Loan Counseling Tools

1. Session 15 Loan Counseling Tools Chuck Hirman | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals

2. Why is Loan Counseling Important? • Student loan default rate is 13.7% • Student loan debt now exceeds $1 trillion • Financial literacy is key to successful repayment Our Vision for Loan Counseling "With college graduation around the corner, thousands of students will soon start to repay their loans, and we want to help them select the repayment plan that makes sense for them. These tools give students the information they need to understand how to better manage their student loan obligations. Our goal is to make the entire challenge of college costs much less daunting, and these tools are additional steps in that direction.” - U.S. Secretary of Education, Arne Duncan

3. Benefits of Expanded Loan Counseling • Provides broader financial literacy information to borrowers with personalized, visual, and interactive content • Enhanced borrower information for a more informed financial decision • Centralization of counseling reduces borrower confusion and provides a consistent experience

4. Agenda • Counseling Requirements and Overview • StudentLoans.gov Common Features Entrance Counseling PLUS Counseling Financial Awareness Counseling Exit Counseling • School Functionality • Resources Agenda

5. Counseling Requirements - Regulations • Entrance and Exit counseling are required by regulations, 34 CFR 685.304, “Counseling Borrowers” • PLUS (credit) counseling is now required in certain circumstances, by regulations, 34 CFR 685.200(b)5 and 685.200(c)(1)(viii)(A)(2) and (3) • See Federal Register posted 10/23/2014 – Final Regulations Strengthening and Improving the William D. Ford Federal Direct PLUS Loan Program • Regulations specify: • who must complete entrance, PLUS and exit counseling • when the counseling must be completed • what the required topics of each counseling type must include

6. Counseling – When, How • Entrance and Exit counseling - can be provided to the borrower online via an interactive electronic vehicle (e.g., StudentLoans.gov), in person, or on a signed and returned written form • Entrance counseling - must be completed prior to the first disbursement of a loan unless that student has received a Subsidized, Unsubsidized, or graduate/professional PLUS loan previously • PLUS counseling - must be completed in StudentLoans.gov prior to the first disbursement for PLUS borrowers with denied credit who are approved based on extenuating circumstances or who obtain an endorser • Exit counseling - must be conducted shortly before the student ceases at least half-time study

7. Counseling in StudentLoans.gov StudentLoans.gov provides ALL Federal Student Aid electronic loan counseling at one location: • Entrance Counseling • Subsidized/Unsubsidized • Graduate and professional student PLUS • PLUS (credit) Counseling • Will begin with COD Release 14.0 in late March 2015 • Financial Awareness Counseling • Recommended but not a regulatory/statutory requirement • Exit Counseling • NSLDS continues to provide detailed exit counseling reports

8. Counseling in StudentLoans.gov • All counseling is now available in Spanish • Added emphasis on exhausting federal student loans first, before private loans • Clear steps borrowers can take to control their disbursements • More information on interest, especially capitalized interest

9. StudentLoans.gov – pre/post sign-in Without logging in user can complete a “demo session” of any of entrance, financial awareness, or exit counseling • No NSLDS information will be populated • No schools will be notified • No completion documentation produced Once logged in users can complete counseling sessions with current loan data provided, they can view completed counseling sessions, or they can send counseling results to additional schools

10. StudentLoans.gov – Signing in Authentication is via the user’s FSA ID – username, password Replaces PIN starting late Spring 2015. Sign in with FSA ID Counseling Demo

11. StudentLoans.gov – Welcome Page Once logged in users can view completed counseling sessions -or- begin a new session. Note: Regarding PLUS counseling: we’re working on it. Screen prints not yet available.

12. Repayment Estimator Repayment Estimator links from the Welcome Page.

13. Repayment Estimator • Addition of average loan balances • Share functionality for Twitter and Facebook

14. StudentLoans.gov – Landing Page Counseling landing page provides borrowers with information on selecting the type of counseling they wish to complete.

15. Counseling – Schools to Notify Entrance, Financial Awareness, and Exit Counseling pull data from NSLDS of school(s) associated with a borrower.

16. Check Your Knowledge “Check Your Knowledge” quizzes appear throughout each topic, except when viewing Demo screens. Also, “Did You Know?” and “Remember!” boxes are seen throughout.

17. StudentLoans.gov - Topics

18. Understand Your Loans Entrance Counseling, Financial Awareness Counseling, Exit Counseling • Detailed list of loans pulled from NSLDS • Basics: principal amount, interest, capitalized interest • Things the borrower needs to know about the MPN, half-time enrollment, loan acceleration • Free money first- grants before loans • Types of loans and loan limits • Dependent vs. independent, grade level • Direct Subsidized loan time limit (SULA) • Hyperlinks and tables of SULA usage history for applicable borrowers

19. Projected Loan Balance Calculator Added to Understand Your Loans – Entrance, Financial Awareness and Exit Counseling. Available via a link under “Additional Loans” section.

20. Understand Your Loans - SULA Subsidized Loan Limitation (150% or SULA) added to Entrance, Financial Awareness and Exit Counseling modules.

