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Office of Admission and Financial Aid
Student Loan Exit Counseling
Spring 2013
Office of Admission and Financial Aid
Today’s Topics
• Loan Programs
• Rights and Responsibilities
• Repayment
• Deferments/Forbearance
• Cancellation/Forgiveness
• Tax Benefits
• Default
• Managing Your Money and
Your Credit Report
Office of Admission and Financial Aid
Loan Programs
• Subsidized Loans
– Subsidized Federal Stafford Loan
– Federal Perkins Loan
– Institutional Loan
• Unsubsidized Loans
– Unsubsidized Federal Stafford Loans
– Federal Grad PLUS Loans
– Private Loans (CitiAssist, Signature)
Office of Admission and Financial Aid
Rights and Responsibilities
• Rights – Know how much you borrowed (disclosure statement)
– Where to make payments
– Where to write or call with questions
– You may pre-pay your loan at any time without penalty
• Responsibilities – PAY YOUR LOAN
– Notify your lender if you change your name, address, telephone number or student status
– Notify your lender if anything affects your ability to pay your loan
Office of Admission and Financial Aid
www.nslds.ed.gov
• Get information on all of
your existing Federal
Loans
– Stafford,
– PLUS,
– Consolidation
– Perkins
• Access information on
your
– Loan Amounts
– Loan Servicers
– Loan Status
Where are my loans?
Office of Admission and Financial Aid
Federal Loan Servicing
Servicer Borrower Phone Website
FedLoan Servicing (PHEAA) (800) 699-2908 myfedloan.org
Great Lakes (800) 236-4300 mygreatlakes.org
Nelnet (888) 486-4722 nelnet.com
Sallie Mae (800) 722-1300 Salliemae.com
Office of Admission and Financial Aid
Federal Loan Servicing
Servicer Borrower Phone Website
Aspire (IA) (855) 475-3335 aspireresourcesinc.com
Cornerstone (UT) (800) 663-1662 mycornerstoneloan.org
EdFinancial (TN) (855) 337-6884 edfinancial.com/dl
EdManage (SC) (855) 479-0490 edmanage.myedloan.com
Granite State (NH) (888) 556-0022 gsmr.org
KSA Servicing (KT) (877) 292-4825 ksa.myedloan.com
MOHELA (MO) (888) 866-4352 mohela.com
OSLA Servicing (OK) (866) 264-9762 osla.org
If you have a loan at Direct Loan Serving, your loan will be moved
at sometime in the future
Office of Admission and Financial Aid
Multiple Loan Holders
• Only FFELP Loans from 2008-09 and 2009-10
• Federal Direct Loans
Not All of Your Loans May Have Been Sold to the Department of Education
• Two bills
• Two minimum monthly payments
• Two requests for deferment/forbearance
This May Cause “Split Servicing”
Office of Admission and Financial Aid
www.studentloans.gov
You may take out a
Federal Direct
Consolidation Loan to
resolve the split in
servicing
Office of Admission and Financial Aid
Federal Loan Consolidation Process
Complete and submit
the application
Verifies Payoff
Amounts
Sends you a Pay-Off
Loan Statement
Pays off the old loans
Sets up your new account
This process
takes 60-90 days
Office of Admission and Financial Aid
Federal Loan Consolidation Process
Print out your loan history on NSLDS
Before the end of your grace period, complete and submit the Direct Consolidation Loan Application
Make payments or apply for a deferment or forbearance to keep your loans from becoming delinquent while they process your application.
