STUDENT LOANS AND DEFAULT FOR EVERYONE WVASPA STUDENT LOAN BASICS AND DEFAULT 1

FINANCIAL AID BUDGET WVASPA STUDENT LOAN BASICS AND DEFAULT 2

IT STARTS WITH A FINANCIAL AID BUDGETS Tuition and fees  Full time by in state and out of state or some other method Room and board  Dependent student (under 24/not married/no children they support)  Independent student (over 24 or married or children/dependents they support) Books and supplies  Standard allowance for full time Transportation Allowance  All students regardless of close or far away from campus Personal Expense Allowance  Dependent student different from Independent student 3

FINANCIAL AID BUDGETS DEPENDENT STUDENTS INSTATE DEPENDENT OUT OF STATE DEPENDENT INSTATE INDEPENDENT OUT OF STATE INDEPENDENT Tuition and fees Room and board Books and Supplies 1135 Transportation allowance 1400 Personal and Miscellaneous TOTAL AID

THEN MAXIMUM STUDENT LOAN LIMITS PER YEAR BASED ON HOURS COMPLETED Total Dependent Loan$5500 if < 30 hrs total Total Dependent Loan$6500 if Sophomore loan status Total Dependent Loan$7500 if Junior loan status Total Dependent Loan$7500 if Senior loan status Total Independent Loan$9500 if <30 hrs total Total Independent Loan $10500 if Sophomore loan status Total Independent Loan $11500 if Junior loan status 1)Student loans require the student must be enrolled in 6 hrs or more at time of disbursement in a degree seeking program 2)Loan amount is lesser of remaining budget amount or loan limits above 5

THEN DETERMINE FEDERAL LOAN MAXIMUMS Total Limit for Loans Dependent Undergraduate Students $31,000 Independent Undergraduate Students $57,500 6

NOW APPLY THIS TO A STUDENT TO GET A FINANCIAL AID BUDGET (EXAMPLE IN STATE STUDENT) Sample Financial Aid Package (Fall and Spring) (any family size/income that has O EFC) Budget$8122 EFC - 0 Need based aid$8122 Pell grant -$5645 Student Loan or other aid $2477 Sample Financial Aid Package (Fall and Spring) (any family size/income that has O EFC) Budget $11056 EFC - 0 Need based aid $11056 Pell grant -$5645 Student Loan or other aid $5451 7

NOW APPLY THIS TO A STUDENT TO GET A FINANCIAL AID BUDGET (EXAMPLE FOUR YEAR INSTITUTION) Sample Financial Aid Package (Fall and Spring) (any family size/income that has O EFC) Budget$18,122 EFC - 0 Need based aid$18,122 Pell grant -$ 5,645 Student Loan or other aid $12,477 Sample Financial Aid Package (Fall and Spring) (any family size/income that has O EFC) Budget $21,056 EFC - 0 Need based aid $21,056 Pell grant -$5,645 Student Loan or other aid $15,451 8

WHERE DO I FIND OUT INFORMATION ABOUT MY SCHOOL? Your College Catalog or your College’s Financial Aid webpage will have your institutions budget information (most budgets assume students are full time) 9

STUDENT LOAN REPAYMENT COMPARISON BASIC REPAYMENT OPTIONS 10

BASIC REPAYMENT OPTIONS Standard – 10 years with same payment per month Extended fixed – 25 years with the same payment per month (loan must be over $30,000) Graduated standard - 10 years with loan amounts increasing on years 1,3,5,7,9) Graduated extended – 25 years with loan amounts increasing on all odd years (loan must be over $30,000) Income Contingent- Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of: 1)the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or 2)20% of your monthly discretionary income Income Based ( IBR)-Under this plan the required monthly payment will be based on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years up to 25 years. Pay As you Earn is the newest plan but has many date restrictions at this time 11

CONSOLIDATION LOANS A Consolidation Loan allows a borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments. 12

STUDENT BORROWED $15,000 TOTAL STUDENT IS FAMILY OF 4 HAS $20,000 AGI PlanMonthly payment# of paymentstotal interesttotal payback $15,000 loan/$20,000 AGI Family size 4 Standard$ years (120 payments)$5,714$20,714 Extended fixedN/A Graduated standard$99.57 (yr 1 and 2)10 years (120 payments)$7,289$22,289 $ (yr 3 and 4) $ (yr 5 and 6) $ (yr 7 and 8) $ (yr 9 and 10) Graduated extendedN/A Income Contingent$0 reviewed each year25 yrs (300 payments)$16669 $16,669 $ last months 13

