Loan Repayment Options 2013 FSA Training Conference for Financial Aid Professionals

Options? Three main plans Income-Contingent Repayment Plan (ICR) – 1994 Direct Loan Program only More information available at StudentAid.gov/ICR Income-Based Repayment Plan (IBR) – 2009 Available in both the Direct Loan and FFEL Program More information available at StudentAid.gov/IBR Pay As You Earn Plan (PAYE) – 2012 For new borrowers in FY 2008 who receive new loans in FY 2012 Modeled on IBR, incorporating statutory IBR changes scheduled to take effect for new borrowers in 2014 More information available at StudentAid.gov/PayAsYouEarn

Payment Amounts

Billy Borrower Billy Borrower: Is single with no dependents and lives in DC Has an AGI of $35,000 that rises at 5% per year and Has $50,000 in Direct Loan debt ($23,000 of which is subsidized), all of which has a 3.86% interest rate

Billy Borrower – Comparison Year IBR ICR PAYE 1 $222 $360 $148 2 $240 $364 $163 3 $258 $369 $178 4 $278 $374 $194 5 $298 $378 $211 6 $319 $383 $229 7 $342 $387 $247 8 $365 $393 $267 9 $390 $398 $287 10 $417 $403 $309 11 $445 $409 $331 12 $474 $414 $355 13 $503 $420 $380 14 $426 $406 15 - $434 16 $463 17 $493 18 19 20 21 22 23 24 25

Billy Borrower – Comparison ICR IBR Pay As You Earn Initial Payment $360 $222 $148 Final Payment $426 $503 Time Of Repayment 13 years, 9 months 15 years, 6 months 19 years, 9 months Total Paid $65,198 $69,595 $77,605 Forgiveness $0

Public Service Loan Forgiveness (PSLF) http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service StudentAid.gov/PublicService

Public Service Loan Forgiveness 120 qualifying payments On Direct Loans On qualifying repayment plans While working 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

PSLF – Borrower Example Without PSLF: ICR IBR Pay As You Earn Time in Repayment 13 years, 9 months 15 years, 6 months 19 years, 9 months Total Paid $65,198 $69,595 $77,605 Plan Forgiveness $0 With PSLF: ICR IBR Pay As You Earn Time in Repayment 10 years Total Paid for PSLF $45,700 $37,541 $26,788 PSLF Amount $18,064 $28,777 $41,671

QUESTIONS?