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Senior loan exit interview dental school class of 2014

Senior loan exit interview dental school class of 2014. Repayment Strategies for Managing Your Student Loans. Considerations. Dental school graduates have great track record for repayment Multiple ways to effectively handle your student loan debt

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Senior loan exit interview dental school class of 2014

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  1. Senior loan exit interviewdental school class of 2014 Repayment Strategies for Managing Your Student Loans

  2. Considerations • Dental school graduates have great track record for repayment • Multiple ways to effectively handle your student loan debt • Constantly evaluate your repayment objectives and repayment plan, and change if needed • Importance of working with loan servicers

  3. Educational debt* • $241,097 mean debt all schools • $209,150 mean debt public schools • $283,978 mean debt private schools • 21.7% no debt or debt less than $100,000 • 27.9% debt in excess of $300,000 • Dental school graduates known for timely and responsible repayment * Indebted graduates in the Class of 2013

  4. Common sense approach • Know what you borrowed, who services your loans, and when they come due • Determine repayment objectives and constantly reevaluate them • Select repayment plan to meet your repayment and career objectives • Use all available resources

  5. Common sense approach • Know what you borrowed, who services your loans, and when they come due • Determine repayment objectives and constantly reevaluate them • Select repayment plan to meet your repayment and career objectives • Use all available resources

  6. Student loan portfolio • Federal Direct Stafford* • Federal Direct Grad PLUS* • Campus-based (awarded by school) • Perkins*, Health Professions Student Loan, Loans for Disadvantaged Students, Institutional • Federal Consolidation* • Private loans * Referenced on NSLDS at www.NSLDS.ed.gov

  7. Federal Stafford Loans* • Subsidized and Unsubsidized • Direct and FFEL • Fixed interest rate • 6 month Grace period • Deferment and Forbearance options • Multiple repayment and forgiveness options • Eligible for consolidation * Referenced on NSLDS at www.NSLDS.ed.gov

  8. Federal Grad PLUS* • Unsubsidized • Direct and FFEL • Fixed interest rate • 6 month post-enrollment Deferment • Deferment and Forbearance options • Multiple repayment and forgiveness options • Eligible for consolidation * Referenced on NSLDS at www.NSLDS.ed.gov

  9. Federal Perkins* • Subsidized • 5% fixed interest rate • 9 month Grace period • Deferment and Forbearance options • Standard 10 year repayment • Not eligible for income-driven repayment or Public Service Loan Forgiveness • Eligible for consolidation * Referenced on NSLDS at www.NSLDS.ed.gov

  10. HPSL and LDS* • Subsidized • 5% fixed interest rate • 12 month Grace period • Deferment and Forbearance options • In general, Standard 10 year repayment • Not eligible for income-driven repayment • Eligible for consolidation * HPSL and LDS are NOT referenced on NSLDS

  11. Institutional loans* • Subsidized or unsubsidized • Terms and conditions vary by school • Check Grace, Deferment, and Forbearance options, plus repayment options, with school • Not eligible for income-driven repayment or Public Service Loan Forgiveness • Not eligible for federal consolidation * Institutional loans are NOT referenced on NSLDS

  12. Federal consolidation* • Subsidized and Unsubsidized • Weighted interest rate, rounded up 1/8th of a percent and fixed for life of loan • No Grace period • Deferment and Forbearance options • Multiple repayment and forgiveness options • See Consolidation Primer from ADEA * Referenced on NSLDS at www.NSLDS.ed.gov

  13. Private loans* • Unsubsidized • Variable or fixed interest rate • Terms and conditions vary by lender • Check Grace, Deferment, and Forbearance options, plus repayment options, with lender • Not eligible for income-driven repayment or forgiveness • Not eligible for federal consolidation * Private loans are NOT referenced on NSLDS

  14. Some words about private loans • Can easily derail a repayment strategy • Pay special attention to private loans from undergraduate and post-baccalaureate programs • Minimal repayment and postponement options • No national database • Check your records, with FAO, or credit report

  15. National Student Loan Data System (NSLDS) • www.NSLDS.ed.gov • Federal database of all Stafford, Grad PLUS, Federal Consolidation, Perkins • Direct Loans will be indicated • FFEL Loans are federal loans from private lenders (no longer allowed)* • Information on loan servicer • Click on number to left of each loan * No more new FFEL Loans as of 2010.2011 year, so all your loans may be Direct

  16. Interest rates • Stafford at 6.8% and 5.41% fixed* • Grad PLUS at 7.9% and 6.41% fixed* • Campus-based • Perkins, Health Professions Student Loans (HPSL), Loans for Disadvantaged Students (LDS) at 5% fixed • Check disclosures for Institutional and Private Loans * Lower rate for loans disbursed on or after July 1, 2013

  17. Capitalization of interest • Process whereby accrued and unpaid interest is added back to principal of loan • Less frequent the better • Usually occurs: • When loans enter repayment • When borrower has status change* • When borrower in IBR or PAYE no longer demonstrates PFH** or opts out of plan * For example, Deferment to Forbearance ** Partial Financial Hardship

