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Student Loans

Mary Anne Hunter College Access Team CO Dept. of Higher Education. Student Loans. Stafford Loans. Low fixed interest rates – 1% loan fee 6 month grace period In student’s name No credit check/income verification. Subsidized Stafford Need -based Interest Rate = 3 .40% (2011-12)

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Student Loans

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  1. Mary Anne Hunter College Access Team CO Dept. of Higher Education Student Loans

  2. Stafford Loans • Low fixed interest rates – 1% loan fee • 6 month grace period • In student’s name • No credit check/income verification Subsidized Stafford • Need-based • Interest Rate = 3.40%(2011-12) • Government pays interest while in school & during grace period Unsubsidized Stafford • Not need-based • Interest rate = 6.8% • Student pays interest/accrues while in school & during grace period • Can pay quarterly or capitalize

  3. Federal Perkins Loans • Awarded directly by college – not all participate • Fixed interest rate of 5% • Based on exceptional financial need • 9 month grace period • Award $ vary – up to $5,500 p/yr • Repay college directly

  4. Federal Parent Loan for Undergraduate Students PLUS Loans • In parent name - for parents of undergrad. dependent students • Fixed interest rate of 7.9% • Credit check required • If denied, student is eligible for additional unsubsidized Stafford allowance • Repayment begins 6 weeks after the loan is fully disbursed – or - parent may defer repayment: • while the student on whose behalf the parent borrowed the loan is enrolled on at least a half-time basis, and • for an additional six months after the student ceases to be enrolled at least half-time. • $ = up to unmet need • Fees - up to 4%

  5. Private/Alternative Student Loans • Higher interest rates and variable (Prime/LIBOR) • Based on credit score & income = parents typically co-sign • Interest rate & fees determined by credit score • Less favorable repayment & deferment terms than Federal student loans • Use federal loans first • Consider PLUS/home equity loans • Talk to financial aid office first

  6. Annual Loan Limits TOTAL/AGGREGATE LIMIT = $31,000

  7. Annual Loan Limits TOTAL/AGGREGATE LIMIT = $57,500

  8. Examples of Monthly Payments • Examples of Monthly Payments based on 6.8% with • 10 year repayment period: • $3,500 $50 per month • $5,000 $56 per month • $7,000 $78 per month • $10,000 $111 per month • $15,000 $167 per month • $25,000 $278 per month • $45,000 $500 per month

  9. SLOPE Calculator Student Loans Over Projected Earnings

  10. CAREER & SALARY $25,330/$44,830

  11. INTEREST RATES & TERMS

  12. HOW MUCH DO YOU PLAN TO BORROW?

  13. Total Owed – Payments - Total Paid

  14. What Slope are YOU On? Green– comfortable/safe Blue– good (money) skills Black - dangerous/risky

  15. Your Monthly Income What’s Coming In

  16. Your Monthly Expenses What Goes Out

  17. What Does That Leave You?

  18. Loan Repayment Options Standard Repayment  Fixed amount each month  10 year repayment period  Higher monthly payments than other plans  least total interest paid Graduated Payments  Start low - Increases every 2 yrs  Up to 12 - 30 yr repayment period  Minimum payment = amount of accrued interest/$25  Results in more total interest paid Income Based  Capped at affordable $ - % of discretionary income\fam size  Up to 25 year repayment  Possible balance cancellation  Submit annual documentation  Results in more total interest paid Extended Payments  Smaller fixed monthly payments  Up to 12 - 30 year repayment  Must have >$30,000 outstanding  Results in more total interest paid

  19. Example Repayment Plans From: Finaid.org

  20. Save – Pay on time – Protect your Credit Rating • DON’T BORROW MORE THAN YOU REALLY NEED • Set up automatic direct debit from checking/savings account for monthly loan payments • Many lenders offer discounts for auto-debit payments: • Federal loans offer a 0.25% interest rate reduction • Private student loans offer a 0.25% or 0.50% interest rate reduction • Auto-debit eliminates missed/late payments = good repayment record • Deduct up to $2500 of student loan interest payments from taxes – you can’t be claimed by parents From Fastweb.org

  21. Postponing Repayment Deferment • A temporary suspension of loan payments for specific situations (i.e. reenrollment in school, unemployment, economic hardship) • Can receive a deferment for certain defined periods. • You don’t have to pay interest on Subsidized Stafford Loans during deferment - Must pay interest on Unsbubsidized • Must apply to loan servicer (the organization that handles your loan) • Must continue to make payments until notified of deferment approval

