Financial Aid Informational Seminar What You Need to Know

Transcription

1 Financial Aid Informational Seminar What You Need to Know Federal Loan Basics Changes to Federal Loans Amount of Eligibility and your Refund IAP - Financial Impact FA Notifications Loan Repayment Basics And more

2 Who do I contact if I have financial questions? If your question is pertaining to your financial aid application, your budget, or the amount you should borrow, please contact: 1(800) Financial Aid Diane Beltrani Director of Financial Aid Ext Tami Vecchio Associate Director Ext Laura Raygada Financial Aid Counselor (A - D) Ext Laura Faylo Financial Aid Counselor (E - KO) Ext Kara Johnston Financial Aid Counselor (KR PE) Ext Michele Wulfken Financial Aid Counselor (PH U) Ext Cynthia Lessing Assistant Director (V - Z) Ext Christine Cathcart Clinical Financial Aid Counselor (A-C & P-Z) Ext Lynda Hanley Clinical Financial Aid Counselor (D O) Ext Angela Kuhlmeier Student Health Insurance Ext Beth Cohen Loan Specialist for Canadian students Ext Registrar Enrollment Verification / Deferments [email protected] The address for the Financial Aid Department is [email protected] Student Finances If your question is pertaining to your refund check, the balance of your account, or your student account bill, please contact: 1(800) Valerie Cascio [email protected] Ext Gini Davanzo [email protected] Ext. 1271

3 Changes to Federal Loan Benefits President Obama signed the Bipartisan Student Loan Certainty Act of 2013 which changed the interest rate structure of federal student loans Loans became annual fixed rate loans Interest rate established each year based on 10 year Treasury note plus an index, then fixed for the life of the loan Rate change for loans disbursed after July 1, 2013 Unsubsidized Loan % Grad PLUS loan % Loan origination fees Unsubsidized Loan 1.072%% Grad PLUS loan 4.288%

4 Direct Unsubsidized Loan Payments not required while enrolled at least half-time (5 credits) Interest will accrue while in school No prepayment penalty for payments made while in school You can pay the interest monthly/quarterly Interest will be capitalized at repayment if you defer interest Capitalized interest means the unpaid accumulated interest will be added to the total amount owed Interest rate: fixed 5.41% One-time Grace period: 6 months

5 Direct Grad PLUS Loan Payments not required while enrolled at least half-time (5 credits) Interest will accrue while in school No prepayment penalty for payments made while in school You can pay the interest monthly/quarterly Interest will be capitalized at repayment if you defer interest Capitalized interest means the unpaid accumulated interest will be added to the total amount owed Interest rate: fixed 6.41% Credit-based: Borrower must not have Adverse Credit You are considered to have an adverse credit history if: You are 90 or more days delinquent on any debt Within 5 years of the date of the credit report, you have been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Federal Student Aid debt (for example, a Direct Loan or Federal Stafford Loan)

6 Private Educational Loans Interest rate and repayment terms vary Eligibility requirements vary Credit check Low debt-to-income ratio Co-signer, if borrower does not have a credit record Cannot be consolidated with federal loans Not eligible for any federal repayment or forgiveness programs Consider for Selectives, or MPH/MSc coursework

7 Grace Period The grace period is the period of time between your last day of attendance and the date your first payment is due. Subsidized/Unsubsidized loans: one full 6 month period Perkins loans: 9 months Before the end of the grace period, your lender or servicer will contact you to inform your first payment is due Make sure contact information is current with your loan servicer!

8 What is a Loan Servicer? A loan servicer is a company that collects payments on a loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a lender. We encourage you to enroll in an online account with your servicer: Make online payments View loan balance details Change repayment plans Request loan deferment / forbearance Update contact information Other tasks related to your federal student loan Current Federal Loan servicers include: Great Lakes Education Loan Services, Inc. Nelnet PHEAA/FedLoan Servicing Sallie Mae If you are not sure who your loan servicer is, you will be able to view the name and contact information of the servicer associated with each of your federal student loans on the National Student Loan Data System (NSLDS) website

