loans must have been paid in full before October 1, 2007 and must have a Direct loan disbursed after October 1, year repayment schedule ending in forgiveness Payments based on total federal loan debt, family size, previous year s Adjusted Gross Income (AGI) and 150 percent of poverty line. Annual amounts of payments due are no more than 10 percent of the difference between your AGI and 150 percent of poverty line based on family size Payments will never be more than a standard payment amount based on a ten year loan term

18 MUST recertify annually The government will pay the difference between what is accruing in interest and what you pay in interest on subsidized loans only. Only occurs for first three consecutive years Interest will capitalize if you no longer qualify for the lower payment or if you fail to recertify at the end of the 12 month period No more than 10 percent of the Outstanding Principal Balance at the time you enter PAYE will be capitalized.

19 Available on FFELP loans only Only available for five years over the life of the loan Applied like a forbearance Payment is the greater of the estimated monthly interest accrual or four percent of your gross monthly income MUST recertify annually Any unpaid interest will capitalize

20 Available for FFELP & Direct Subsidized/Unsubsidized, Graduate PLUS, Parent PLUS and Consolidated loans Forbearance will pause your loan term May be no limit, depending on your lender Applied in 12 month increments Any unpaid interest will capitalize

21 Low-Income Extension Maximum 10 years Based on most recent Income Protection Allowance Tables Must recertify every year Reduced Payment 1. $10 per month for one year 2. Agreed upon amount between school and borrower

22

23 Deferment Must meet pre-qualifications Government will pay for interest on subsidized loans only Forbearance May or may not have to meet pre-qualifications Government will not pay for any interest regardless of the loan type

24 Available for all FFELP, Direct and Perkins loans Must be enrolled at least half-time at a Title IV eligible school Available for all FFELP and Direct loans Must be enrolled at least half-time at a Title IV eligible school during the Spring semester and are going to enroll at least half-time for the upcoming Fall semester

25 Available for FFELP and Direct Parent PLUS loans The student must be enrolled at least half-time at a Title IV eligible school Available for all FFELP/Direct Parent and Graduate PLUS loans disbursed on or after July 1, 2008 Acts as a six month grace period Automatically applied to Graduate PLUS loans, but Parent PLUS borrowers must specifically request

26 Graduate Fellowship: Available for FFELP/Direct Subsidized, Unsubsidized and Consolidated loans as well as Perkins loans. Student must be in a full-time course of study in a Graduate Fellowship Program that requires a B.A. to be accepted. Rehabilitation Training: Available for FFELP/Direct Subsidized, Unsubsidized and Consolidated loans as well as Perkins loans. Must be enrolled full-time in a certified rehabilitation program. Internship/Residency: Available for FFELP Subsidized, Unsubsidized and Perkins loans if the borrower began borrowing prior to July 1, Must be in a medical internship or residency program. The program must require a B.A. for acceptance either lead to a degree or certificate or be required to begin professional practice. Maximum 24 months total may be used.

27 Available for FFELP, Direct and Perkins Borrowers before July 1, 1993 are eligible for two years Borrowers on or after July 1, 1993 are eligible for three years Must be unemployed or working less than 30 hours per week Two ways to qualify 1.) Receive unemployment benefits 2.) Be seeking full time work in a variety of fields and registered with an unemployment agency Unemployment agency can be public or private, but cannot be a temporary employment agency or school placement office

28 Available for FFELP*, Direct and Perkins *Only new FFELP borrowers on or after July 1, 1993 Maximum time allotted = three years Four Options 1.) Receive Economic Hardship Deferment from another federal student loan program for the same time period 2.) Receive federal or state public assistance 3.) Serving as Peace Corps volunteer 4.) GMI (gross monthly income) does not exceed the larger of the Federal Minimum Wage Rate or 150% of the poverty guideline based on family size

29 Available for FFELP, Direct and Perkins Must be serving active duty and given orders involved with a war or other military operation or national emergency National Guard duty and give orders involved with a war or other operation or national emergency as called by the President or Secretary of Defense Must be performed for more than 30 consecutive days. Must provide a copy of military orders May defer for an additional 180 days following completion of service If you are retired, Reserve or National Guard and are called to active duty during a period you are enrolled in school, you may request up to an additional 13 months

30 Discretionary: Available for all loan types. Do not have necessarily have to qualify. Maximum time frame on Direct and Perkins is three years. FFELP loans maximum time frame is dependent on the lender. Mandatory: Available for FFELP & Direct loans. Must meet qualifications and will be applied even if discretionary forbearance has been exhausted. Multiple types. Internship/Residency: Same requirements as the deferment but is applicable for all new borrowers after July 1, Excessive Debt: If 20% of the borrower s GMI is less than the total student loan payment the borrower will qualify for 12 months. Maximum three years. National Disaster: If you live or work in an area that has been declared a national disaster by FEMA. No maximum time frame, but it ends when FEMA s incident period ends.

31 Available for FFELP and Direct loans MUST be a new borrower as of October 1, 1998 MUST teach in a Title I school for five consecutive years MUST teach full-time: Special Education for elementary or secondary school students Mathematics for secondary school students Science for secondary school students As a highly qualified teacher in a specific subject area as a secondary school teacher As a highly qualified teacher in an elementary school Must have a chief administrative officer certify your eligibility Principal Assistant Principal Superintendent

32 ONLY available for Direct loans Can consolidate FFELP and Perkins loans into a Direct loan MUST be employed full-time for ten consecutive years in a public service position Federal, state, or local government agency, entity, or organization 501(c)(3) Private not-for-profit that are not tax exempt MUST make 120 on-time payments on or after October 1, 2007 that are at or above a standard payment amount based on a standard ten year loan term unless you are in an IBR, ICR or PAYE plan Must be full payments made no later than 15 days after the due date Must be separate payments

33 Perkins The school decides whether an incentive will be offered FFELP Depends on the lender If you lose the incentive, you will not get it back! Direct.25% interest rate reduction for using autodebit Origination fee rebate for loans disbursed prior to July 1, 2013

34 UCCS Office of Financial Aid, Student Employment and Scholarships: UCCS Mountain Lion Money Matters National Student Loan Data System Federal Student Aid PIN Department of Education Student Loans Federal Student Aid