Office of Admission and Financial Aid
National Average Indebtedness for
Medical Class of 2012
All Schools Public
Schools Private Schools
USC Keck 2013
Mean $166,750 $155,978 $183,066 $168,069
Median $170,000 $160,000 $190,000 $178,784
• 86% of class report having educational debt
• 62% of class report debt $150,000 or higher
•30% of class plans to enter loan/forgiveness programs
Office of Admission and Financial Aid
Interest Rates
In-School, Grace , Deferment and
Repayment
Federal Stafford Loans
(loans after 7/1/06) 6.8%
Federal Graduate PLUS Loans (taken before
2010-11 academic year) 8.5%
Federal Graduate PLUS Loans (taken after
2009-10 academic year) 7.9%
Federal Perkins Loan, HPSL, LDS, PCL 5.0%
USC Institutional Loans 4.0 to 5.0%
Federal Consolidation Loan Fixed rate based on weighted average
interest rate of underlying loans rounded up
to nearest one-eighth of a percent (capped
at 8.25%)
*varies annually based on 91-day t-bill set every July 1st
Office of Admission and Financial Aid
What is Capitalization?
DEFINITION: The Addition of Accrued Interest to Outstanding Principal
• Grace,
• Deferments
• Forbearances
Generally, unpaid interest is capitalized once each time the borrower enters repayment
May be capitalized more frequently on private loans
Payments you make in grace will reduce overall interest cost
Office of Admission and Financial Aid
Capitalization
Capitalized
Interest
Interest Paid
In-School
Amount borrowed $10,000 $10,000
Monthly Interest Payment 0 $65.83
Interest to Capitalize $2,370 0
Principal Balance at Repayment $12,370 $10,000
Estimated Monthly Payments $149.43 $120.80
Total Payments $17,931.53 $16,865.98
Total Interest Paid $7,931.53 $6,865.98
Additional Cost to Capitalize $1065.55 0.00
Based on $10,000 loan at 7.9% interest, deferred for 3-years and capitalized once at repayment
Office of Admission and Financial Aid
Grace Periods
Loan Program Grace Period
Federal Stafford Loans 6 months
Federal Grad PLUS Loans (before 7/1/2008) N/A
Federal Grad PLUS Loans (after 7/1/2008) 6 months*
Federal Perkins Loan 9 months
Federal Consolidation Loan N/A
*you will need to request a post enrollment deferment from your loan service agency.
Office of Admission and Financial Aid
Repayment
Consider Affordability and Overall Cost
• Standard Repayment
• Graduated Repayment 10-Year Repayment
Period
• May extend repayment up to 25 years, depending on how much you borrowed
Extended Repayment
• Payment amount varies with income Income-Based
Repayment (IBR) & Pay As You Earn (PAYE)
Standard Repayment Chart Federal Direct Stafford Loans - 6.8%
Debt Amount Number of
Payments
Monthly Payment Total Interest Total Payback
$100,000 120 $1,151 $38,096 $138,096
$125,000 120 $1,438 $47,620 $172,620
$150,000 120 $1,726 $57,145 $207,145
$175,000 120 $2,014 $66,669 $241,669
$200,000 120 $2,302 $76,193 $276,193
Standard Repayment Chart Federal Direct PLUS Loans – 7.9%
Debt Amount Number of
Payments
Monthly Payment Total Interest Total Payback
$50,000 120 $604 $22,480 $72,480
$75,000 120 $906 $33,720 $108,720
$100,000 120 $1,208 $44,960 $144,960
Office of Admission and Financial Aid
I
P
10 YEARS
$ Payment Summary
Total $ Payments $248,574
Total Interest $68,574
Total # of
Payments 120
Monthly Payment Schedule
Initial Balance $180,000
Remaining
Terms $2,071
Standard Repayment
Office of Admission and Financial Aid
Payment Summary
Total $ Payments $262,000
Total Interest $82,000
Total # of
Payments 120
Graduated Repayment
Monthly Payments
Initial Balance $180,000
Years 1-2 $1,422
Years 3-4 $1,729
Years 5-6 $2,102
Years 7-8 $2,555
Years 9-10 $3,107
Office of Admission and Financial Aid
Payment Summary
Total $ Payments $374,799
Total Interest $194,799
Total # of Payments 300
Extended Repayment
Monthly Payments
Initial Balance $180,000
Year 1-30 1,249
Office of Admission and Financial Aid
Repayment in Residency
Consider Overall Cost vs. Affordability
• Median Post-MD Stipends for 2012 and IBR and PAYE Approximate Payments
• 1st Year $49,651 $411 $274
• 2nd Year $51,428 $433 $289
• 3rd Year $53,454 $459 $306
• 4th Year $55,750 $487 $325
Pay Now: Income-Based Repayment
• Interest will accrue during forbearance
• Unpaid interest will be capitalized at the end of the forbearance period.
