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UCSD Health Sciences Financial Aid Ana Nastich Financial Aid Counselor

STUDENT LOAN MANAGEMENT & REPAYMENT Strategies. UCSD Health Sciences Financial Aid Ana Nastich Financial Aid Counselor. Educational debt . Average Indebtedness - Class of 2012. * Per American Association of Colleges of Pharmacy – Pharmacy Graduating Student Survey 2011

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UCSD Health Sciences Financial Aid Ana Nastich Financial Aid Counselor

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  1. STUDENT LOAN MANAGEMENT & REPAYMENT Strategies UCSD Health Sciences Financial Aid Ana Nastich Financial Aid Counselor

  2. Educational debt Average Indebtedness - Class of 2012 *Per American Association of Colleges of Pharmacy– Pharmacy Graduating Student Survey 2011 Please note: 2011 UCSD Average Indebtedness was $86k

  3. Pharmacist national wages Average Pharmacist salary is $112,160 Top paying industries Top paying states *Per U.S. Bureau of Labor Statistics - Occupational Employment Statistics

  4. topics • KNOW YOUR LOAN PORTFOLIO • HOW TO POSTPONE PAYMENTS • REPAYMENT PLANS • OTHER CONSIDERATIONS • QUESTIONS

  5. KNOW YOUR LOAN PORTFOLIO

  6. Finding your Federal Loans www.nslds.ed.gov

  7. Knowing your servicer **For Perkins and HPSL Loans Only!

  8. In school, Grace & Deferment Forbearance & Repayment Interest Rates

  9. Repayment Strategy Prioritize repayment efforts – pay the most expensive debt FIRST!

  10. Capitalization Addition of unpaid interest to the principal $182,670 $160,000 $22,670 + = Principal Interest Larger Principal

  11. Repayment Strategy Pay the interest on unsubsidized loans PRIOR to capitalization!

  12. HOW TO POSTPONE PAYMENTS

  13. Grace Period - A period after graduation when payments are not required • Automatically granted on sub and unsub loans and Direct PLUS Loans disbursed on or after July 1, 2008 - Interest does not accrue on subsidized loans - Sub and unsub loans – 6 month period - Perkins loan – 9 month period

  14. Deferment - A period when payments are not required - Must apply and qualify - Interest does not accrue on subsidized loans - Unsubsidized loans continue to accrue interest

  15. Forbearance - A period when payment are not required - Must request from the lender/servicer - Interest accrues on sub and unsub loans - Many types (administrative, discretionary, mandatory)

  16. REPAYMENT PLANS

  17. Repayment plans Determines the payment amount and interest cost

  18. Standard repayment plan • Monthly payment stays essentially the same throughout repayment • 10 year repayment period • Automatically selected if you don’t choose another plan BEST OPTION FOR: Borrowers whose primary goal is to minimize the repayment time period and the total interest cost of their loan debt

  19. Extended repayment plan • Allows up to 25-year repayment term • Low monthly payment • Total loans must be more then $30,000 BEST OPTION FOR: Borrowers who need long-term repayment relief

  20. Graduated repayment • Monthly payment adjusted at one or more predefined intervals • Payment must cover accruing interest • Number of intervals and frequency of adjustment can vary by lender BEST OPTION FOR: Borrowers seeking short-term repayment relief from high loan payments but expect an increase in their income in the next few years

  21. Repayment Fact The lower the monthly payment, the higher the total interest cost!

  22. Income-based repayment plan • Monthly payments are based on household AGI and family size • Partial interest subsidy during the first 3 years • Unpaid interest does not capitalize when • annual paperwork is filed timely and borrower demonstrates a PFH (partial financial hardship) BEST OPTION FOR: Borrowers that have a lower income or are experiencing a financial hardship and need assistance making their monthly payment

  23. More on IBR • After 25 years of qualifying payments, any remaining debt will be forgiven • You may choose IBR if your federal student debt is high relative to your AGI • How to apply: • Contact your lender to request • Inform lenders, annually, of family size • Give lenders permission to access tax returns • Demonstrate a Partial Financial Hardship

  24. IBR Formula • Payment based on the 15% of income that exceeds 150% of the poverty line for a borrower’s family size • Example: Family size: 1 (single) 150% of 2010 Poverty Guideline: $1354 Income: $47,716 ($3976 monthly)

  25. IBR Formula Monthly Income 150% of poverty line - x Available income Monthly Payment

  26. IBR Monthly Payment Amounts as of January 2012 http://studentaid.gov

  27. IBR calculators www.finaid.org www.IBRinfo.org

  28. Income-contingent repayment plan • Monthly payments are based on household AGI, family size and your total Direct Loan debt • You do not have to demonstrate ‘partial financial hardship’ • Monthly payment must cover at least the interest due • Payment generally higher than under IBR BEST OPTION FOR: Borrowers with income too low to afford payments under other repayment plans

  29. Repayment plans $2,210/mo $1,300/mo Based on the original principal balance of $160k entering repayment after 4 years of Pharm school and 6 months grace $1000/mo $610/mo $390/mo

  30. Repayment Strategy To reduce the cost of student loans – make extra payments!

  31. OTHER CONSIDERATIONS

  32. Consolidation

  33. Consolidation

  34. Special Consolidation

  35. Loan Forgiveness

  36. Public Service Loan Forgiveness Eligible Loans - Federal Direct Sub and Unsubsidized Stafford - Federal Direct Consolidation - Federal Direct Grad PLUS - Federal Perkins

  37. Public Service Loan Forgiveness Qualifying payments 120 payments to Direct Loans made under - Income-Based Repayment (IBR) - Income Contingent Repayment (ICR) - Standard 10-year Repayment While simultaneously working in public service

  38. Public Service Loan Forgiveness Qualifying work: Full-time (30+hours/week) - Non-profit, tax exempt, 501(c)(3) organization* - Federal, state, local or tribal government - Military Service - Private organization providing public service *Includes most medical schools and teaching hospitals

  39. Private Loans

  40. Keep an Eye on your Credit Report • Late payments, going over credit limits and having too many open accounts will lower your credit score • Credit score affects your ability to borrow more, get housing or a job • Protect your credit Free Credit Report www.annualcreditreport.com

  41. Avoid Delinquency & Default • Call your lender as soon as you know you are ‘in trouble’ • Federal Student Loans DO NOT qualify for bankruptcy • Federal Student Loans are forgiven only in the case of death or permanent disability

  42. Useful Websites

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