$mart Docs September 25, 2014

$mart Docs September 25, 2014

What are they? How do I qualify? How are my payments calculated? Why should I repay my loans under one of these plans? When do I apply? Examples Resources

An income-driven plan is a student loan repayment plan that sets your monthly loan payment at an amount that is intended to be affordable based on your income and family size. There are three income-driven repayment plans: 1. Income-Based Repayment Plan (IBR) 2. Pay As You Earn Repayment Plan (PAYE) 3. Income Contingent Repayment Plan (ICR)

1. Did you borrow at least one Federal Direct Loan? 2. Are you a new borrower? 3. Are you experiencing a partial financial hardship (PFH) as defined by the Department of Education?

Loan Type IBR Plan Pay As You Earn Plan ICR Plan Direct Subsidized Loans Eligible Eligible Eligible Direct Unsubsidized Loans Eligible Eligible Eligible Direct PLUS Loans made to graduate or professional students Direct Consolidation Loans that did not repay any PLUS loans made to parents Eligible Eligible Eligible Eligible Eligible Eligible Subsidized Federal Stafford Loans (from the FFEL Program) Eligible Eligible if consolidated into a Direct Consolidation Loan* Eligible if consolidated into a Direct Consolidation Loan* Unsubsidized Federal Stafford Loans (from the FFEL Program) Eligible Eligible if consolidated into a Direct Consolidation Loan* Eligible if consolidated into a Direct Consolidation Loan* FFEL PLUS Loans made to graduate or professional students Eligible Eligible if consolidated into a Direct Consolidation Loan* Eligible if consolidated into a Direct Consolidation Loan* FFEL Consolidation Loans that did not repay any PLUS loans made to parents Eligible Eligible if consolidated into a Direct Consolidation Loan* Eligible if consolidated into a Direct Consolidation Loan* Federal Perkins Loans Eligible if consolidated into a Direct Consolidation Loan* Eligible if consolidated into a Direct Consolidation Loan* Eligible if consolidated into a Direct Consolidation Loan*

Interest rate is based on the weighted average interest rate of the loans being consolidated, rounded to the next nearest higher one-eighth of one percent. Fixed for the life of the Direct Consolidation Loan. Note that consolidation is not always the right choice for all borrowers or all loan types. Will discuss at exit counseling.

For IBR, you are a new borrower if you had no outstanding balance on a Direct Loan or FFEL loan when you received a Direct Loan on or after July 1, 2014. For PAYE, you are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan when you received a Direct Loan or FFEL Program loan on or after Oct. 1, 2007, AND you also received a disbursement of a Direct Loan on or after Oct. 1, 2011. For ICR, there are no time period restrictions.

1. Determine the size of your household and identify what 150% of the poverty line is for your family size. 2. Subtract the number (150% of the poverty line) from your total household monthly adjusted gross income (AGI). 3. Multiply that number by a percentage (see next slide) to determine your monthly payment amount. 4. This calculated amount must be less than what you would pay under the 10-year Standard Amount.

If your loan debt exceeds your annual income, you will most likely qualify for a Partial Financial Hardship.

Income-Driven Repayment Plan IBR Plan for those who ARE NOT new borrowers on or after July 1, 2014. IBR Plan for those who ARE new borrowers on or after July 1, 2014. Pay As You Earn Income Contingent Plan Payment Amount Generally 15% of your discretionary income, but never more than the 10-year Standard Generally 10% of your discretionary income, but never more than the 10-year Standard Generally 10% of your discretionary income, but never more than the 10-year Standard The lesser of the following: 20% of your discretionary income ; or what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income

Repayment Plan IBR Plan for those who are NOT new borrowers on or after July 1, 2014 IBR Plan for new borrowers on or after July 1, 2014 Pay As You Earn Plan ICR Plan Repayment Period 25 years 20 years 20 years 25 years Under all three plans, any remaining loan balance is forgiven if your federal student loans are not repaid in full at the end of the period. The forgiven amount is TAXABLE under current law.

Most physicians repay their student loans in 15 years or less. You may change plans if you want during repayment. If you are eligible for Public Service Loan Forgiveness, you may qualify for forgiveness of any remaining Direct Loan balance after you have made 10 years of qualifying payments.

Income driven plans are a good option for borrowers with lower salaries experiencing a financial hardship, and/or for those seeking some type of loan forgiveness.

120 Payments in an eligible plan Loan Forgiveness! Under the PSLF program, the amount forgiven is not considered income for tax purposes. Public Service Employment

Most charitable non-profit organizations, federal, state, or local government agencies 501(c)(3), Public health, public education Public Colleges Children s Hospital VA Hospital Most private schools, colleges, and universities are non-profit and are qualifying employers for the PSLF program.

Submit a Employment Certification Form for Public Service Loan Forgiveness to qualify for the program.

Partial interest subsidy. The amount of interest that accrues on the subsidized loans, but exceeds the IBR or PAYE payment amount, will be paid for by the fed gov t for the first 3 years of repayment. Limit to the amount capitalized and a potential postponement of capitalization. Capitalization will not occur until after the PFH ceases to exist, or you elect to leave IBR or PAYE. Capped maximum payment amount. The maximum amount cannot exceed what the 10-year Standard Repayment amount would have been (based on the debt amount when initially entering the plan).

Submit an application called the Income- Driven Repayment Plan Request. You can submit the application online at StudentLoans.gov or on a paper form, which you can obtain from your loan servicer. Along with the application, you will be asked to provide income information. This may be either your adjusted gross income (AGI) or alternative documentation of income.

You can document your income using AGI if: you have filed a federal income tax return in the past two years, and the income on your most recent federal income tax return is not significantly different from your current income. You can provide your AGI in one of the following ways: Apply online and use the IRS Data Retrieval Tool Use the paper Income-Driven Repayment Plan Request and provide a paper copy of your most recently filed federal income tax return or IRS tax return transcript.

If you do not meet the conditions for documenting your income using AGI, you must provide alternative documentation of income. Submit a paper Income-Driven Repayment Plan Request with your most recent pay stub. If you do not currently have income or if you receive only untaxed income, you can indicate that on the online or paper application. You are not required to supply further documentation of your income.

Medloans Organizer and Calculator Organize and track your loan information Calculate custom repayment plans Estimate amount forgiven under PSLF NSLDS upload feature Dept of Ed Repayment Estimator Use actual loan data if you login or use estimates

AAMC FIRST for Medical Education https://www.aamc.org/services/first/ Federal Student Aid http://studentaid.ed.gov/ Your Loan Servicer http://studentaid.ed.gov/repayloans/understand/servicers IBR and PSLF http://www.ibrinfo.org/

Thursday, November 20 th at noon, S255 Guest Speaker: Financial Advisor from Renaissance Financial Website: http://www.renaissancefinancial.com/