Managing Your Student Loans

Transcription

1 Managing Your Student Loans

2 Presented By: Libby Ludwig

3 Student Loans The average American college student will graduate with an average student loan debt of $28,000 70% of students take out at least one student loan Your student loan payment can impact: Home-buying Starting a Family Retirement 4/23/2015 3

4 Private Loans Generally have higher interests rates Subject to the terms and conditions of the contract Cannot be consolidated into a federal loan Possible limited repayment options 4/23/2015 4

5 Student Loan When taking out your loan, hopefully you considered: Payments Potential Income Additional Debts Terms and Conditions of the Loan Information on jobs and salaries 4/23/2015 5

6 Managing Your Student Loans Create a Spending Plan 4/23/2015 6

7 Your Goal Pay off your student loan as agreed In the least amount of time Paying the least amount of interest WHY? Will cost you less money in the long run Gets you out of that debt on schedule Lets you do other things with the money that you were making the payment with Paying as agreed benefits your credit score 4/23/2015 7

8 Incorporate Payments into a Spending Plan What is it? A step-by-step plan for ensuring bills are paid on time and money is prioritized to help you reach your financial goals Benefits Reduces money-related anxiety and stress Gives you control of your financial situation Helps you stay on track to reach your financial goals Home buying Family Retirement 4/23/2015 8

9 Elements of a Spending Plan Income Expense Tracking Track expenses for 30 days Fixed Expenses (Car, Housing) Variable Expenses (Gasoline, Utilities) Periodic Expenses (Insurance, Gifts) Lifestyle habits- Needs versus Wants Understand where you can cut back Write it down and follow it 4/23/2015 9

10 Fritter Finder Daily Spending Diary ITEM COST Lunch at work $5.87 Afternoon snack $2.50 Gas $ /23/

11 Spending Plan Worksheet 4/23/

12 Managing Your Student Loans Making Payments On Your Loans 4/23/

13 Pay Your Debts Off Faster Gather Information on all of your debts Lenders Payment amounts Due dates Interest rates % 4/23/

14 Your First Payment When you have to start to pay Direct and Stafford Loans 6-month grace period Begin paying even before you have to Make sure extra payments are going toward the principal PLUS Loans No grace period Possibly eligible for deferment Perkins and Private Loans Depends on the terms and agreement of loan 4/23/

15 Repayment Plans Four types of repayment plans: Standard Graduated Extended Income-based Among other stipulations, income-based plans are determined by Income Family size Financial hardship 4/23/

16 Repayment Plans Standard Repayment Plan Payments are slightly higher Pay less interest over life of loan Payments made over 10 years If at all possible, this should be the plan you partake in 4/23/

17 Special Program Public Service Loan Forgiveness (PSLF) Program Loans must be in the Direct Loan Program Work in public service (government or non-profit) Must not be in default 120 payments, or 10 years 4/23/

18 Creating Your Payoff Plan Use Your Spending Plan Make minimum payments on debts with lower interest rates Apply additional income to any debt with higher interest rate (student loans, credit cards, car loan, etc.) Inform lender that extra payments are to be applied to principal 4/23/

19 Managing Your Student Loans Before You Default 4/23/

20 Defaulting on Student Loans You are responsible for paying your loan Even if: You do not graduate You are not happy with your school You can t find a job Defaulting should be a last resort 4/23/

21 Defaulting on Student Loans Consequences of Default Loans turned over to collections agency Liable for costs associated with collecting on loan, court and attorney fees Can be sued for entire amount Wages may be garnished Federal and state income tax refunds intercepted Social Security benefit payments withheld Credit history: difficulty accessing credit 4/23/

22 Defaulting on Student Loans Consequences of Default Ineligible to receive any more federal financial aid You will be ineligible for deferments Subsidized interest benefits will be denied You may not be able to renew a professional license Prohibited from enlisting in the Armed Forces 4/23/

23 Before You Default Deferment Federally-funded subsidized loans Principal and interest are temporarily delayed Payments postponed Qualifications: Unemployed Returning to school Suffering economic hardship 4/23/

24 Before You Default Forbearance Temporary delay from having to repay (up to one year) Accrues interest in the meantime 4/23/

25 Financial Troubles? Only two ways to resolve this dilemma Increase Income Decrease Expenses 4/23/

26 Options Get a second job or search for temporary work Use community resources Cut back on eating out and other entertainment expenses Barter your services Sell stuff you have laying around the house Check with your employer to see what benefits you have with area merchants Do your homework before you go out shopping (Know were the best deals are) Ask for the best price 4/23/

27 Options Use direct deposit. You will be less likely to spend money if it goes straight to your account, especially your savings account Don t use credit to supplement income you do not have Buy only what you need don t buy things just because they are on sale 4/23/

28 Settlements Is Settling Your Debt an Option? Check with loan servicers One-time lump sum payment 4/23/

29 Bankruptcy Difficult to Discharge Student Loan Debt Must file adversary proceeding in conjunction with bankruptcy Prove Undue hardship School was not credible You have total or permanent disability Laws vary from state to state 4/23/

30 Seek Help Options for counseling with a trusted agency Budget counseling to help regain control of your finances Debt Management Programs to help repay unsecured debt such as credit cards and medical bills Student loan and credit report education Make sure you choose a reputable agency to represent you 4/23/

31 Resources Where can I get more help? /23/

32 For more information about managing your personal finances, contact Apprisen at: Attendance Code: LL0423 Follow us on Twitter, Google+ & Like us on Facebook: Apprisen 4/23/