1. Income-based Repayment Plan and Public Service Loan Forgiveness MPTA, Western District Meeting February 11, 2016

2. DISCLAIMER The content contained in this presentation is based on my own experiences and interpretation of publicly available resources, except for the information that is drawn directly from my references. Nothing contained in this presentation should be interpreted to be legal, financial, or accounting advice. Products or vendors that are discussed are for illustration purposes only and should not be considered an endorsement. The content in this presentation is not necessarily the opinion of the Michigan Physical Therapy Association, the American Physical Therapy Association, the presenter’s employer, or the host of the event.

3. Our Goals 1.Refresh our understanding of the mechanics of a loan 2.Understand the qualifications for, mechanics of, and risks and rewards of the Public Service Loan Forgiveness (PSLF) program 3.Leave with an Action Plan for managing loans

4. Refresher on Loans What is a loan? An agreement between a lender and a borrower for the exchange of principal for a period of time until repayment is satisfied How is a loan recorded? Promissory note Why do we use loans? A way of collecting the benefits of an asset while deferring its cost

5. Public Service Loan Forgiveness Program What is it and why would I want to do it? Who can it help? How do I do it? Common Questions Where can I learn more?

6. PSLF: What is it and why would I want to do it? Program offered by the federal government College Cost Reduction and Access Act of 2007 Consolidate lenders and simplify payments Special access to income-based repayment plan Income-driven (IBR/ICR) plan is not a required repayment plan Factors in IBR payment formula: adjusted gross income, number of people in borrower’s household, federal poverty rate, 15% coefficient, and 10 yr standard payment 10 yr standard repayment plan is also acceptable Federal tax-free forgiveness of student loans after 120 qualifying payments By comparison, non-PSLF program forgiveness of the remaining balance after 25 years of repayment under the income-contingent and income-based repayment plans for borrowers who are not employed full time in public service jobs State tax laws may vary

7. PSLF: Who can this help? People with qualifying student loans working for qualifying employers who make qualified payments Qualifying loans Federal Direct loans Qualifying employment Full-time for a qualifying employer Does not include for-profit employers Qualifying payments Qualifying loans Made after 10/1/07 Under a qualified repayment plan No later than 15 days after due date While employed by a qualifying employer Does PSLF make sense for me?

8. PSLF: How do I do it? Check if your loans qualify Often, this will include consolidation, which can take a few months Apply Approval can take a few months Pay 120 qualifying payments Update your information each year Apply for forgiveness You must still be working for a qualifying employer to receive forgiveness

9. PSLF: Common Questions Does it matter if I stop being a PT? Not really, the more important factor is who your employer is Can the program be terminated? Congress can change its mind and terminate or limit the program Full termination is unlikely. Because politics. What if I change employers during the 120 month payment period? Not a problem as long as the employers qualify and the documentation is kept current What if I claim Family Medical Leave Act benefits or other leave? This time is still considered qualifying work as long as it is approved by your employer and properly documented

10. PSLF: Where can I learn more? PSLF Program https://studentaid.ed.gov/sa/sites/default/files/public-service-loan- forgiveness-common-questions.pdf https://studentaid.ed.gov/sa/sites/default/files/public-service-loan- forgiveness-common-questions.pdf https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public- service https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public- service https://myfedloan.org/manage-account/loan-forgiveness-discharge- programs/public-service-loan-forgiveness.shtml https://myfedloan.org/manage-account/loan-forgiveness-discharge- programs/public-service-loan-forgiveness.shtml Direct Consolidation Loans https://studentaid.ed.gov/sa/repay-loans/consolidation

11. ACTION PLAN Get your promissory note(s) and read them so you know what loans you have and what you agreed to See National Student Loan Data System https://www.nslds.ed.gov/nslds/nslds_SA/ Determine if the PSLF program makes sense for you Make a budget, stick to the budget Don’t manage to the payments, manage to your goals Be patient with the process Don’t be afraid of your debt It’s serious and can be damaging if managed improperly, but it doesn’t have to make you miserable; it’s a tool for reaching your goals

12. Resources FedLoan Servicing National Student Loan Data System Department of Education FinAid.org