9 National Student Loan Database (NSLDS) NSLDS is a repository of all of your federal loans Lists the current lender, servicer and the outstanding principal balance (OPB) of the loan. ED PIN, DOB, and SSN are needed to access your account NSLDS does not provide information on private loans

10 NSLDS Federal Student Loan History

11 Interest Capitalization Capitalization The practice of adding unpaid interest charges to the principal balance of an educational loan, thereby increasing the size of the loan Interest is then charged on the new balance, which includes both the unpaid principal and the accrued interest Capitalization may occur when: -The loan enters repayment -The loan exits deferment -The loan exits forbearance -The loan exits any status in which interest accrues

12 Interest Capitalization and Its Impact Interest on most loans accrues from the date funds are disbursed until the loan is paid in full Capitalization is the addition of unpaid accrued interest to the principal balance of a loan. The less frequent the better Capitalization may occur more frequently for certain loans during forbearance The chart provides estimates, for $50,000 in Grad PLUS loans from a 4 year program with a 7.9% interest rate, of the monthly payments due at the end of a 12 month forbearance Treatment of Interest During Forbearance Status Principle at Repayment Capitalized Interest During Forbearance Principle at end of Forbearance Payment Amount Total Amount Repaid Total Interest Cost Interest is paid as it accrues Interest is capitalized at end of status $50,000 $0 $50,000 $ $72, $22, $66,129 $5,224 $71,353 $ $103, $53, Tip: Students should consider asking family to help with interest if possible.

13 Individual Advancement Program (IAP) Financial Considerations Tuition and Fees No change to tuition/fee charges in the term you are approved to enter IAP Will not be charged tuition when repeat courses in subsequent term Administrative Fees are charged Changes to Financial Aid Since no tuition charge when repeating course(s): Loan amount to be reduced when repeating course (still eligible to borrow for living expenses) No scholarship for repeated term Since extending length of academic program, loan indebtedness will be increased May impact ability to complete Basic Sciences on time

14 Budgeting Living without a budget is similar to traveling across the country without a roadmap While both can be accomplished, the result is usually expensive and wasteful A good budget can help keep your spending on track and even uncover some hidden cash flow problems

15 Benefits of Budgeting Acts as a roadmap will outline where every dollar is spent Reveals waste When money is spent on non-budgeted items, budget shortfalls are created and can be corrected Aligns priorities Family discussions over the budget can reveal differences in priorities that may often cause conflict Conversations to address the underlying priorities will correct the problems and reduce disagreements over money

16 Benefits of Budgeting Builds New Habits Working within the budget will shift actual expense from unnecessary categories into the most essential categories Reduces Stress Sufficient funds will exist to pay expenses when needed; no guessing or hoping! Controls Spending Provides a reality check so you can avoid situations where you tend to overspend. And ask yourself if you really need each purchase before you make it. Delay and postpone! Accelerates Financial Goals Borrowing student loans wisely and minimizing debt

17 Mint.com Budgeting Tools To Name a Few... Free apps for smart phones /computers Studentloans.gov TG Texas Guaranteed Loan Servicer Corp. TG offers resources to help students and families plan and prepare for college, learn the basics of money management, and repay their federal student loans Mapping Your Future

18 Budgeting Tools

19 Borrow Wisely Decisions you make now can affect you in your future

20 Borrow Wisely The average single student debtor is likely ineligible for the typical home mortgage due to their debt-to-income ratio Including a typical mortgage and other consumer debt, the average single student debtor has a debt-to-income ratio of.49 This means they would pay about half of their monthly income toward student loans and mortgage payments would not qualify for an FHA loan or many private mortgages A similar typical single debtor in 2002 would have a debt-to-income ratio of.43; a 14% increase over the last decade For couples looking to buy a house, it is more difficult to qualify for a home mortgage when even one of the buyers has student debt, and even harder if both buyers have student debt

21 School of Medicine Budget Term 1 MD The information above outlines the Estimated Cost of Attendance for a student enrolled in January. Each academic year, you will have to complete a new FAFSA, and your maximum eligibility would be $20,500 in Federal Direct Unsubsidized loans. Your individual budget may vary according to the term and may be adjusted for budget increases.