  22. Postponing Repayment Forbearance • A temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty • Can receive forbearance if not eligible for a deferment • Interest continues to accrue (whether subsidized or unsubsidized) - you’re responsible for repaying it. • Can be granted in intervals of up to 12 months at a time for up to 3 years • Must apply to your loan servicer and continue making payments until notified your forbearance has been granted

  23. Consequences of Default • Reported to credit bureau (borrower & cosigner) • Loan becomes immediately due in full • Ineligible to receive state and/or federal financial aid • Federal and state income tax refunds withheld (borrower & cosigner) • Wages may be garnished • Assigned to collection agency or federal government • Borrower responsible for attorneys fees and collection costs • Suspension of professional license or certificate

  24. Information About My Loans • Total Loans – balance owning – lender(s) • Repayment Options • Trouble Making Payments • Consolidation • Default • Money Saving Tips

  25. www.nslds.ed.gov

  26. Your Loan History

  27. www.StudentLoans.gov

  28. Loan Forgiveness Programs

  29. Federal Perkins Loan Teacher Cancellation Up to 100% cancellation (discharge) if served full -time in public or nonprofit elementary or secondary school system as a teacher: In a school serving students: • from low-income families • special-education teacher - infants, toddlers, children, or youth with disabilities In the fields of: • mathematics • Science • foreign languages • bilingual education • or in any other field of expertise determined by a state education agency to have a shortage of qualified teachers in that state

  30. Perkins Loan Cancellation Rates Up to 100 percent of the loan may be canceled, including the interest that accrued during the year, for teaching service, in the following increments: • 15 percent canceled per year for the first and second years of service, • 20 percent canceled for the third and fourth years, and • 30 percent canceled for the fifth year

  31. Stafford Loan Forgiveness Program for Teachers • Teach full-timefor five consecutive, complete academic years • Certain elementary and secondary schools that serve low-income families and meet other qualifications • May be eligible for forgiveness of up to a combined total of $17,500 in principal and interest on their FFEL and/or Direct Loan program loans • Must have an outstanding balance on FFEL or Direct Loan • Amount of forgiveness based on completion year and certification by Chief Administrator Officer of school www.studentaid.ed.gov/PORTALSWebApp/students/english/cancelstaff.jsp?tab=repaying

  32. Public Service Loan Forgiveness (PSLF) • Created to encourage individuals to enter and continue to work full-time in public service jobs • You may qualify for forgiveness of the remaining balance due on your eligible federal student loans after you have made 120 payments on loans under certain repayment plans while employed full-time by certain public service employers • Only for non-defaulted loans made under the Direct Loan Program • Federal Family Education Loans (FFEL) may qualify for forgiveness if they are consolidated into a Direct Consolidation Loan

  33. Eligible Public Service Jobs • emergency management • government (excluding time served as a member of Congress) • military service • public safety and law enforcement (police and fire) • public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations) • public education • early childhood education (including licensed or regulated childcare, Head Start, and State-funded prekindergarten) • social work in a public child or family service agency • public services for individuals with disabilities or the elderly • public interest legal services (including prosecutors • public defenders and legal advocacy on behalf of low-income communities at a nonprofit organization) • public librarians, school librarians and other school-based services, and employees of tax exempt 501(c)(3) organizations • Full-time faculty at tribal colleges and universities; faculty teaching in high-need subject/shortage areas (including nurse faculty, foreign language faculty, and part-time faculty at community colleges)

  34. Other Loan Forgiveness Programs The Nursing Education Loan Repayment Program • helps alleviate the critical shortage of registered nurses currently experienced by certain types of non-profit health care facilities by helping nurses working at them to repay their student loans. • In exchange for two years of service, participants receive 60 percent of their total qualifying nursing education loan balance The Federal Student Loan Repayment Program • allows federal agencies to establish loan forgiveness programs to help recruit and retain • agencies make payments directly to the loan holder - payments represent taxable income to the • employees must agree to work for the agency for at least 3 years.

  35. Helpful Websites • www.StudentLoans.gov • www.Studentaid.ed.gov • www.Loanconsolidation.ed.gov • www.Finaid.org

  36. www.educationcents.org

  37. Questions?

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