Agenda Student Debt Portfolios Repayment Options Review –Additional Considerations Evaluating Financial Values and Skills Developing a Personal Repayment Strategy Knowing how to answer four key questions will lead the way for student loan borrowers –What do I owe? –What are my options? –What are my goals and objectives? –What do I need to do to reach these?
Repayment Timeline Complexities 1.Make payments (Full or Interest-only) 2.Deferment (UNEM or HRD?) 3.Forbearance Need to manage debt from this time period forward FPDDOSD Grad PLUS and Most Existing Consolidation loans OSD – Out of School Date EOG – End of Grace Period FPDD – First Payment Due Date Stafford loans (unconsolidated) and DL “In-school” Consolidation loans EOG FPDD OSD (6 month grace period) Perkins loans EOG FPDD OSD (9 month grace period)(may or may not have a grace period) OSD Private loans EOGFPDD 2007 Sallie Mae, Inc. All rights reserved.
Developing a Personal Repayment Strategy 2007 Sallie Mae, Inc. All rights reserved. IF YOUR FINANCIAL GOAL IS: CONSIDER THESE REPAYMENT STRATEGIES Minimize total repayment costs Select the repayment option with the highest monthly payment and shortest repayment term that you can afford. Pay some or all of the accruing interest during periods in which payments are not required. Prepay loans with highest interest rates first. Ensure all required actions are taken to earn borrower benefits, if available. Investigate loan forgiveness and cancellation options. Consolidate variable rate loans when interest rates are low. Assess the value of borrower benefits on your current loans that you may lose by consolidating. Minimize monthly payment (short-term) Investigate deferment options* to temporarily reduce or eliminate payments. Review graduated repayment plan options. You may be allowed to choose the appropriate length of time that your monthly payment is minimized. Investigate forbearance options to temporarily reduce or eliminate payments*. Minimize monthly payment (long-term) Pursue an extended repayment option if you are eligible. Consolidate eligible loans to obtain maximum repayment term. Minimize payments to multiple companies Consolidate eligible loans with a single lender. Consider obtaining a private consolidation loan with the lender of your federal loans (or vice versa). IF YOUR FINANCIAL GOAL IS: CONSIDER THESE REPAYMENT STRATEGIES Pay off higher interest rate loans quickly Make minimum payments on lower rate loans, adjusting your repayment plan if needed, and make the highest payments you can afford on higher rate loans. Review postponement options* on lower rate loans to allow you to make higher payments on your higher rate loans. Do not consolidate higher rate loans, or consider consolidating them separately from other loans. Manage private loan repayment Pay some or all of the accruing interest during periods in which payments are not required. Consult your private loan lender to evaluate repayment plans available. Consider reducing monthly payment amounts on federal loans to pay down private loans more quickly. Consider obtaining a private consolidation loan with the lender of your federal consolidation or vice versa. Applying with a cosigner and/or improving your credit score before consolidating private loans may result in better interest rates. Manage credit card repayment Consider reducing the monthly payment amounts on your federal loans to focus on paying off your credit cards. Stop or minimize the use of credit cards until your balance is low enough to pay-in-full every month. * Check with your lender to determine the potential effect that a deferment or forbearance may have on your ability to qualify for borrower benefits.
Questions? Repayment What do I owe? What are my options? What are my goals and objectives? What do I need to do to reach these?
“Running the Numbers” LoansBalanceInterest Rate Term (years) Monthly Payment Amount Interest Cost Total Repayment Amount Leave Loans Separate Consol Loan 1$70, %30$366$61,455$131,455 Stafford Loan S1$35, %10$403$13,334$48,334 Stafford Loan S2$35, %10$403$13,334$48,334 Cumulative Total$140,000$1,172$88,123$228,123 Consolidate Only New Loans Consol Loan 1$70, %30$366$61,455$131,455 Consol Loan 2 (S1 & S2)$70, %30$460$95,546$165,546 Cumulative Total$140,000$826$157,001$297,001 Consolidate All Loans Consol Loan 2 (All loans)$140, %30$829$158,135$298,135 Consolidation
“Running the Numbers” Consolidation and Extended Repayment Comparison LoansBalanceInterest Rate Term (years) Monthly Payment Amount Interest Cost Total Repayment Amount Leave Loans Separate Consol Loan 1$70, %25$400$49,725$119,725 Stafford Loan S1$35, %25$243$37,878$72,878 Stafford Loan S2$35, %25$243$37,878$72,878 Cumulative Total$140,000$886$125,480$265,480 Consolidate Only New Loans Consol Loan 1$70, %25$400$49,725$119,725 Consol Loan 2 (S1 & S2)$70, %25$490$76,753$146,753 Cumulative Total$140,000$890$126,478$266,478 Consolidate All Loans Consol Loan 2 (All loans)$140, %25$892$127,406$267,406