FIRST Financial Information, Resources, Services, and Tools for Medical Education Money Management for Medical School Students Michael T. Goodman Associate Vice President Tulane University Financial Aid 8/5/10

© 2008 AAMC. May not be reproduced without permission. Session Outline Introduction Operations Managing student loans Prior loan deferments Master promissory note Alternative (non-federal) loan application Budgeting & billing Disbursements of aid Refunds for living expenses Reconsiderations Applying for Aid for 2011 summer Additional information Questions???

© 2008 AAMC. May not be reproduced without permission. Introduction Tulane University Health Sciences Center Office of Financial Aid Suite 1213, Tidewater Building 1440 Canal Street serving… School of Medicine School of Public Health & Tropical Medicine

© 2008 AAMC. May not be reproduced without permission. Operations Counselor by alphabet (last name): A-Hip: Carl Hudson, Counselor His-McC: James Bourgeois, Assistant Director McD-Z: Shirley Davis, Counselor Program Coordinator: Donna Fasullo

© 2008 AAMC. May not be reproduced without permission. Operations Hours: 9AM – 5PM, Monday – Friday Counselors available: M-W 1PM – 4PM Th & F 9AM – 1PM Recommend appointments Communications: (504) (504) fax Website:

© 2008 AAMC. May not be reproduced without permission. “An investment in knowledge always pays the best interest” - Benjamin Franklin

© 2008 AAMC. May not be reproduced without permission. Class of ’09 Indebtedness Approximately 86% of all 2009 medical school graduates had debt Nearly half (49.4%) had debt of $150,000 or higher All Schools Public Schools Private Schools Mean$136,374$129,852$146,156

© 2008 AAMC. May not be reproduced without permission. Tulane School of Medicine Class of ’09 Indebtedness Mean =$190,364 Approximately 81% of all 2009 Tulane medical school graduates had debt NOTE: These amounts INCLUDE student loan debt incurred prior to matriculation at medical school.

© 2008 AAMC. May not be reproduced without permission. Know the Details of Your Loans

© 2008 AAMC. May not be reproduced without permission. What is in Your Loan Portfolio? A student loan portfolio can be complex Each loan type has its own set of terms and conditions to consider Understanding your loan portfolio is the first step in effectively managing its repayment TIP: Know who your servicer is.

© 2008 AAMC. May not be reproduced without permission. Finding Your Loans To access provide your: Social Security # Date of Birth First 2 letters (last name) PIN # (

© 2008 AAMC. May not be reproduced without permission. Subsidized Loans Borrower is not responsible for interest while in school, grace and authorized deferments: Federal Direct Subsidized Stafford ($8,500) Federal Perkins ($8,000) Primary Care Loan (PCL) Federal Direct Consolidation Loans (underlying eligible subsidized loans)

© 2008 AAMC. May not be reproduced without permission. Unsubsidized Loans Borrower is responsible for all accrued interest (beginning the date of disbursement): Federal Direct Unsubsidized Stafford ($32,000) Federal Direct Grad PLUS (COA – other aid) Private Loans (COA – other aid) Consolidation (underlying unsubsidized loans)

© 2008 AAMC. May not be reproduced without permission. Relative Cost of Student Loans Relative cost refers to: Annual Interest Rate Borrower Benefits Capitalization Loan Fees

© 2008 AAMC. May not be reproduced without permission. Annual Interest Rates In school, Grace and Deferment Forbearance, Repayment Federal Direct Stafford Loans (disbursed on or after 7/1/06) 6.8% Fixed 6.8% Fixed Stafford Loans* (disbursed between 7/1/98 and 6/30/06 ) 1.88% Variable 2.48% Variable Federal Direct Grad PLUS Loans 7.9% Fixed 7.9% Fixed Perkins Loan / PCL / LDS 5.0% Fixed 5.0% Fixed Private Loans Typically Variable – Check the Promissory Note Institutional Loans Varies by Loan – Check the Promissory Note Consolidation Loan Fixed rate based on weighted average interest rate of underlying loans rounded up to nearest one-eighth of a percent (capped at 8.25%) * Variable, changes every July 1 based on the 91-day treasury bill

© 2008 AAMC. May not be reproduced without permission. Capitalization Addition of unpaid interest to the principal balance of a loan Increases your total amount due The less frequent the better TIP: Pay the interest accruing on unsubsidized loans while in-school-prior to capitalization.

© 2008 AAMC. May not be reproduced without permission. The Cost of Capitalization If a member of your family is able to financially help you through medical school, consider this: Request that they pay some of the interest accumulating on your student loans each month EXAMPLE: $400/mo towards student loan interest Total paid by family member = nearly $21k Total savings to you = $56k Assumptions: Based on $150,000 borrowed via Stafford. Average payments $400 (actually starts lower in 1 st year and gets progressively higher), Repayment begin 6-months after graduation. Savings is based on a 10-year repayment term.