Pay Later: Forbearance
Office of Admission and Financial Aid
Income-Driven Repayment
(IBR and PAYE)
• Appropriate for early in careers or public service
High Debt Relative to Income
• From 15% to 10% of discretionary income
Allows for Reduced Payment
• Spousal income and student loan debt considered
Married Borrowers Filing Jointly
• For IBR, after 25 years. For PAYE, after 20 years.
• IRS considers amounts forgiven to be taxable income in the year forgiven
Allows for Forgiveness
Office of Admission and Financial Aid
Eligibility for Income-Driven Plans
(IBR and PAYE)
• Direct Loan and FFEL Program borrowers with eligible loans and
• Their payments would be lower on IBR relative to what would have been paid under the 10-year standard repayment plan
Income-Based Repayment (IBR)
• Direct Loan borrowers with eligible loans
• Their payments would be lower on PAYE relative to what would have been paid under the 10-year standard repayment plan
• New borrower on/after 10/1/2007 who received a new loan on/after 10/1/2011
Pay As You Earn (PAYE)
Office of Admission and Financial Aid
Payment Amounts for Income-Driven Plans
(IBR and PAYE)
• 15% of discretionary income
• Possible interest subsidy for up to 3 years
Income-Based Repayment (IBR)
• 10% of discretionary income
• Possible interest subsidy for up to 3 years
Pay As You Earn (PAYE)
Office of Admission and Financial Aid
Applying for Income-Driven
Repayment Plans
Electronic application for Income-Driven Repayment Plans
• Available at studentloans.gov and via servicers websites
Uses IRS Data Retrieval Tool that is used on the FAFSA
• Retrieves the most recent tax information from two most recently completed tax years
Electronically transmits application to loan servicers
• No follow-up necessary unless AGI is unavailable or borrower wants to submit alternative documentation of income
Servicer may require Alternative Documentation of Income (ADOI)
• If AGI is unavailable or does not reasonably reflect current income
Must recertify family size and update income information each year
• Failure to do so, will revert the account to the 10-year standard repayment plan.
• Can update income information and family size early if it changes mid-year.
Office of Admission and Financial Aid
Income-Based Repayment (PAYE)
Annual Income (Median First Year
Stipend)
$49,651
Total Educational Indebtedness $180,000
Monthly Payment Under Standard
($180,000 in Stafford Loans at 6.8%)
$2,071
Monthly Income $4,137
150 % of Poverty Level (Single) 16,755
Discretionary Income $32,896
15% of Discretionary Income X 10%
Monthly Payment Under IBR $274
Office of Admission and Financial Aid
Pay As You Earn (PAYE)
Annual Income Family Size
1 2 3
$40,000 $194 $144 $95
$50,000 $277 $228 $178
$55,000 $319 $269 $220
$60,000 $360 $311 $261
$65,000 $402 $353 $303
$70,000 $444 $394 $345
$80,000 $790 $478 $428
$90,000 $610 $561 $511
$100,000 $694 $644 $595
Office of Admission and Financial Aid
Public Service Loan Forgiveness
Program for federal student loan borrowers who work in certain kinds of jobs.
It will forgive remaining debt after 10 years of eligible employment and qualifying loan payments.