  18. Loan servicers • Organizations lenders contract with to work with you in repayment • See www.NSLDS.ed.gov for your servicer* • Loan servicers required to notify you when they take over servicing of your loans • Your federally owned loans should all be serviced by one loan servicer • See www.StudentLoans.gov for details** * Click on the number to the left of each loan on the Financial Aid Summary page ** See Managing Repayment for additional information on loan servicers

  19. Working with loan servicers • Document everything • Take notes and ask if they are doing same • Speak with supervisor if needed • Semantics are important • Confirm all actions they say they will take • Confirm receipt of all submitted documents • Keep contact information current

  20. When loans come due • Most Stafford and Grad PLUS come due 6 months after graduation • Perkins Loans 9 month after graduation • HPSL and LDS 12 months after graduation • Check terms on institutional and private loans • Only get Grace period once, so if used on loans prior to dental school, these should come due shortly after graduation

  21. Common sense approach • Know what you borrowed, who services your loans, and when they come due • Determine repayment objectives and constantly reevaluate them • Select repayment plan to meet your repayment and career objectives • Use all available resources

  22. Repayment objectives • Protect income, maximize cash flow • Limit impact of interest accrual and capitalization • Help through loan repayment and/or forgiveness programs • Convenience and simplicity of repayment

  23. Common sense approach • Know what you borrowed, who services your loans, and when they come due • Determine repayment objectives and constantly reevaluate them • Select repayment plan to meet your repayment and career objectives • Use all available resources

  24. Options at repayment • Loan servicers usually notify borrowers 30 to 60 days prior to loans coming due • Be sure all contact information is up to date • Options at repayment • Select repayment plan and start actively repaying your student loans • Postpone payments

  25. Options at repayment • Loan servicers usually notify borrowers 30 to 60 days prior to loans coming due • Be sure all contact information is up to date • Options at repayment • Select repayment plan and start actively repaying your student loans • Postpone payments

  26. Postponement options • Deferment* • School-based postdoctoral program • Graduate fellowship • Forbearance* • Mandatory Internship Residency Forbearance • Other options, work with loan servicer • Details at www.StudentLoans.gov under Managing Repayment * Credit protected, as borrower considered in “Good Standing”

  27. Options at repayment • Loan servicers usually notify borrowers 30 to 60 days prior to loans coming due • Be sure all contact information is up to date • Options at repayment • Select repayment plan and start actively repaying your student loans • Postpone payments

  28. Repayment reminders • You will be notified loans are coming due • No penalty for aggressive repayment • Payments applied to interest before principal • Voluntary and additional payments may be targeted on most expensive loans • Don’t assume you need an income-driven repayment plan like IBR or PAYE

  29. Repayment plans • Standard 10 year (level payments)* • Graduated 10 year (scheduled increases) • Extended 25 year (level payments) • Income-driven repayment • Income Based Repayment (IBR) • Pay As You Earn (PAYE) • Details at www.StudentLoans.gov under Managing Repayment * Up to 30 years on Federal Consolidation Loans, depending on balance

  30. Standard 10 year • Same payment each month • 10 years for unconsolidated loans, up to 30 years for consolidation loans • You get Standard if you do not choose • Possibly part of strategy for graduate with steady income moving right into practice who can afford relatively high payments * Use Dental Loan Organizer and Calculator at www.AAMC.org/GoDental and calculators at www.StudentLoans.gov to estimate payment amounts

  31. Graduated 10 year • Payments start lower and increase in designated amounts at designated intervals • Total repayment higher if held to term • Possibly part of strategy for graduate with steady income moving right into practice who has other short term financial obligations * Use Dental Loan Organizer and Calculator at www.AAMC.org/GoDental and calculators at www.StudentLoans.gov to estimate payment amounts

  32. Extended 25 year • Same payment each month for 25 years • Total repayment much higher if held to term • Possibly part of strategy for graduate with high debt who needs a lower payment or perhaps needs to show a lower DTI (debt-to-income) ratio when applying for a mortgage or other financing * Use Dental Loan Organizer and Calculator at www.AAMC.org/GoDental and calculators at www.StudentLoans.gov to estimate payment amounts

  33. Income-driven plans* • Designed for highly indebted borrowers with low to moderate incomeswho cannot afford repayment under other plans • Possibly part of repayment strategy for graduate entering residency who wants to make payments, for borrower trying to qualify for PSLF**, or borrower entering practice with extremely high debt * Use Dental Loan Organizer and Calculator at www.AAMC.org/GoDental and calculators at www.StudentLoans.gov to estimate payment amounts

  34. IBR and PAYE • Repayment plans designed for highly indebted borrowers with low to moderate incomes who cannot afford other plans • Must apply annually and demonstrate eligibility (called “Partial Financial Hardship”)* • Expect payment to change each year * Use calculators at www.StudentLoans.gov to estimate eligibility and payment amount

  35. IBR and PAYE pros and cons • Advantages • More manageable payments • May help you qualify for forgiveness • May help build credit • Disadvantages • Initial payments may not cover interest • Must renew annually • Married borrowers may feel a pinch