STUDENT BORROWED $35,000 TOTAL STUDENT IS FAMILY OF 4 HAS $20,000 AGI $35,000 loan/$20,000 AGIFamily size 4 PlanMonthly payment# of paymentstotal interesttotal payback Standard$ years (120 payments)$13,333$48,333 Extended fixed$ years (300 payments)37,877$72,877 Graduated standard$ (yr 1 and 2)10 years (120 payments)$17,009$52,009 $ (yr 3 and 4) $ (yr 5 and 6) $ (yr 7 and 8) $ (yr 9 and 10) Graduated extended$ (yr 1 and 2)25years (300 payments)$43,932$78,932 $ (yr 3 and 4) $ (yr 5 and 6) $ (yr 7 and 8) **skipped 9 to 19 $ (yr 19 and 20) Income Contingent$ yrs (287 payments)$43,778$81,399 $ last month Income Based IBR$0 reviewed each yr25 years (300 payments)$16,699 $ last month 14

REPAYMENT PLAN SUMMARY Billy Borrower has $35,000 in Direct Loan debt at an interest rate of 3.86%. His income is $30,000, he is single, and he lives in Indiana. His income increases at a rate of 5% per year. Repayment Plan Initial Payment Final Payment Total PaidTotal Paid in Interest Total Time in Repayment Forgiveness 10-Year Standard $352 $42,244$7,24410 years- Graduated$196$590$44,032$9,03210 years- Extended$182 $54,624$19,61425 years- Extended Graduated $113$331$59,711$24,71125 years- Income-Based$160$352$48,557$13,55715 yr., 5. mo.$0 Pay As You Earn$106$352$51,283$20,75520 years$4,479 Income- Contingent $231$273$46,822$11,82215 yr., 5. mo.$0

GRACE PERIODS STUDENT LOAN REPAYMENT 16

GRACE PERIODS 17 After a student graduates, leaves school, or drops below half-time enrollment, there is a period of time before repayment begins. This is called the "grace period" and will be: Six months for a Federal Stafford Loan (Direct Loan Program ℠ or Federal Family Education Loan (FFEL) Program ℠) Nine months for Federal Perkins Loans

WHY GRACE PERIODS ARE IMPORTANT… 18 Of the borrowers who defaulted, most did not receive their full 6-month grace period Schools must learn when a borrower leaves campus and promptly report this to NSLDS During Grace Periods Student Loan Servicers Continue to establish a relationship with the borrower Update borrower contact information Promote self-service through the web Discuss repayment plan options Discuss consolidation options

POSTPONING REPAYMENT - DEFERMENT AND FORBEARANCE

DEFERMENT & FORBEARANCE REASONS Deferment Unemployment Economic hardship Graduate fellowship Rehabilitation training program Military In-school Forbearance Medical/dental internship residency Student loan debt burden AmeriCorps Teacher Loan Forgiveness DOD Student Loan Repayment Program National Guard Medical/other acceptable reasons

DEFERMENT AND FORBEARANCE Postpone making payments All deferments have eligibility criteria Some forbearances have eligibility criteria; others are at the lender’s discretion Most have time limits Unpaid interest capitalizes at end Interest does not accrue on subsidized loans during deferments Time does not count against repayment period

DELINQUENCY AND DEFAULT Delinquency begins on the day after due date when full payment not made Loan servicers will begin activities to try to prevent default, including contacting references and sending notices Loan servicers always try to keep the borrower making payments because it will save the borrower time and interest payments in the long run Servicers will provide deferment and forbearance options if needed Default occurs after 270 days of delinquency

CONSEQUENCES OF DEFAULT Reported to credit bureaus No more eligibility for federal student aid Loan immediately due and payable in full Lose eligibility for repayment plans and deferment or forbearance options Collection agencies will contact borrower Administrative wage garnishment Garnishment of tax refunds

3 YEAR COHORT DEFAULT RATE (CDR) National 13.4%14.7% West Virginia 14.1%16.2% National Public 4 year 7.9%9.3% West Virginia Public 4 year 10.4%13.2%