Office of Admission and Financial Aid
Public Service Loan Forgiveness
• Direct Stafford, Direct Graduate PLUS, Direct Consolidation Loan Programs
The Right Loan - Federal Direct Loan
• Federal, State, Local or Tribal Government
• Private nonprofit 501(c)(3) organizations
• AmeriCorps or Peace Corps positions
The Right Job – Full Time Employment (30 hours/week)
• 120 On-time Payments Under the IBR Plan
The Right Payment
Office of Admission and Financial Aid
Pay as You Earn (PAYE) and
Public Service Loan Forgiveness
Year of IBR/
Post-MD
Income Monthly Loan
Repayment
Year 1 $49,651 $274
Year 2 $51,488 $285
Year 3 $53,393 $296
Year 4 $55,368 $309
Year 5 $120,000 $802
Year 6 $124,440 $875
Year 7 $129,044 $909
Year 8 $133,819 $943
Year 9 $138,770 $979
Year 10 $143,904 $1,017
Office of Admission and Financial Aid
Pay as You Earn (PAYE) and
Public Service Loan Forgiveness
Payment Summary
Total # of Payments 120
Total $ Payments $80,780
NPV of Total Payments $57,230
Total Loan Forgiveness $221,619
Office of Admission and Financial Aid
Public Service Loan Forgiveness
• Direct Stafford, Direct Graduate PLUS, Direct Consolidation Loan Programs
The Right Loan - Federal Direct Loan
• Federal, State, Local or Tribal Government
• Private nonprofit 501(c)(3) organizations
• AmeriCorps or Peace Corps positions
The Right Job – Full Time Employment (30 hours/week)
• 120 On-time Payments Under the IBR Plan
The Right Payment
Office of Admission and Financial Aid
For More Information
Repayment Plans and
Forgiveness Options
Office of Admission and Financial Aid
IBR/PSLF Actions
Graduate
Consolidate
Choose ICR, IBR or PAYE Repayment Plan and start making on-time payments
Complete Employment Certification (annually)
Loan will be transferred to myfedloan.org
Office of Admission and Financial Aid
ASK FOR HELP!!
• Let your Lender or Loan Service Agent know if
anything effects your ability to pay your loan
• You may be eligible for a
– Deferment
– Forbearance
– Cancellation
Office of Admission and Financial Aid
Deferments
• In-School Deferment
• Unemployment Deferment
• Economic Hardship Deferment
Office of Admission and Financial Aid
Forbearance
• Financial Difficulties
• Reduced-Payment Forbearance
• Med or Dental Internships
• Debt Exceeds Monthly Income
• Americorp/Teacher Loan Forgiveness
• Local/Nat’l Emergency
• Military Mobilization
• Designated Disaster Area
• Borrower Ineligible for Deferment
Temporary suspension or reduction of loan payments
Office of Admission and Financial Aid
Cancellation
DEATH
Your Loans Will Qualify for Cancellation in the Event of Your Death
PERMANENT AND TOTAL DISABILITY
Your Loans Will Qualify for Cancellation Should You Become Totally AND Permanently
Disabled
Office of Admission and Financial Aid
Loan Repayment Programs
• NIH Loan Repayment Programs:
www.lrp.nih.gov
• NHSC Repayment Program:
www.nhsc.hrsa.gov/loanrepayment
• Other programs available at AAMC website:
www.aamc.org/stloan
Office of Admission and Financial Aid
www.irs.gov/publications/p970/
The Taxpayer Relief Act of 1997
Full Deduction Partial
Deduction No Deduction
Single $60,000 or less $60,001 to
$74,999 $75,000 or more
Married
filing jointly $120,000 or less
$120,001 to
$149,999 $150,000 or more
Office of Admission and Financial Aid
Stafford/Grad PLUS Online Exit
Counseling
www.nslds.ed.gov
Update contact
information for:
•Yourself
•Your employer
•Your references
Login with your:
•Name
•SSN
•Date of Birth
•Fafsa PIN
Office of Admission and Financial Aid
USC Administered Loans
• Federal Perkins Loan
• Health Professional Student Loan
• Loan for Disadvantage Students
• USC Institutional Loans
Office of Admission and Financial Aid
USC Administered Loans
• www.ecsi.net Register and Create a User ID View and Manage Your Account Make One Time Payment Make Scheduled Payment Update Address Information
You can check out your USC Loan Accounts online at:
Office of Admission and Financial Aid
Due Diligence & Default
Office of Admission and Financial Aid
Consequences of Default
Hold on University Services
Adverse Credit History
Tax-Offset & Wage Garnishment
Loan Acceleration
Sent to a Collection Agency
Late Fees & Collection Costs
Litigation
Suspension of Professional Licenses
Office of Admission and Financial Aid
OSFA Ombudsman
Office of Student Financial Assistance,
Ombudsman
The SFA Ombudsman works with student loan borrowers
to informally resolve loan disputes and problems.