22 Processing of your Loan Refund Funds disbursed 10 days prior to start of the term Refund issued approximately 3 business days after funds are credited to student account Direct Deposit available for expedient posting of funds to your bank account Refunds are sent to your mailing address unless you have set up direct deposit Questions regarding refunds, account balance or direct deposit should be addressed to Student Finances [email protected] To change your refund mailing address, sign into to SGU Student Self-Service and go to Personal Information tab

23 In-School Deferment Postpones your loan payment Subsidized loans remain interest free Unsubsidized loans will continue to accrue interest May need to submit In-school Deferment Form to our Registrar s Office Available on your servicer s website Private loan servicers may ask for an Enrollment Verification form SGU hopes to be a participant in National Student Clearinghouse by end of year students would be able to electronically request deferment

24 Tips for Managing Prior Loans Sign up for electronic notifications from your servicers If you had a Perkins Loan from a prior school - a separate deferment form is needed every 6 months Organize your loan information Know what you owe!!

25 SOM Satisfactory Academic Progress (SAP) Federal regulations require that students who are not in good academic standing are ineligible for federal loans Not making academic progress means: Cumulative Weighted Mean Percentage Grade less than 70% Not removed from academic probation within one academic year Cumulative Weighted Mean Percentage Grade less than 73% by the end of Term 5 have not earned at least 50% of attempted curriculum after first 2 terms of enrollment or have not earned at least 60% of their attempted curriculum thereafter

26 If You Are Not Meeting SAP Placed on Financial Aid Warning If not meeting SAP after FA Warning term: Not eligible for aid unless submit appeal to Financial Aid and appeal specifies the exceptional circumstances that lead to the poor academic performance and states what has changed that will allow the student to demonstrate academic progress in the next and future terms

27 If You Are Not Meeting SAP If SAP appeal is accepted: Will be provided with an academic plan Must meet academic plan in order to receive federal aid in future term

28 Leave of Absence If a student must take a leave of absence during basic science terms: Federal Loans will be prorated based on the number of days enrolled Tuition will be prorated Be mindful of timeline for SAP Reported to federal enrollment database as not enrolled Loans go into grace period If LOA is more than 6 months, no further grace period available If more than 6 months - see various repayment options

29 Those annoying notifications Take the action needed to resolve them! May need to sign Promissory Notes May need to provide Student Health Insurance Information May need to accept loan awards Office of Financial Aid may need to update our systems

30 Applying for Aid File FAFSA ( SOM code: G22333 SVM code: G notification of federal loan awards to be sent late April (Term 3/4 students), and May (Term 2 & 5 students) Complete a new Master Promissory Note for both Unsubsidized and Grad PLUS loans Must be in good academic standing Must be credit-worthy for Grad PLUS approval Will need a new Health Insurance confirmation for new year (August 1 st )

31 SOM Preparing for Clinicals and Residency No federal loans for period between end of Term 5 and start of clinical rotations Private Bridge Loan available as last resort Plan ahead for Clinical living expenses Plan for expenses due to securing a Residency Private Residency and Relocation loans available Loan Process is different in Clinical terms Attend Financial Aid Presentation in Term 5

32 Bridge Loan Bank of Lake Mills Borrower must have completed their first two (2) years of medical school at St. George s University* Borrower may apply with or without a co-signer Borrower must be the minimum age of majority based on the state of permanent residence at the time of application Minimum loan amount = $2, Maximum loan amount = $8, (inclusive of fees netted from loan) Borrowers and Cosigners must meet minimum FICO score and other credit requirements Income requirements may apply Interest Rate/Fees Variable Interest Rate, adjusted quarterly An Origination Fee will apply For additional information or questions, please call: (877) To Apply Go to: *The Bank of Lake Mills Medical Bridge Loan Program is not being offered, made or endorsed by St. George s University. Bank of Lake Mills is not affiliated with St. George s University. 1

