Federal Student Loan Repayment Plans and the Repayment Estimator June 2016

Today’s Topics Student Loan Basics Repayment Options and Repayment Estimator Postponing Payments, Default, and Discharge Federal Student Aid Resources

Types of Loans and Loan Servicers 10/28/2017 Student Loan Basics Types of Loans and Loan Servicers

National Student Loan Data System (NSLDS) 10/28/2017 Identify Your Loans Federal National Student Loan Data System (NSLDS) Private Credit Report Financial Aid Office Personal Records Access NSLDS using your FSA ID at nslds.ed.gov

Federal Student Loan Programs Direct Loan (DL) Program Loans made by ED Started in 1994, but was relatively small until 2010 Federal Family Education Loan (FFEL) Program Loans made by banks, guaranteed by ED Started in 1965, and was very big until program ended Ended on June 30, 2010 Federal Perkins Loan Program Loans made by schools

Federal Student Loan Types 10/28/2017 Federal Student Loan Types Federal Student Loan Subsidized Stafford Unsubsidized Stafford Parent PLUS Grad. PLUS Perkins Loans Consolidation Loans

Interest Rate for Federal Loans   Interest Rate (First Disbursed between July 1, 2016 and June 30, 2017) Repayment Additional Info Federal Perkins Loan 5% Fixed 9 months after school No interest charged while in school Federal Stafford/ Direct Loan Undergraduate Subsidized 3.76% Fixed Unsubsidized 3.76%Fixed 6 months after school Subsidized: no interest charged while in school Unsubsidized: interest accrues while in school Federal Stafford/ Direct Loan Graduate/Professional Unsubsidized 5.31% Fixed Unsubsidized interest accrues while in school Federal Direct PLUS Loan (Parents, Graduate & Professional) 6.31% Fixed Direct Lending Schools May be deferred until 6 months after student drops below ½ time or 60 days after loan is fully disbursed Interest accrues while student is in school

Loan Servicers CornerStone ESA/Edfinancial FedLoan Servicing (PHEAA) 10/28/2017 Loan Servicers The following are loan servicers for federally held loans made through the Direct Loan and (FFEL) Programs: CornerStone ESA/Edfinancial FedLoan Servicing (PHEAA) Granite State – GSMR Great Lakes Educational Loan Services, Inc. MOHELA Navient Nelnet OSLA Servicing VSAC Federal Loans The 1-800 numbers are located on StudentAid.gov

Brookings and Perkins Repayment Heartland ECSI is the loan servicer for these two loans They can be contacted at 888-549-3247 Their Website is www.heartlandecsi.com Little tip: your school code is W30 and your account number is typically your social security number

Repayment Plans and Consolidation 10/28/2017 Repayment Options Repayment Plans and Consolidation 11

Repayment Plans Based on income Based on loan debt 10/28/2017 Repayment Plans Based on income Based on loan debt Income-Based Income-Contingent Pay As You Earn Revised Pay As You Earn Standard Extended Graduated

Standard Repayment Plan Under this plan, the borrower will pay a fixed amount that ensures they pay their loan(s) in full within the repayment period. Payments will be at least $50 per month. For subsidized, unsubsidized, and PLUS loans, the repayment period is 10 years. For consolidation loans, the repayment period is 10-30 years, depending on the borrower’s total educational indebtedness. For borrowers who do not have consolidation loans, this plan results in the lowest total interest paid because the repayment period is shorter than it would be under any of the other repayment plans.

Extended Repayment Plan Under this plan, the borrower will pay a fixed or graduated amount in an amount that will ensure that they pay their loans(s) in full within 25 years. Fixed payments will be at least $50 per month. Graduated payments will be at least the amount of interest that accrues in a month. A borrower may choose this plan if: He or she did not have an outstanding balance on a FFEL Program or Direct Loan as of October 7, 1998 or on the date they obtained a student loan after that date and He or she has more than $30,000 in outstanding FFEL Program loans or more than $30,000 in outstanding Direct Loans.

Graduated Repayment Plan Under this plan, the borrower will pay an amount that increases every two years and ensures that they pay their loan(s) in full within the repayment period. For subsidized, unsubsidized, and PLUS loans, the repayment period is 10 years. For consolidation loans, the repayment period is 10-30 years, depending on the borrower’s total educational indebtedness. The minimum payment equals the amount of interest that accrues monthly. No one payment will be more than three times greater than any other payment.

Income-Driven Repayment Plans

Eligible Borrowers ICR (20%) Eligible loan IBR (15%) 10/28/2017 Eligible Borrowers ICR (20%) Eligible loan IBR (15%) Debt-to-income ratio PAYE (10%) Debt-to-income-ratio Started borrowing recently REPAYE (10%)

Eligible Loan Type Loan Type ICR IBR PAYE REPAYE Loan received as student X Loan received as parent Consolidation (no underlying parent loans) Consolidation (underlying parent loans)

Consolidation: www.StudentLoans.gov Components End Result Direct Sub. Consol. Direct Unsub. Consol. Stafford PLUS Perkins Direct Consolidation Loan In-School What happens when your loans are consolidated No interest rate cap Repayment of a Direct Consolidation Loan can begin 60 days after the loan is disbursed, or sooner. Your loan servicer will let you know when the first payment is due. The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan, your other education loan debt, and the repayment plan you select. Interest rate is weighted average of consolidated loans Interest rate is rounded to nearest higher 1/8 of 1%

Loan Consolidation One lender and one monthly payment 10/28/2017 Loan Consolidation One lender and one monthly payment Flexible repayment options Reduced monthly payments Fixed interest rate Loan Consolidation Information Call Center at 1-800-557-7392 Note: Private loans are ineligible for federal loan consolidation Including PERKINS & PLUS Repayment of a Direct Consolidation Loan can begin 60 days after the loan is disbursed, or sooner. Your loan servicer will let you know when the first payment is due. The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan, your other education loan debt, and the repayment plan you select. You can apply for a Direct Consolidation Loan. Submit an application and you will be contacts by a consolidation servicer 1-800-557-7392.