Customer Service: (877) 557-2575
http://ombudsman.ed.gov
Office of Admission and Financial Aid
Your Money, Your Credit and You
Manage
your debt.
Don’t let it manage you.
Office of Admission and Financial Aid
Four
Basic
Steps
1) Set
Financial
Goals
4) Evaluate
& Adjust
3) Track
Expenses
2) Identify
Income
Creating A Budget
Office of Admission and Financial Aid
SMART Financial Goals
S=Specific
M=Measureable
A=Attainable
R=Relevant
T=Time Bound
Office of Admission and Financial Aid
Four
Basic
Steps
1) Set
Financial
Goals
4) Evaluate
& Adjust
3) Track
Expenses
2) Identify
Income
Creating A Budget
Office of Admission and Financial Aid
Habitual Spending
• What is your Spending Habit?
Office of Admission and Financial Aid
Credit Cards
• Credit card payment example: • 18% credit card
• $2,500 balance
• Minimum payment (2% of balance)
Results Minimum monthly payment
2% $50 $75
Total Cost to Pay Off:
Total Interest Paid:
Number of Years:
Paying Off Your Balances
$3,388
$888
3.8
$4,656
$2,156
7.8
$8,396
$5,896
27.8
Office of Admission and Financial Aid
Entitled to an annual free copy of your Credit Report
(877) 322-8228
www.myfico.com – fee for service
www.bankrate.com – info and articles
www.annualcreditreport.com
Office of Admission and Financial Aid
What is a FICO Score Based On?
35%
30%
15%
10% 10%
Payment history
Utilization rate (amount owed)
Length of
credit history
New credit
Type of credit used
Office of Admission and Financial Aid
Higher the FICO Score,
the Lower the Payment
FICO score APR* Monthly
payment
Total Interest
Cost
720-850 3.394% $731 $1,330
690-719 4.822% $747 $1,902
660-689 6.88% $771 $2,740
620-659 10.458% $812 $4,234
590-619 15.71% $875 $6,513
*National average interest rates as of 02/27/2013 (myfico.com). This table illustrates
how different FICO score ranges can affect rates and monthly payments on a $25,000,
36-month fixed-rate auto loan.
Office of Admission and Financial Aid
Protect Yourself
Read All of Your Mail
Guard Your Mail and Trash from Theft
Deposit Outgoing Mail at the Post Office
Place Mail on Hold when on Vacation
Shred, Shred, Shred
Charge Receipts
Credit Applications or Offers
Insurance Forms
Checks and Bank Statements
Expired Credit or Debit Cards
888-5 OPTOUT (888-567-8688) optoutprescreen.com
Office of Admission and Financial Aid
Keep Personal Information Personal
• Watch what information
you share on Social
Networks
• Keep your PIN private
• Use Good P@ssw0Rds!
• Lock your phone with
password.
Office of Admission and Financial Aid
More Information
• www.nslds.ed.gov
• www.ecsi.net
• www.lrp.nih.gov
• www.nhsc.hrsa.gov/loanrepayment
• www.aamc.org/stloan
• www.studentloans.gov
• www.annualcreditreport.com
• www.myfico.com
• www.bankrate.com
• www.feedthepig.org
Office of Admission and Financial Aid
Although every effort is made to provide the most
accurate and up-to-date information, the content of
this publication is subject to change due to
alterations in federal, state, university or lender
policy or procedure. The USC Financial Aid Office
cannot be held liable for the consequences of such
changes in policy or procedure. The most current
information can be found by contacting your
lender.
Disclaimer
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