© 2008 AAMC. May not be reproduced without permission. Student Loan Fees Federal Perkins: none Federal Direct Stafford:1.0%, yet 0.5% rebate, thus net is 0.5% example:borrow $10,000; net 0.5% fees: $10,000 x.005 = $50 $9,950 disbursed, yet repayment = $10,000* Federal Direct Grad PLUS: 4.0%, yet 1.5% rebate, thus net is 2.5% Private Alternative Loans: usually 0% front fees, varies on back-end fees, check with private loan lender

© 2008 AAMC. May not be reproduced without permission. Remember You Have Options

© 2008 AAMC. May not be reproduced without permission. Options During Residency There are many options with student loans during residency and beyond. To Postpone Payments – Grace – Deferment – Forbearance To Reduce Payments – Interest Only Payments – Change the Repayment Plan

© 2008 AAMC. May not be reproduced without permission. Postpone with Grace A period of time following graduation when you are not required to make payments on your loans: Subsidized loans are interest free to the borrower during grace Unsubsidized loans continue to accrue interest Automatic, you do not have to apply Availability and duration is based on the loan type

© 2008 AAMC. May not be reproduced without permission. Postpone with Deferment A period of time when a borrower may postpone payments Subsidized loans are interest free to the borrower during deferment Unsubsidized loans continue to accrue interest You must apply and meet certain criteria

© 2008 AAMC. May not be reproduced without permission. Postpone with Forbearance A period of time when a borrower may postpone or reduce payments due to financial hardship Interest accrues and capitalizes on all loans, subsidized and unsubsidized Application required periodically Use after grace and deferment TIP: This can be an expensive way to postpone payments, but a good way to avoid default.

© 2008 AAMC. May not be reproduced without permission. To Reduce the Payment Amount Interest Only Payment Option Pay only the interest accruing Contact your Servicer to request Change your selected Repayment Plan There are 5 repayment plans to choose from Your repayment plan can be changed anytime TIP: Select a repayment plan that complements your financial goals.

© 2008 AAMC. May not be reproduced without permission. The 5 Repayment Plans Standard (Level) Repayment Graduated Repayment Income Contingent Repayment (DL) Extended Repayment Income-Based Repayment Public Loan Forgiveness

© 2008 AAMC. May not be reproduced without permission. Loan Consolidation The term of a federal loan is usually 10-years Consolidation can combine one or more loans into a new loan with: A longer term A lower monthly payment A fixed interest rate TIP: The longer it takes to repay a loan, the greater the overall cost of the loan.

© 2008 AAMC. May not be reproduced without permission. Borrow and Pay Wisely

© 2008 AAMC. May not be reproduced without permission. How Will You Borrow? You do NOT have to borrow money just because you are eligible for it Know how much money you will need Decline any loans that exceed your need Borrow low rate loans BEFORE using higher rate loans TIP: Only borrow what you NEED. It will hurt to borrow what you WANT.

© 2008 AAMC. May not be reproduced without permission. Borrow Wisely The impact of borrowing $5,000 less each year will REDUCE The Monthly Payment By: $340 per month The Total Loan Cost By: $41,060 TIP: Have a spending plan (a.k.a. – a budget) and borrow less.

© 2008 AAMC. May not be reproduced without permission. Alternatives to Borrowing Scholarships Outside: Service based Tulane: Merit and Need-based Family support Loan forgiveness/repayment options

© 2008 AAMC. May not be reproduced without permission. How Will You Pay? BEFORE you select a repayment option, know what your financial goals are Lower monthly payments = higher interest costs Lower interest costs = higher monthly payments TIP: Financial goals will change during life, so your Repayment Plan should change too.

© 2008 AAMC. May not be reproduced without permission. Pay Loans Off Early You can prepay your federal loans without penalty If sending additional payments, SEND A check separate from regular payments A letter clarifying where the money should go – The loan # – The loan type TIP: Pay your most expensive debt off first!

© 2008 AAMC. May not be reproduced without permission. Your Rights Responsibilities Rights Written information Default information Copy of your prom note Repayment information Subsidies, grace, deferment, forbearance Prepay w/o penalty Responsibilities Must repay your loans Notify loan servicer of: changes in contact info ability to pay change in status or grad date Attend an exit interview before graduation

© 2008 AAMC. May not be reproduced without permission. Know the Consequences of... Delinquency (failure to pay on time) Negatively affects your credit Can lead to default Default (more than 270 days late) Negatively affects your credit Wages and tax returns can be garnished A lawsuit can be filed against you School can withhold records Student loans rarely discharged in bankruptcy

© 2008 AAMC. May not be reproduced without permission. Be Organized Keep all of your loan papers in one place Make files for each individual loan you receive Weed out dated materials Keep important contact info and bookmark sites TIP: Open and read your student loan mail!!