  36. Options post “PFH”* • Payments automatically revert to Standard 10 year amount* • Options at that point include • Pay Standard until balance paid • Pay Standard until PSLF eligible • Opt out of IBR or PAYE and into another repayment plan like Extended** * What you would have paid had you entered Standard 10 year when you first applied for IBR or PAYE ** Public Service Loan Forgiveness “off the table” at this point, as Extended payments do not qualify

  37. Choosing IBR or PAYE PAYE • December 2012 • Direct Loans only • 10% of discretionary income • 20 year forgiveness • Capitalization limit • Renew annually • Trigger date of October 1, 2007 IBR • July 2009 • Direct and FFEL • 15% of discretionary income • 25 year forgiveness • No limit to capitalization • Renew annually

  38. Choosing IBR or PAYE • Look at repayment objectives and cash flow • Borrowers who want or need lowest payment likely to choose PAYE • Borrowers simply looking for manageable payment and who are not interested in forgiveness may choose IBR over PAYE • No penalty for overpayment

  39. $241,097 Repayment Estimates for $241,097 MEAN ALL SCHOOLS Indebted Students, Class of 2013

  40. Repayment assumptions for $241,097 (all schools)* • $241,097 educational debt (all schools) • $162,000 Sub and Unsubsidized Stafford • $79,097 Grad PLUS • Interest rates • Stafford at 6.8% years 1-3, 5.41% year 4 • Grad PLUS at 7.9% years 1-3, 6.41% year 4 • Two scenarios for IBR and PAYE • $184,140 income (immediate practice)** • $48,147 income (GPR residency) * Dental Loan Organizer and Calculator used for all calculations ** Source: ADA

  41. Repayment of $241,097 at $184,140 salary • Standard 10 year • $3,215 per month for 10 years • $385,658 total repayment • Extended 25 year • $1,945 per month for 25 years • $582,995 total repayment • Income Based Repayment (IBR) • $2,077 per month for 12 months only • Pay As You Earn (PAYE) • $1,385 per month for 12 months only

  42. Repayment of $241,097 at $48,147 stipend (GPR) • Standard 10 year • $3,215 per month for 10 years • $385,658 total repayment • Extended 25 year • $1,945 per month for 25 years • $582,995 total repayment • Income Based Repayment (IBR) • $379 per month for 12 months only • Pay As You Earn (PAYE) • $252 per month for 12 months only

  43. $209,150 Repayment Estimates for $209,150 MEAN ALL PUBLIC SCHOOLS Indebted Students, Class of 2013

  44. Repayment assumptions for $209,150 (public schools)* • $209,150 educational debt (public schools) • $162,000 Sub and Unsubsidized Stafford • $47,150 Grad PLUS • Interest rates • Stafford at 6.8% years 1-3, 5.41% year 4 • Grad PLUS at 7.9% years 1-3, 6.41% year 4 • Two scenarios for IBR and PAYE • $184,140 income (immediate practice)** • $48,147 income (GPR residency) * Dental Loan Organizer and Calculator used for all calculations ** Source: ADA

  45. Repayment of $209,150 at $184,140 salary • Standard 10 year • $2,762 per month for 10 years • $331,303 total repayment • Extended 25 year • $1,662 per month for 25 years • $498,107 total repayment • Income Based Repayment (IBR) • $2,077 per month for 12 months only • Pay As You Earn (PAYE) • $1,385 per month for 12 months only

  46. Repayment of $209,150 at $48,147 stipend (GPR) • Standard 10 year • $2,762 per month for 10 years • $331,303 total repayment • Extended 25 year • $1,662 per month for 25 years • $498,107 total repayment • Income Based Repayment (IBR) • $379 per month for 12 months only • Pay As You Earn (PAYE) • $252 per month for 12 months only

  47. $283,978 Repayment Estimates for $283,978 MEAN ALL PRIVATE SCHOOLS Indebted Students, Class of 2013

  48. Repayment assumptions for $283,978 (private schools)* • $283,978 educational debt (private schools) • $162,000 Sub and Unsubsidized Stafford • $121,978 Grad PLUS • Interest rates • Stafford at 6.8% years 1-3, 5.41% year 4 • Grad PLUS at 7.9% years 1-3, 6.41% year 4 • Two scenarios for IBR and PAYE • $184,140 income (immediate practice)** • $48,147 income (GPR residency) * Dental Loan Organizer and Calculator used for all calculations ** Source: ADA

  49. Repayment of $283,978 at $184,140 salary • Standard 10 year • $3,823 per month for 10 years • $458,616 total repayment • Extended 25 year • $2,325 per month for 25 years • $696,939 total repayment • Income Based Repayment (IBR) • $2,078 per month for 12 months only • Pay As You Earn (PAYE) • $1,385 per month for 12 months only

  50. Repayment of $283,978 at $48,147 salary • Standard 10 year • $3,823 per month for 10 years • $458,616 total repayment • Extended 25 year • $2,325 per month for 25 years • $696,939 total repayment • Income Based Repayment (IBR) • $379 per month for 12 months only • Pay As You Earn (PAYE) • $252 per month for 12 months only

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