Income Sensitive Repayment Plan 10/28/2017 Income Sensitive Repayment Plan Federal Family Education Loans (FFEL) Low-income borrowers Not applicable to those with Direct Loans Payments increase or decrease based on income

Repayment Plan Summary Billy Borrower has $40,000 in Direct Loan debt, which has a 6% interest rate. His income is $35,000, he is single, and he lives in Colorado. His income increases at a rate of 5% per year. Repayment Plan Initial Payment Final Payment Time to Repay Total Paid Standard $444 10 years $53,290 Graduated $254 $762 $56,848 Extended - Fixed $258 25 years $77,316 Extended - Graduated $200 $388 $84,115 Revised Pay As You Earn* $143 $507 20 years $71,172 Pay As You Earn* $69,967 Income-Based* $215 15 years, 6 mos. $65,407 Income-Contingent* $315 $373 15 years $61,484 *Income-Driven Repayment Plans

Public Service Loan Forgiveness 120 qualifying payments On Direct Loans On qualifying repayment plans While working full-time at qualifying employer Borrower must also be employed by a qualifying organization at the time that the borrower applies for and receives PSLF According to the IRS, the forgiven amount is not treated as taxable income Details about the program: StudentAid.gov/public service

PSLF Requirements Don’t wait to enroll if eligible! 1 Must make 120 separate, monthly payments 2 After October 1, 2007 3 Payments do not need to be consecutive 4 Must be for full amount due under plan 5 Must be made within 15 days of due date Don’t wait to enroll if eligible!

PSLF - Qualifying Repayment Plan 10-Year Standard IBR ICR Pay As You Earn Others ≥ 10-Year Standard Income-driven plans are most likely to leave a remaining balance for forgiveness after 120 qualifying payments

PSLF – Qualifying Employment 1 Any government organization 2 501(c)(3) not-for-profit organization 3 Other not-for-profit organizations providing specific qualifying services Doesn’t matter what the borrower’s job duties are. Borrower can work at multiple organizations while making the required 120 payments

www.StudentLoans.gov/repay

10/28/2017 Repayment Estimator www.studentaid.gov/repay 29

Estimate your student loan payments! 10/28/2017 Estimate your student loan payments! Sign in using FSA ID or Step by Step process to Apply for Income-Based Plans Sign- In and Complete Application Or request that your loan servicer determine what income-driven plan or plans you qualify for, and to place you on the income-driven plan with the lowest monthly payment amount. Want the PLAN that GIVES YOU THE LOWEST LOAN AMOUNT Along with the application, you will be asked to provide income information. This may be either your adjusted gross income (AGI) or alternative documentation of income. sign in and guestimate information for LOANS StudentAid.gov/repayment-estimator

Postponing Payment, Avoiding Default, Loan Discharge and Forgiveness

Deferment & Forbearance Reasons Unemployment Economic hardship Graduate fellowship Rehabilitation training program Military In-school Forbearance Medical/dental internship residency Student loan debt burden AmeriCorps Teacher Loan Forgiveness DOD Student Loan Repayment Program National Guard Medical/other acceptable reasons

Consequences of Default For most federal student loans, you will default if you have not made a payment in more than 270 days.  Reported to credit bureaus No more eligibility for federal student aid Loan immediately due and payable in full Lose eligibility for repayment plans and deferment or forbearance options Collection agencies Administrative wage garnishment Garnish tax refunds

Getting Out of Default Consolidate Rehabilitate Pay off loan Choose IDR Plan Fast Less beneficial for credit Rehabilitate 9 income-driven payments over 10 months Slow More beneficial for credit Pay off loan Impractical for most

Discharge, Forgiveness, Cancellation Death (DL, FFEL, Perkins) Disability (DL, FFEL, Perkins) Public Service (DL) Teaching (DL, FFEL, Perkins)

www.studentaid.gov/repaymentchecklist

Federal Student Aid Resources 10/28/2017 Federal Student Aid Resources 37

10/28/2017 StudentAid.gov

10/28/2017 StudentLoans.gov Sign up for IBR, Pay As You Earn, ICR or REPAYE at StudentLoans.gov!  Repayment Estimator and Sign Up for Plans on studentloans.gov MUST HAVE FSA ID for that!!! Or Guestimate

NSLDS.ed.gov

Questions? Contact your loan servicer. 10/28/2017 Questions? Contact your loan servicer. If you do not know who you loan servicer is, visit NSLDS at nslds.ed.gov Federal Student Aid Information Center (FSAIC) 1-800-4-FEDAID (1-800-433-3243)