21. Understand Your Loans Topics: • Loan Topics • Things You Need to Know • Free Money First • Types of Federal Student Loans • Loan Limits • SULA information now added

22. Understand Your Loans

23. Manage Your Spending In Entrance and Financial Awareness counseling modules • Budgeting while still enrolled and attending classes • “College Navigator” school cost data pulled from IPEDS • Benefits of controlling day-to-day expenses and incurring minimal debt • How loans are disbursed • Paying accruing interest will lessen borrowing costs • Tips to help manage debt • Federal loans first emphasized

24. Manage Your Spending

25. Manage Your Spending

26. Expense Estimator Added to Manage Your Spending The “Estimate School Expenses” dropdown from the “Your Expense Budget Tool” is populated with schools the borrower has associated loans with in NSLDS, and the schools the borrower selected from the School Selection page. Users can select estimated expenses or enter their own estimates.

27. Plan to Repay Entrance, Financial Awareness and Exit counseling • Compare estimated monthly repayment amounts based on loan debt and repayment plan selection • Evaluate student loan debt burden based on estimated income • Estimate initial monthly payments for income-driven repayment plans • Calculate savings by paying extra, making automated payments, and paying interest during periods of deferment and forbearance • Facts about entering and navigating repayment: grace period, first payment due date, contacting the loan servicer

28. Plan to Repay – Monthly Payments

29. Plan to Repay – Payments and Plans

30. Plan to Repay – Income-driven

31. Avoid Default Entrance, Financial Awareness, and Exit Counseling • Limiting borrowing • Completing the program and graduating • Keeping in touch with the loan servicer and paying on time • Trouble making payments • Deferment and forbearance • Changing repayment plan • Loan forgiveness, cancellation, discharge • Consequences of delinquency, default • Retaining loan records and resolving disputes • Loan consolidation

32. Avoid Default

33. Make Finances a Priority Entrance, Financial Awareness, and Exit counseling • Plan for the future, save, spend wisely • Taxes and impact on income • Gross to net comparisons • Educational tax incentives • Tax deductions and tax credits • Trouble making payments • Deferment and forbearance • Credit scores and credit basics • Credit cards and other borrowing and time calculated to pay off balances • Identity theft and protecting credit and identity

34. Make Finances a Priority

35. Entrance Counseling - Expenses IPEDS data pulled via College Navigator and applied to the “Manage Your Spending” screen. Step 1 and Step 2 tabs must be completed to continue.

36. Entrance Counseling - Expenses Step 2 allows entry of expected assistance for the upcoming award year.

37. Entrance Counseling - Summary Entrance Counseling Summary Screen Summary Tools allow e-mailing, posting to social media, exporting to Excel, and printing. Links to FSA videos also.

38. Entrance Counseling – School Notification Users can notify additional schools of completed Entrance and Financial Awareness Counseling sessions.

39. PLUS Counseling Final Regulations Strengthening and Improving the William D. Ford Federal Direct PLUS Loan (PLUS Loan) Program • Posted 10/23/2014 • Requires PLUS loan counseling for borrowers who are determined to have adverse credit but appeal based on extenuating circumstances, or who obtain an endorser • Disbursement-level edit will block actual disbursements until counseling is completed • Counseling functionality will be added to StudentLoans.gov

40. Financial Awareness Counseling • Developed to provide a centralized, online source of financial literacy information for students • Helps borrowers make informed postsecondary funding decisions • Provides schools with educational resources about federal student aid • Supports government-wide efforts to improve financial capability in the U.S. through the Financial Literacy Education Commission

41. Financial Awareness Counseling • Implemented in StudentLoans.gov in July 2012 • Voluntary – not mandatory • Does not replace Entrance, PLUS, or Exit Counseling • For both undergraduate and graduate students • Intent is to fill the time gap between entrance and exit counseling and educate borrowers about their current indebtedness and managing their student loans • Logging in will display real-time data

42. Financial Awareness Counseling User can choose to forgo school selection/ notification.

43. Exit Counseling • Functionality added to StudentLoans.gov in March 2013 • Schools continue to get details reports from NSLDS • Completion results, along with those from Entrance and Financial Awareness Counseling – in COD Counseling Report • References used on StudentLoans.gov are saved • Dropdown added which allows borrowers to select previously entered references

44. Exit Counseling Exit CounselingSummary concludes with indebtedness and other information.

45. Exit Counseling Conclusion of Exit Counseling requires the user to select a “preferred” repayment plan. Repayment plan preference can be changed.

46. School Functionality School Summary Information/ Options

47. COD Options - Counseling Entrance Counseling: choose “Y” or “N” for participation. Choose Response Frequency. For FAC and Exit – if you don’t want to participate choose On-Demand and then don’t make any demands for completion results. State University

48. COD Counseling Results Upon completion of counseling • School(s) selected by the student are notified • System-generated EC (Electronic Counseling) response • Counseling Report • CSV with headers • All counseling types • Delivered weekly to school’s Newsbox (only) • Not the detailed Exit Counseling report, which comes from NSLDS • NSLDS Reports • COD Counseling search on COD website • COD Batch search

49. COD Counseling Report - Newsbox

50. Counseling Report – COD Tech Ref 2014/15 COD Technical Reference Volume VI, Section 8, Page 238: Counseling Report The Counseling Report shows all Entrance Counseling, Financial Awareness Counseling, and Exit Counseling completed via StudentLoans.gov for your school within the past week (i.e. within the last 7 days of the report run date). This report will allow your school to identify students who have completed Entrance Counseling, Financial Awareness Counseling, and/or Exit Counseling.