© 2008 AAMC. May not be reproduced without permission. Get Organized and Informed AAMC FIRST for Medical Education NEW: Medloans® Organizer and CalculatorMedloans® Organizer and Calculator Money Management for Medical Students Financial Literacy 101

© 2008 AAMC. May not be reproduced without permission. Have a Spending Plan

© 2008 AAMC. May not be reproduced without permission. Living on a Financial Aid Refund Determine your monthly allowance Know the # of months it must cover Divide the refund check by the # of months = your monthly allowance Be sure you can afford the necessities Consider prepaying rent for the entire period Determine what is left for the “wants” i.e. Entertainment, travel, Starbucks

© 2008 AAMC. May not be reproduced without permission. Budgeting & Billing You will receive by a monthly billing statement detailing charges and credits that occurred during the prior month School of Medicine’s tuition & fees: $23, tuition per semester $ 1, academic support fee per semester $ student activity fee per semester $ health services fee per semester $ rec. center fee per semester $25, = Total tuition & fees per semester Other possible charges: Books, Parking, Deming Pavilion, Health Insurance

© 2008 AAMC. May not be reproduced without permission. Budgeting & Billing Financial Aid Budget for the Academic Year: assumption: not residing with parents Tuition & fees:$50,959 Room & board:$12,948* Books & supplies$ 1,500 Transportation:$ 2,998* Miscellaneous:$ 3,924* TOTAL:$72,329 *$19,870 living expenses equates to $2,100/month

© 2008 AAMC. May not be reproduced without permission. Budgeting & Billing Financial Aid Award for the Academic Year: Federal Subsidized Stafford Loan:$ 8,500 Federal Unsubsidized Stafford Loan:$32,000 Federal Graduate PLUS Loan:$31,829 TOTAL:$72,329 Total financial aid = Total cost of attendance.

© 2008 AAMC. May not be reproduced without permission. Disbursements of Aid Loan period for : 08/2/10 to 05/27/11 Federal regulations require 2 disbursements of federal student loan funds during a loan period, half at start; remainder at mid-point (1/4/11). Federal Direct student loan funds arrive from DOE via electronic fund transfer (EFT) to Tulane. Federal Perkins Loan funds and institutional scholarship funds disburse in 2 equal installments at the start of each semester. All eligibility criteria must be satisfied prior to disbursement of aid.

© 2008 AAMC. May not be reproduced without permission. Disbursements of Aid Example of 2010 Fall Semester disbursements: Tuition & fees $25, = $25, Sub. Staff. ($ 4,228.75) Unsub. Staff. ($15,920.00) Grad. PLUS($15,517.12) = $35, = A/R balance ($ 10,186.37) + Refund $ 10, = A/R balance $ 0.00

© 2008 AAMC. May not be reproduced without permission. Disbursements of Aid Sign up to receive refunds via “direct deposit”: www2.tulane.edu/acctrec/ sign up for NetPay’s direct deposit Otherwise refund via “check”, pick up at: Financial Services Office 2 nd floor (Room 247) Lesa Williams Pick up location also used for: outside scholarship checks non-preferred loan lenders

© 2008 AAMC. May not be reproduced without permission. Eating Out? Pay Down Debt? Spring Break? Charge It? Coffee? Cable? Discretionary income will determine your lifestyle: Budget: Needs versus Wants

© 2008 AAMC. May not be reproduced without permission. Budget Reconsiderations Computer purchase (max. = $2,500) only allowed once during medical school career Combined MD/MPH degree program Special financial circumstances Receive any other financial assistance: outside scholarship and/or grant

© 2008 AAMC. May not be reproduced without permission. Applying for FAFSA School of Medicine Financial Aid Addendum Financial Aid Workshop TBA…February 2011

© 2008 AAMC. May not be reproduced without permission. Applying for 2011 Summer ONLY for MD/MPH Combined Degree Summer is processed separately FAFSA 2011 SPH&TM Summer Financial Aid Addendum (available 3/15/11) 2011 Summer Financial Aid Workshop TBA…late March 2011.

© 2008 AAMC. May not be reproduced without permission. Your residency program Your loan servicers’ and their websites FIRST for Medical Education Your family Your TUHSC Office of Financial Aid !! Support Along the Way

© 2008 AAMC. May not be reproduced without permission. DL MPN & Entrance Counseling Counseling and MPN for: Federal Direct Stafford Federal Direct Graduate PLUS

© 2008 AAMC. May not be reproduced without permission. Final Thoughts Accept your financial aid award! For Loans:Stafford; Grad PLUS; or non-federal (private) Complete all necessary promissory notes and entrance counseling on-line; Federal Perkins Accept award and e-sign Perkins promissory note; Good luck during your Tulane career! Questions???

FIRST Financial Information, Resources, Services, and Tools for Medical Education ©