1. Senior Updates Financial Aid Office

2. KNOW YOUR LOANS NSLDS Access Federal Loan Servicers Repayment Options –Standard, Graduated, Extended, ICR, IBR, PAYE Loan Forgiveness Programs Loan Consolidation Payments and Power Pay Exit Counseling Bar Loans

3. Federal v. Private Loans Federal Loans –Originated and Serviced by Federal Government Loans from before 2010 may be serviced under FFEL Program and not the Direct Loan Program ***important for repayment and consolidation*** –Fixed Interest Rates, for loans after 2006 Private Loans –Guaranteed by Private Banks or Credit Unions –Loan Terms and Conditions: Determined by Lender, all different! –Cannot be included in loan forgiveness, special repayment programs, or discharged after death or permanent disability

4. NSLDS: Know Your Loans http://www.nslds.ed.gov/ Determine: –loan balances –servicer name and contact info Complete Exit Counseling

5. Loan Servicers: Federal Loans –Direct Loans William D. Ford Direct Loan Program (ACS) Phone number: 1-800-848-0979 Website: www.myedaccount.comwww.myedaccount.com –Fed Loan Servicing (PHEA) Phone number: 1-188-699-2908 Website: www.myfedloan.orgwww.myfedloan.org –Great Lakes Phone number: 1-800-236-4300 Website: www.mygreatlakes.orgwww.mygreatlakes.org –NelNet Education Planning and Financing 1-888-486-4722 Website: www.nelnet.comwww.nelnet.com –SallieMae Department of Education Loan Services Phone number: 1-800-722-1300 Website: www.salliemae.comwww.salliemae.com *** To Retrieve Information on Your Loan Servicer: www.nslds.ed.gov ***www.nslds.ed.gov

6. Federal Direct Loan Terms and Conditions Annual Maximum: $20,500 Lifetime Maximum: $138,500 –Includes Undergraduate Studies –Effective July 2, 2012: Graduate students are not eligible for new subsidized loans Subsidized Loans: Interest paid by Federal Govt. while student is enrolled at least half-time Unsubsidized Loans: Interest accrues on loan while student is enrolled at least half-time Interest Rate: Fixed 6.8% Loan Origination Fee: 1% –Loan Request: $1000, Funds Received for $990 Grace Period: 6 months –begins once the student graduates, withdraws, or drops below half- time enrollment

7. Direct Grad PLUS Loans Terms and Conditions Annual Maximum: Cost of Attendance minus all other aid Other Aid: Scholarships, Perkins loans, Federal Direct Loans, and Work- Study Lifetime Maximum: None- subject to credit approval If denied: request credit report from www.annualcreditreport.comwww.annualcreditreport.com Required: to fix credit problem and appeal credit decision or co-signer Interest Rate: Fixed 7.9% Loan Origination Fees: 4% Loan Request : $1000, Funds Received by Student: $960 No interest subsidy, interest accrues immediately Grace Period: None, but student requests a loan deferment Loan deferment: ends after student graduates, withdraws, or drops below half-time enrollment Student may request an additional 6 month deferment if disbursed on or after July 1 st, 2008

8. Repayment Plan Options Standard Repayment Graduated Repayment Extended Repayment –Fixed or Graduated Income Contingent Repayment (ICR) Income-Based Repayment (IBR) Pay as You Earn (PAYE)

9. Standard Repayment Plan Payment Amount: fixed, set by loan balance Minimum Payment: $50 Repayment Term: 10 years (plus deferments and forbearances) The good: 10 years of loan payments Least amount in interest paid Ideal: high income v. loan balance The bad: Highest payment amount

10. Graduated Repayment Plan Payment Amount: set by loan balance, increases with time Minimum Payment: Interest accrued between payments Maximum Payment: >3x the minimum payment Repayment Term: 10 years (plus deferments and forbearances) The good: 10 years of loan payments Less interest than other alternative repayment options Ideal: high income v. loan balance income increases with time The bad: Higher interest costs than standard

11. Extended Repayment Plan Required: >$30,000 in Direct Loan debt Repayment Term: up to 25 years (plus deferments and forbearances) Two payment options: 1.Fixed Similar to standard payment Pay same amount each month 2.Graduated Similar to graduated repayment plan Payments start lower and increase every 2 years The good: More affordable payments with longer term Ideal: medium income v. loan balance income increases with time The bad: Higher interest costs (longer the term, the more interest)

