Trailblazer Camp 2007 They All Asked For You Loan Repayment and Responsibilities

Trailblazer Camp 2007 Federal Family Education Loan Program (FFELP)  Largest source of long-term, low-interest loans for undergraduate, graduate and professional students, and parents of dependent students  Subsidized Stafford Loan  Unsubsidized Stafford Loan  Parental Loans for Undergraduate Students (PLUS)  Consolidation Loans

Trailblazer Camp 2007 Subsidized Stafford Loan  Loan is need-based  Student must be enrolled at least half- time  Federal government pays all interest while:  Borrower is in school  During the grace period  During periods of deferment  Interest rate is variable, capped at 8.25%  Repayment begins 6 months after leaving school  10 year repayment period

Trailblazer Camp 2007 Unsubsidized Stafford Loan  Loan is not need-based  Loan may replace all or part of the student’s EFC  Must have completed the FAFSA  Student must be enrolled at least half- time  Borrower is responsible for interest at all times  Interest rate is variable, capped at 8.25%  Repayment begins 6 months after leaving school  10 year repayment period

Trailblazer Camp 2007 Plus Loans  Parent may borrow up to the Cost of Attendance less other financial aid received by the student  Must not have an adverse credit history  Interest rate is annually variable, capped at 9%  Repayment begins 60 days after the loan is fully disbursed  Borrower has 10 years to repay  Borrower must be the parent of a dependent undergraduate student

Loan Limits Dependent Undergraduate Students Borrower’s Academic LevelCombined Subsidized & Unsubsidized Freshman$3,500 Sophomore$4,500 Remaining Undergraduate$5,500 Independent Students or Dependent Students Whose Parents Are Denied Plus Loans Borrower’s Academic LevelSubsidizedUnsubsidizedTotal Freshman$3,500$4,000$7,500 Sophomore$4,500$4,000$8,500 Remaining Undergraduate$5,500$5,000$10,500 Graduate or Professional$8,500$10,000$18,500

Loan Limits Total Cumulative Loan Limits Dependent Student$23,000 Independent Undergraduate$46,000 Graduate Student$138,000 PLUS LoansNo Federal Limit

Trailblazer Camp 2007 Players in the Game  School  Your school must certify your eligibility to receive a student loan  Lender  A lender provides funds up to the amount approved by the school  You may select any participating lender  Servicer  A lender may contract with a servicer to administer your loan  The servicer may be responsible for disbursement, processing of payments, deferments and forbearances

Trailblazer Camp 2007 Players in the Game  Guarantor  Provides insurance to the lender that your loan will be repaid  You may select your guarantor  Secondary Market  A secondary market is a company which purchases student loans from a lender making funds available to the lender to make new loans to other students  If your loan is sold to a secondary market:  It will not change the conditions of the loan  You will be notified in writing  You will direct any future correspondence to the new holder

Trailblazer Camp 2007 Master Promissory Note  The MPN is a legal document which you sign to indicate your willingness to repay a student loan  The MPN will contain your Rights and Responsibilities as a borrower  The MPN may be used as a single year note or a multi-year note  If your school uses the MPN as a single year note, you must sign a new MPN for each new loan you borrow  If your school uses the multi-year feature of the MPN, you may receive multiple loans without signing a new MPN  You may be required to sign a new MPN if you change schools  You will be required to sign a new MPN if you change lenders

Trailblazer Camp 2007 Loan Facts  You may reduce or cancel your loan prior to disbursement  You may prepay your loan without penalty  You must maintain Satisfactory Academic Progress (SAP) as defined by the school to continue receiving loans

Trailblazer Camp 2007 Keeping in Touch  You must inform your lender if:  You change your name  Your address changes  Your phone number changes  You withdraw from school  You drop below half-time enrollment  You graduate  You change employment  You have a change in status which will affect your loan status  You are having difficulty repaying your loan

Trailblazer Camp 2007 Grace Period  You will have a grace period of six months before your loan goes into repayment  The grace period begins the day after you graduate, withdraw from school or drop below half-time status  You can only receive one grace period per loan

Trailblazer Camp 2007 Repayment  You are required to repay your student loans even if:  You do not complete your education  You do not find a job in your field of study  You do not find employment upon completion of your education  The education you received did not meet your expectations  Investigate electronic repayment options  Some lenders/servicers offer interest rate reductions for this option

Trailblazer Camp 2007 Repayment Options  Standard Repayment  Requires minimum monthly repayment of $50 per loan  Graduated Repayment  Smaller initial payments  Payments will increase over time  Income-Sensitive Repayment  Payments are annually adjusted based on income  Extended Repayment  For borrowers with more than $30,000 in loans  Maximum repayment period is 25 years  Payments may be graduated or fixed annually

Trailblazer Camp 2007 Loan Consolidation  Available after you complete your education  Allows you to combine loans from different lenders into a single loan  Allows you to reduce your monthly payments and extend your repayment period  The interest rate on the consolidation loan may be higher or lower than the interest rates of the individual loans

Trailblazer Camp 2007 Deferment  You may request a deferment:  If you are enrolled at least half-time at an eligible institution  For up to three years if you are seeking but unable to find full-time employment  For up to three years if you have an economic hardship  You must provide a completed Deferment Request form and evidence verifying your eligibility for deferment to your lender

Trailblazer Camp 2007 Forbearance  A forbearance can allow you to temporarily reduce or suspend making payments  You are responsible for all interest which accrues during the forbearance period  Interest may be paid as it accrues, or  Interest may be capitalized  Your lender may grant a forbearance if:  You experience economic hardship  You are affected by a local or national emergency, or natural disaster  You are affected by a military mobilization  You are serving in a position which may qualify you for loan forgiveness or partial repayment of your loan

Trailblazer Camp 2007 Discharge and Cancellation  Your loan may be discharged if:  You die  You are totally and permanently disabled  You are unable to complete your education because the school closed, falsely certified a loan, or fraudulently completed a loan application in your name  Bankruptcy generally does not result in the cancellation of a student loan

Trailblazer Camp 2007 Other Discharge/Repayment Options  Loan Discharge/Forgiveness Program for Teachers working in a low-income school  AmeriCorp service  Certain branches of the armed forces may repay a portion of your loans

Trailblazer Camp 2007 Consequences of Default  A loan is considered to be defaulted if you fail to make payments for 270 days  Defaulting on your student loan can result in:  Damage to your credit rating  Wage garnishment  Denial of professional licenses  Withholding of federal and state tax refunds  Liability for collection costs and legal fees  Referral of account to a collection agency  Denial of access to student transcripts  Loss of eligibility for future student financial aid