1. MoneyCounts: A Financial Literacy Series
Student Loan Repayment Strategies
Dr. Daad A. Rizk
Financial Literacy Manager
MoneyCounts: A Financial Literacy Series
128 H Outreach Building
University Park PA 16802

2. Learning Objectives Review the loan repayment process
Choose your repayment plan
To consolidate or not to consolidate? that is the question!
Budgeting and saving tips to meet your loan repayment
Strategy to protect your financial reputation
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3. Outstanding Student Debt !
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4. Key Terms
Terminology
Loan Servicer – DOE designated agency to service your loan
Total student loan debt amount – principle and interest
Monthly payment – depends on your payment plan
Interest rate – varies per loan
Grace period – waiting period to start repayment
Repayment Plan – various plans to choose from (7 plans)
Consolidation – combining all loans into a NEW loan
Deferment and forbearance – ways to help in difficult time
Defaulting – not being able to pay your loan
Loan forgiveness – must meet requirements for forgiveness

5. Exit Counseling Manage My Direct Loan [StudentLoans.gov]
You can get to your exit counseling from different websites
Penn State – e-Lion
Studentloans.gov
At the end of the exit counseling session, you will be asked for information that will be included as part of your federal student loan records. You must provide the following:
Name, address, address, and phone number for:
Your next of kin
Two references who live in the US
Your future employer (if known)

6. Where Do I Start? Penn State Student Aid Office Website
Loan Debt [Penn State Office of Student Aid]
Know Loan Servicer
NSLDS
National Student Loan Data System
Student Access: National Student Loan Data System
Manage My Direct Loan [StudentLoans.gov]

7. StudentLoans.gov

8. How much Do I Owe?

9. NSLDS - Loan Summary

10. Loan Servicer

11. When Do I Begin Repaying my Student Loans?
6 months after you leave college, graduate or drop below half-time enrollment (Grace Period)
Your loan servicer or lender must provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.
It is your responsibility to update your contact information with your loan servicer

12. How much will I Need to Pay?
Your bill will tell you how much to pay. Your payment (usually made monthly) depends on:
The type of loan you received
How much money you borrowed
The interest rate on your loans
The repayment plan you choose.

13. How Do I Make My Payment? National Student Loan Data System
The U.S. Department of Education (ED) uses several loan servicers to handle the billing and other services on loans for the William D. Ford Federal Direct Loan (Direct Loan) Program and for loans that were made under the Federal Family Education Loan (FFEL) Program and that ED later purchased. You’ll tell your loan servicer which repayment plan you’d like to choose.
National Student Loan Data System

14. Repayment Plan? Standard Repayment Plan Graduated Repayment Plan
Extended Repayment Plan
Income-based Repayment Plan
Pay As You Earn Repayment Plan
Income Contingent Repayment Plan
Income Sensitive Repayment Plan
Repayment Plans [Office of Federal Student Aid]

15. Payment Estimator

16. Payment Comparison

17. Payment Plan - 1

18. Payment Plan – 2

19. Payment Plan – 3

20. Repayment Estimator
Repayment Estimator [Office of Federal Student Aid]
Helps you compare repayments under each repayment plan
Helps you visualize length of time and total cost of each loan
Note: this does not include “PRIVATE LOANS”

21. Payments (mail or online)
There are several ways you can make your payments:
Electronic payments (receive your loan statement electronically, make payments on line)
Electronic Debiting (link the payment to your checking account)
Send a paper check in the mail to loan servicer (avoid late payment)

22. What Happens if I Don’t Pay My Student Loan Back?
Borrowers who default on their student loans are reported to credit bureaus
Your credit rating and future borrowing ability will be negatively impacted
Legal action can be taken to require payment through garnishment of wages and withholding of tax refunds
Student Loans are NOT dischargeable through bankruptcy!

23. Consolidation, Deferment & Forbearance
Consolidation is making all your loans into one, make one payment
Subsidized, Unsubsidized, PLUS (Student, not parent)
Do the math before you make the decision to consolidate or not to consolidate
Deferment and Forbearance
Gives you more time to get your financial hardship under control
You have to apply and qualify!

24. Loan Forgiveness Program
What is the Public Service Loan Forgiveness Program?
In 2007, congress created this program to encourage individuals to enter and continue to work full-time in public service jobs
Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers.
The cancellation of all or some portion of your remaining federal student loan balance. If your loan is forgiven, you are no longer responsible for repaying that remaining portion of the loan.

25. Strategy for Success
Increase your emergency fund from 10% to 20% of your net income
Start paying into the fund as soon as you start earning income (3 months payments)
Pay off credit card debt before you enter student loan repayment
Remain in touch with your servicer and notify them of any financial problems, do not default at any cost
Depending on your income level, speed pay your student loans so you can free money for other future commitment

26. Quick Tip to estimate payment
Loan Debt Repayment Chart
Amount Borrowed
Number of Payments
Estimated Monthly Payments*
Recommended Annual Salaries**
$ 5,000
120
$55.51
$8,326.50
$10,000
$111.02
$16,653.00
$15,000
$166.53
$24,979.35
$20,000
$222.04
$33,306.00
$25,000
$277.55
$41,632.50
$30,000
$333.06
$49,959.00
$35,000
$388.57
$58,285.50
$40,000
$444.08
$66,612.00
$45,000
$499.59
$74,938.50
$50,000
$555.10
$83,265.00
$55,000
$610.61
$91,591.50
$60,000
$666.12
$99,918.00

27. Compare Payments, Interest and Total Paid
Loan of $50,000
AGI $35,000
Repayment Plan
Term (years)
Monthly Payment
Interest Paid
Total Paid
Standard 10
$575
$19,048
$69,048
Graduated Standard
$395 (initial) $863 (final)
$22,778
$72,778
Graduated Extended 25
$283 (initial) $496 (final)
$62,770
$112,770
Extended
$347
$54,112
$104,112
Income-Contingent
15.8
$403 (initial) $443 (final)
$32,397
$82,397
Income-Based
$234 (initial) $477 (final)
$74,341
$104,812 ($21,722 forgiven)

28. Budgeting Tips Net Income 100% Saving 10%
Debt Repayment 15% (instead of 10%)
Housing & Utilities 30%
Food %
Car %
All Other Expenses 15%

29. SFEC The Student Financial Education Center (SFEC) offers
in-person financial education, from one student to another
Peer-to-Peer Financial Education
Walk in or make an appointment to talk with a Peer Educator
Check Website for Walk-in Hours
Location: 309 Paterno Library, in Schreyer Business Library
Contact us at

30. Resources – URL links
National Student Loan Data System Allows borrowers to look up information about their Title IV federal student loans FREE
Federal Student Aid Information Center/Student Aid on the Web Provides information on federal student loans FREE
Direct Loan Servicing Center Allows borrowers with Direct loans to make payments online and manage their account FREE
Department of Education’s Default Resolution Group Provides information on defaulted student loans FREE
Federal Direct Consolidation Loans Information Center Provides information on the Direct consolidation loan program FREE

31. Not a good strategy!

32. Good Strategy!
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33. MoneyCounts: A Financial Literacy Series
Thank You!
Comments and Questions
Dr. Daad A. Rizk
Financial Literacy Manager
MoneyCounts: A Financial Literacy Series
301 Outreach Building
University Park PA 16802