12. Income Contingent Repayment Plan (ICR) Not available for: –Parent Plus loans –Consolidation loans used to repay Parent Plus loans –Why to bring up: if you take loans out for your children Minimum Payment: calculated annually, based on AGI, family size, and loan balance –Lesser of: 20% of monthly discretionary income (based on AGI, family size, state’s income poverty level) OR Value of: payments based on a 12 year repayment term multiplied by income percentage factor determined by annual income –If payments < accrued interest each month, the unpaid interest is capitalized once a year Capitalization will not exceed 10% of original loan amount Interest will continue to accrue, limit on compounding Repayment Term: up to 25 years (plus deferments and forbearances) Discharge: any unpaid balance after 25 years

13. Income-Contingent Repayment Plan (ICR) The good: Limits loan payments to manageable payment amounts Discharge: 25 years of payments OR 10 years for Public Service Interest capitalization cap Increases flexibility to move to different repayment program Ideal: low income v. loan balance The bad: Higher costs if no discharge Discharged loan balance may be taxable Spousal income is included in calculations ***You will need to consolidate loans to DL if you have FFEL loans***

14. Income-Based Repayment Plan (IBR) Available for: all Stafford, Graduate PLUS, Consolidation loans (DL or FFEL) –Not available for: defaulted loans, Parent Plus loans, or consolidated Parent Plus loans Minimum Payment: –calculated annually, documentation submitted annually –Set at 15% of discretionary income (AGI & family size) –Requires “partial financial hardship” IBR payment > standard repayment –While payments are capped at the 10-year standard repayment, payments are made for 25 years –If payments do not cover accrued interest, the federal government will pay interest on subsidized loans up to 3 years –Borrower is responsible for ALL accrued interest on unsubsidized loans –ALL interest will be capitalized if IBR is left or there is no partial financial hardship Repayment Term: up to 25 years (plus deferments and forbearances) Discharge: any unpaid balance after 25 years or 10 years for public service

15. Income-Based Repayment Plan (IBR) The good: –Likely to be lowest payment –Ability to discharge loans after 25 years of payments –10-year public service loan forgiveness program –Ideal: low income v. loan balance and public service work –Spouse student loans can be included in calculation The bad: Possibility of increased interest payments No capitalization cap on interest Documentation is submitted annually to servicer Discharged value may be taxable Spousal income is used in calculation

16. Pay as You Earn (PAYE) Available for Direct Loans: all Stafford, Graduate PLUS, Consolidation loans New Borrower Requirement: No loan balances prior to 10/01/2007 and need new loan after 10/01/2011 Not available for: defaulted loans, (consolidated) Parent Plus loans, FFEL loans Minimum Payment: –calculated annually, documentation submitted annually –Set at 10% of discretionary income (AGI & family size) –Requires “partial financial hardship” PAYE payment < standard repayment –While payments are capped at the 10-year standard repayment, payments are made for 20 years –Limits on capitalized interest: no more than 10% of original loan balance –Interest capitalizes when there is no partial financial hardship Repayment Term: up to 20 years (plus deferments and forbearances) Discharge: any unpaid balance after 20 years or 10 years for public service

17. PAYE, continued The good: –Likely to be lowest payment –Ability to discharge loans after 20 years of payments –10-year public service loan forgiveness program –Ideal: low income v. loan balance and public service work –Spouse student loans can be included in calculation The bad: Only available for a limited number of borrowers No loans before law school: eligible Loans before law school: probably not eligible Possibility of increased interest payments Documentation is submitted annually to servicer Discharged value may be taxable Spousal income is used in calculation

18. Monthly Payment Plan Example Interest Rate: 6.8% Loan Amount: $165,000 Adjusted Gross Income (AGI): $75,000 Marital Status: Single Family size:1 State of Residence: Continental U.S. Calculator Inputs: Calculator Outputs: Repayment Plan Type Term in Years Initial Monthly Payment Total Payment (Interest + Principal) Standard10$1,898.83$227,859.60 Extended -fixed -graduated 25 $1,145.22 $935.00 $343,566.00 $372,141.74 Graduated10$1,303.79$240,166.70 Income Contingent 15$1,068.50$280,156.14 Income Based 25$735*depends Pay as You Earn 20$385*depends