33 Residency & Relocation Loans Non-federal loans available to provide funds for graduating medical students who have expenses not covered by federal aid packages, including residency expenses and relocation costs The loans can be applied for up to one year before or six months after graduation from medical school Your school is generally required to verify attendance this is verified through the SGU Registrar s office Loan funds are sent directly to the student Cannot be consolidated under a Federal Consolidation loan The loans are private loans from banks or other financial institutions Eligibility is based upon a credit evaluation Deferment during residency must request from the lender Link to loans (Fast Choice):

34 When Loans Enter Repayment

35 Median SGU Student Loan Debt Based on 2012 Graduates Includes private, federal and institutional loans SOM - $258,362

36 Paying Loans Off Early Borrowers can always prepay federal and 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. Payments can be made online directly to your loan servicer Unless otherwise noted, loan payments typically are applied first toward late fees, then interest, and finally principle

37 Loan Repayment Options Standard Repayment Graduated Repayment Extended Repayment Loan Consolidation Income Driven Repayment Plans o Income-Contingent Repayment (ICR) o Income-Based Repayment (IBR) o Pay As You Earn (PAYE) 2

38 Federal Loan Repayment Comparison Repayment Plan Initial Monthly Payment Long-term Monthly Payment Total Interest Paid Years in Repayment Standard $2, $2, $98, Graduated $1, $3, $112, Extended $1, $1, $279, Income Based-4 Yrs. $ $2, $222, Income Sensitive $1, $2, $116, Pay as You Earn-4 Yrs. $ $2, $137, Consolidation $1, $1, $352, Assumes $138,500 in graduate Stafford Loans and $120,000 in Grad PLUS over a 4 year period. Stafford interest rates were at 6.8% and Grad PLUS interest rates were at 7.9%.

39 Loan Consolidation Combines federal loans into a single loan Pays existing loans in full and replaces them with a new loan Acquires a new interest rate Increases repayment term up to 30 years, depending on your loan balance

40 Loan Forbearance Temporarily postpones or reduces your monthly payments Interest continues to accrue on all of your loans Servicers are required to grant mandatory forbearance to residents through the duration of their residency (approved in annual increments) Credit is not affected adversely

41 Income-Driven Plans Overview 3 main income-driven repayment plans: Income-Contingent Repayment Plan (ICR) 1994 Direct Loan Program only More information available at StudentAid.gov/ICR Income-Based Repayment Plan (IBR) 2009 Available in both the Direct Loan and FFEL Program More information available at StudentAid.gov/IBR Pay As You Earn Plan 2012 Direct Loan Program only New borrowers in FY 2008 who receive new loans in FY 2012 Modeled on IBR, incorporating statutory IBR changes scheduled to take effect for new borrowers in 2014 More information available at StudentAid.gov/PayAsYouEarn

42 Income-Driven Plans Payment Amounts Under ICR, borrowers pay the lesser of: 12-year standard repayment schedule multiplied by income percentage factor (payment based on loan debt and income) or 20% of discretionary income (payment based only on income) Under IBR, borrowers pay the lesser of: 15% of discretionary income (income-based payments) or What they would have paid under the 10-year standard repayment plan (non-income-based payments) Under Pay As You Earn, borrowers pay the lesser of: 10% of discretionary income (income-based payments) or What they would have paid under the 10-year standard repayment plan (non-income-based payments) For more on income percentage factors in ICR, see 77 FR 30266, available at:

43 Income-Based Repayment (IBR) Borrower 1 Borrower 2 Borrower 3 Borrower 4 Family Size Monthly AGI* $0 $4,038 $4,038 $15, % of Poverty Level $0 $1,396 $1,891 $1,891 X** $0 $2,642 $2,147 $13,109 15% of X $0 $396 $322 $1,966 Loan Amount Standard Monthly Payment Borrowers who quality for IBR $150,000 $1, , 2 & 3 $200,000 $2, All four borrowers *The average first-year resident stipend for 2009 was $48,460. This amount will vary by region and specialty. **Difference between AGI and 150% of poverty level

44 Loan Forgiveness or Discharge Federal Loan forgiveness programs Federal government repays a portion of your loans Loan discharge (cancellation) Identity theft Death of borrower Total and permanent disability of borrower School closure Contact servicer for more information about these situations

45 Loan Payment Relief Options Federal Public Service Loan Forgiveness (PSLF) National Institute of Health (NIH) Various State and Private Organizations

46 How does Public Service Loan Forgiveness (PSLF) work? To be eligible for Public Service Loan Forgiveness (PSLF) you must make 120 of the right kind of payments, with the right kind of loan, while working in the right kind of job. The 120 payments do not have to be consecutive.