% OF BORROWERS 90+ DAYS DELINQUENT ON STUDENT LOANS

% OF BORROWERS 90+ DAYS DELINQUENT ON STUDENT LOANS BY AGE

3-YEAR DEFAULT RATES IN WV

STUDENT LOAN DEBT IN WV Average student loan balance 2012 is $22, % of student borrowers are 90+ days delinquent at the end of 2012 (only behind MS and PR) Federal Reserve Bank of New York

STUDENT LOAN DEBT IN WV Proportion of student loan borrowers 90+ days past due by age (2012) Federal Reserve Bank of New York age below 30age 30-39age 40-49age 50+ all age groups 21.1%31.1%29.8%16.0%24.4%

(Draft) Blue Ridge19.5%22.9%? Bridgemont27.0%24.2%? EasternNA0%? Kanawha Valley 23%18.3%? Mountwest24.9%32.2%? New River25.7%31.7%? PierpontNA29.2%? Southern22.1%27.3%? WV Northern27.6%31.8%? WVUP24.1%25.8%?

(Draft) Bluefield State17.7%23.5%? Concord16.0%19%? Fairmont State13.7%18.2%? Glenville State14.6%23.9%? Marshall9.9%13.6%? Shepherd6.8%10.7%? WV State14.1%16.4%? West Liberty15.4%14.5%? WVU7.6%9.8%? WVSOM0.8%0.6%?

32 CDRS: THE FORMULA Numerator Denominator Borrowers who entered repayment in one year, and defaulted in that year or the next. Borrowers who entered repayment during the one-year cohort period.

WHY IS THE DEFAULT RATE IMPORTANT? Schools play a critical role. Their contribution will yield improved results What is your motivation to help?  Protect federal program eligibility?  Improve your school’s default rate?  Save students from the consequences of default?

COHORT DEFAULT RATE Lagging indicator Takes a long time before you can assess if any initiatives are working Example – 2011 draft default rates were released to institutions February  Students were enrolled  Went into repayment  A school has until September 30, 2014 to have any impact on 2012 default rates

COHORT DEFAULT RATE Example – a student who leaves your campus today, goes into repayment 6 months from now is part of your FY2015 cohort and if went into default would be part of the draft rate you would receive… February 2018

CDRDenominator: Enter Repayment Numerator Default Publish RatesCohorts used for Sanctions FY 2009 (3-year) 10/1/08-9/30/0910/1/08- 9/30/11 September 2012 No Sanction FY 2010 (3-year) 10/1/09-9/30/1010/1/09- 9/30/12 September 2013 No Sanction FY 2011 (3-year) 10/1/10-9/30/1110/1/10- 9/30/13 September 2014 FY 09, FY 10, FY 11 FY 2012 (3-year) 10/1/11-9/30/1210/1/11- 9/30/14 September 2015 FY 10, FY 11, FY 12 FY 2013 (3-year) 10/1/12-9/30/1310/1/12- 9/30/15 September 2016 FY 11, FY 12, FY 13 FY 2014 (3-year) 10/1/13-9/30/1410/1/13- 9/30/16 September 2017 FY 12, FY 13, FY 14

APPROACHES Traditional approach - It is the financial aid offices responsibility Comprehensive approach – whole campus involved in:  Increasing program completion rates  Decreasing program completion time  Helping non-completers find a job  Implementing institutional policies that promote student success: before a student walks on campus until their loans are paid off 37

COMPREHENSIVE APPROACH Data driven decisions Looking at who is defaulting and who is repaying Not just who is defaulting but why are they defaulting Once you know who and why, then you can implement strategies that will make a difference 38

WHO ARE YOUR STUDENTS? ?% students place into developmental English ?% students place into developmental Math ?% students received GED or passed ATB ?% first generation college students ?% of Pell recipients have Zero EFC ?% are part-time students ?% retention Spring to Fall – ?% retention Fall to Fall

IDENTIFYING DEFAULT RISK Poor Educational Outcomes Poor Employment Outcomes Poor Repayment Outcomes

STUDENTLOANS.GOV Sign up for IBR, Pay As You Earn or ICR at StudentLoans.gov!

ESTIMATE YOUR STUDENT LOAN PAYMENTS Available at StudentLoans.gov.

RESOURCES Successfully Managing your student loans from : financialaidtoolkit.ed.gov/resources/ ​...student-loans.ppt

QUESTIONS??? Brian Weingart WV HEPC State Director of Financial Aid Programs Mary Blizzard Director of Financial Aid for BCTC, KVCTC (now Bridge Valley CTC), and MCTC Janet Fike VP Student Services WV Northern Community College