19. Joint Income Issues for Married Couples PAYE, ICR, and IBR: use combined income Test: file jointly or separately? –Is increased tax liability less than or greater than increased student loan payment –Determine by: Calculate tax liability as joint & as separate Calculate loan payment as joint & as separate Compare annual costs

20. Problems with Making Payments What to do when you cannot make payments: –Step 1: Call your servicer! –Step 2: Request Income-Based Repayment and submit Alternative Income Documentation –Step 3: Ask for special deferment –Step 4: Ask for a hardship forbearance

21. Deferments and Forbearances Deferment: payments are temporarily delayed –Government pays interest on subsidized Stafford and Perkins loans –Interest accrues on unsubsidized Stafford and Grad Plus loans –Grounds: in-school half-time, unemployment (3 years), economic hardship, Peace Corps, or active duty in military Forbearance: payments are suspended for up to 12 months –Interest accrues on all loans –Discretionary or Mandatory Discretionary: financial hardship or illness Mandatory: medical residency program, national service program, teaching service programs

22. Public Service Loan Forgiveness Program What: Discharge of Direct Loans –DL Loans including Grad Plus loans –Perkins loans, must be consolidated with DL –Rehabilitated defaulted loans –No FFEL loans: consolidate FFEL loans with DL When: After 120 qualifying monthly payments –Qualifying payments need not be consecutive Qualifying payments: made while employed FT by a public service organization –Qualifying employment need not be consecutive –Excluded: time spent in deferment or forbearance –Included: when calculated payment is zero Pair with: IBR; ICR; Standard Repayment Plan; any other Direct Loan repayment plan Waived balance is not currently taxable

23. Public Service Loan Forgiveness Program Required: FT public service job with PSLF eligible employer PSLF eligible employers: Public sector employers Federal, state, local, or tribal agency or entity Private non-profit employers that is 501(c)(3) Except: partisan political organizations, labor unions, Except: organizations engaged in religious activities If your job duties are related to religious instruction, worship services, or any form of proselytizing So: individuals working at religiously-affiliated non-profit organizations who perform at least 30 hours of non-religious activities are eligible for PSLF Private employer: if it is non-profit, is not an excluded group, and provides one or more public services Examples: military, law enforcement, public interest, early childhood, public health, education

24. Consolidation www.loanconsolidation.ed.gov -Use: Centralize loans to 1 payment when there is multiple servicers or loan programs (DL and FFEL) -Necessary if aiming for loan forgiveness programs -Timing: -~1 month before you enter repayment -Except: working in non-profit FT job: immediately *think about waiving grace period* -Loans: Stafford loans, Plus loans, Perkins Loans, SLS loans, old consolidation loans -PLUS loans: Graduate or Parent, if borrower is parent -Downside: loss of borrower benefits -Perkins loans: loss of interest subsidy in deferments, loss of cancellation benefits, decreased grace period -Principle rebates, interest rate discounts

25. Power Pay/Debt-Snowball Debt reduction strategy where extra payments are made to highest interest loan Once 1 debt is paid off, that payment is moved to the next highest interest rate debt Use with student loans strategically: –Likely debt with highest interest rate –If on IBR, consider: saving for retirement or pay other debt first

26. Exit Counseling Why complete it? –Required for graduation and to receive diploma –Information includes rights and responsibilities as a student loan borrower –Provides useful tips and information to help manage loans

27. Bar Study Loans Recommend: Check with Financial Aid Office to maximize federal aid package first Private loans used for: –bar prep courses –living expenses between graduation and bar exam Subject to credit qualification May require co-signer Cannot be included in IBR calculations or loan forgiveness programs More information, including list of potential lenders: http://web.wmitchell.edu/financial-aid/bar-study-loans / http://web.wmitchell.edu/financial-aid/bar-study-loans /

28. Helpful Websites www.studentaid.ed.gov www.finaid.org www.nslds.ed.gov www.askheatherjarvis.com www.annualcreditreport.com IBR Website & Calculator http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp www.ibrinfo.org Repayment Plans & Calculator http://studentaid.ed.gov/PORTALSWebApp/students/english/OtherFormsOfRepay.jsp

29. Questions?