47 Public Service Loan Forgiveness (PSLF) If you hold a public service job, you may be eligible to have a portion of your federal student loan debt forgiven This includes work in all 501(c)(3) non-profit organizations, including medical schools and teaching hospitals To qualify, you must meet eligibility requirements, which include: 120 qualifying monthly payments on an eligible Federal Direct Loan on or after 10/1/2007 Employment in a public service job during the time the qualifying payments are made and at the time the loan is forgiven Does your potential residency placement qualify? The answer may help you decide where you want to do your residency.

48 Loan Repayment/Forgiveness Programs AAMC has created a searchable data base that provides detailed information about many of the state and federal programs available to medical and other health professions students.

49 NY Loan Repayment Program Doctors Across New York (DANY) is a series of state-funded programs to help train and place physicians in a variety of settings and specialties to care for New York's diverse population DANY programs include: Physician Loan Repayment including Residency Loan Repayment Tracks Ambulatory Care Training and other initiatives Physician Loan Repayment provides up to $150,000 in funding over a five-year period for physicians who commit to a fiveyear service obligation in an underserved region

50 National Institute of Health (NIH) Part of the U.S. Department of Health and Human Services The primary federal agency for conducting and supporting medical research Offers five loan repayment programs to attract health professionals to careers in clinical, pediatric, health disparities, or contraception and infertility research In exchange for a two or three-year commitment to a research career, NIH will repay up to $35,000 per year of your qualified educational debt Basic eligibility requirements: Government research funding (federal, state, or local) or domestic nonprofit research funding Student loan debt equal to at least 20% of annual salary U.S. citizen For more information, visit lrp.nih.gov

51 Useful links The Economics of Becoming a Doctor Includes information on Income-Based Repayment and Public Service Loan Forgiveness, and a discussion of the economics of earning an M.D. degree - tools to manage student loan debt wisely Medical Residents' Finances: A Strategic Approach to Managing Medical School Debt This video highlights how federal student debt relief programs can help medical residents lower the cost of their student loan debt. An overview of the benefits of Income-Based Repayment and Public Service Loan Forgiveness is also provided.

52 Useful links A Strategic Approach to Managing Veterinary School Debt This video highlights the federal student debt relief programs and repayment strategies available to help veterinarians lower the cost of their student debt and manage their liquidity.

53 ollow Us on Facebook! SGU Financial Aid deadline reminders and important information Useful tips and tools for personal money management Relevant news articles regarding student loans and overall financial well-being Financial Aid Counselor Contact information and useful website links

54 SGU Office of Financial Aid on Facebook What you ve been missing..

55 Who do I contact if I have financial questions? If your question is pertaining to your financial aid application, your budget, or the amount you should borrow, please contact: 1(800) Financial Aid Diane Beltrani Director of Financial Aid Ext Tami Vecchio Associate Director Ext Laura Raygada Financial Aid Counselor (A - D) Ext Laura Faylo Financial Aid Counselor (E - KO) Ext Kara Johnston Financial Aid Counselor (KR PE) Ext Michele Wulfken Financial Aid Counselor (PH U) Ext Cynthia Lessing Assistant Director (V - Z) Ext Christine Cathcart Clinical Financial Aid Counselor (A-C & P-Z) Ext Lynda Hanley Clinical Financial Aid Counselor (D O) Ext Angela Kuhlmeier Student Health Insurance Ext Beth Cohen Loan Specialist for Canadian students Ext Registrar Enrollment Verification / Deferments [email protected] The address for the Financial Aid Department is [email protected] Student Finances If your question is pertaining to your refund check, the balance of your account, or your student account bill, please contact: 1(800) Valerie Cascio [email protected] Ext Gini Davanzo [email protected] Ext. 1271