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.com • Fed Loan Servicing (PHEA) • Phone number: 1-188-699-2908 • Website: www.myfedloan.org • Great Lakes • Phone number: 1-800-236-4300 • Website: www.mygreatlakes.org • NelNet Education Planning and Financing • 1-888-486-4722 • Website: www.nelnet.com • SallieMae Department of Education Loan Services • Phone number: 1-800-722-1300 • Website: www.salliemae.com *** To Retrieve Information on Your Loan Servicer: 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.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 1st, 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: • Fixed • Similar to standard payment • Pay same amount each month • 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 Calculator Inputs: Calculator Outputs:

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/

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?