1 MONEY MATTERS Carla A. Lord-Hardy Coordinator of Debt Management

2 Money Matters Student Loans State Aid, Scholarships Loan Processing & Procedures Document/Paperwork Flow How It All Comes Together Loan Cancellation/Forgiveness Student Rights and Responsibilities Debt Management Repayment

3 Money Matters What is Financial Aid? Who is eligible for aid? What are the types of aid available?

4 Money Matters $ Financial Aid Free Money – Money that a student receives from the State that is not required to be paid back. SEOG FRAG PELL FSAG

5 Money Matters STUDENT LOANS Stafford Subsidized & Unsubsidized Loans Health & Human Services Loans (HHS) Perkins Loans Private Loans FINANCIAL AID State Aid – FRAG, SEOG, PELL, FSAG Scholarships – Internal & External Grants

6 Money Matters Other Forms of Aid Pell - Need-based gift aid available to undergraduate students who demonstrate financial need. FSEOG - Administered by the financial aid office to UG students. Limited funding. FWS - Federal Work-study is a need based program that lets a student earn money and work experience while they are in school.

7 Money Matters Other Forms of Aid Parent Loans/Student Loans - Certain federal education loans are available to parent of undergraduate students. Federal Perkins Loans - Funded by the federal government. Available only to the neediest of students. 5% fixed interest, 10 yr pay-off and 9 month grace.

8 Money Matters Other Forms of AidScholarships- Internal & External answer.com, naid answer.com naid

9 Money Matters Who is eligible for Federal Financial Aid? Citizens Eligible non-citizens Students who have not Defaulted on a prior school loan.

10 Money Matters What steps need to be taken to apply for financial aid? All federal student aid begins with the FAFSA. The student will need his/her current years income tax return in order to complete the application. Ample time needs to be set aside, regardless of whether the form is completed online or on paper. For questions or problems with completing the FAFSA, the student can call FED-AID. A student must re-apply each year aid is needed.

11 Money Matters What steps need to be taken to apply for financial aid? After a few weeks, the student will receive a Student Aid Report (SAR), which will state the students expected financial contribution (EFC) to his/her education. The same information is sent to the school electronically. The financial aid office will compare the students EFC against the schools cost of attendance to determine financial need. An award is then generated and may include scholarships, work-study, & loans.

12 Money Matters Budgeting of the Award Students are sent their award notice via mail or e- mail. Award information can also be reviewed on their Webstar account. The notice states the type of aid offered, the amount of aid, and how the aid is disbursed. Students should only borrow the amount necessary to complete their education.

13 Money Matters Budgeting for SchoolCost of attendance in GTEP program for two years - $13,500 Cost of attendance in Dr. Ed. Leaders program for three years - $37,000

14 Money Matters GTEP/C.O.A = $13,500 Student borrows = $46,250 (average) Dr. Ed. Leaders/C.O.A = $37,000 Student borrows = $74,000 (average)

15 Money Matters What did I borrow and where did the money go? DEL/DOL – 3 yrs Sub = $34,000 Unsub = $40,000 Total = $74,000 Standard monthly payment on loans with 4% interest (10 yrs) $ monthly

16 Money Matters What did I borrow and where did the money go? DEL/DOL – 3 yrs Sub = $17,000 Unsub = $20,000 Total = $37,000 Standard monthly payment on loans with 4% interest (10 yrs) $ monthly

17 Money Matters What did I borrow and where did the money go? GTEP – 2 yrs Sub = $8,500 Unsub = $5,000 Total = $13,500 Standard monthly payment on loans with 4% interest (10 yrs) $ monthly

18 Money Matters What did I borrow and where did the money go? GTEP – 2 yrs Sub = $21,250 Unsub = $25,000 Total = $46,250 Standard monthly payment on loans with 4% interest (10 yrs) $ monthly

19 Money Matters Students who borrow the maximum amount allowed run the risk of reaching their aggregate borrowing limits before completing their education. UG Limits Sub – $23,000 Unsub – $23,000 Total – $46,000 Grad Limits Sub – $65,500 Unsub – $73,000 Total – $138,500

20 Money Matters Once I start loan repayments, are there any programs that would reduce or eliminate any of my debt? Loan Cancellations Loan Forgiveness

21 Money Matters Loan Cancellation Perkins Loans – A student is entitled to have up to 100 percent of the original principal cancelled. A student will need to perform qualifying services in certain areas after the enrollment period covered by the loan. Teaching – Full-time teacher/special education teacher in a public or other nonprofit elementary or secondary school. Early Intervention Services – Full-time qualified professional provider of early intervention services in a public or other nonprofit program.

22 Money Matters Loan Cancellation Child or Family Service Agency – Full-time employee of an eligible public or private nonprofit child or family service agency who is directly providing or supervising the provisions of services to high-risk children.

23 Money Matters Loan Cancellation Nurse or Medical Technician – Full-time nurse providing health care services. Law Enforcement or Corrections Officer – Full-time enforcement officer for an eligible local, state, or federal law enforcement agency.

24 Money Matters Loan Forgiveness Stafford Loans For Teachers – Certain elementary and secondary teachers who teach for at least five consecutive years in schools serving low-income students may qualify to receive up to $5, in loan forgiveness on their Federal Stafford loans or on the outstanding portion of a consolidation loan.

25 Money Matters Loan Forgiveness For Child-Care Providers – Subject to annual appropriations approved by Congress, the US. Department of Education will repay up to 100 percent of an eligible child-care providers Stafford- loan obligations.

26 Money Management & Repayment

27 Preparing to Pay Back School Loans Q1. When do I have to start repaying my student loans? A. Immediately upon graduation B. After I receive my inheritance C. Never – I took out a Stafford Scholarship D. Six months after I graduate or leave school

28 Preparing to Pay Back School Loans Q2. Will I be able to afford the monthly repayments? What will my monthly payments be?

29 Repayment Plans Standard Repayment Fixed monthly payment (minimum of $50) Payable over 10 years Income-Sensitive Adjusted yearly for up to 10 years Based on annual income and the amount of the loan Graduated Repayment Begins with smaller monthly payments that gradually increase every 2 years Repayment period varies from 12 to 30 years

30 Repayment Plans contd Extended Repayment A new option if you were a first time borrower on or after October 7, 1998 Your debt must be in excess of $ 30,000 You may take up to 25 years to repay your loans using either Standard or Graduated Repayment Plan

31 Consolidation Depending on the loan amount, a Federal Consolidation Loan extends your repayment and offers smaller monthly payments. You may consolidate while you are in repayment or in grace. After receiving a Federal Consolidation Loan you have 180 days (approx. 6 months) to add new loans. A consolidation loan cannot be reversed.

32 Eligible Loans for Consolidation Federal Subsidized and Unsubsidized Stafford Loans Federal PLUS Loans Guaranteed Student Loans Direct Consolidation Loans and Federal Consolidation Loans Federal Insured Student Loans Federal Perkins Loans National Defense Student Loans Health Professions Student Loans Loans for Disadvantaged Students Nursing Student Loans

33 Married Borrowers Married borrowers are eligible for joint consolidation. If one spouse dies or becomes permanently disabled, the other spouse is still responsible for repayment of the entire consolidation loan. In case of divorce, both parties are still accountable until the loan is paid in full.

34 Should You Consolidate? Does consolidation offer you a lower rate? What consolidation benefits do your current lenders offer? Are your monthly payments manageable? How much are you willing to pay over the long term? Extending the years of payment increases the total amount you have to repay. If you are already in repayment, how many payments do you have left on your loans?

35 Benefits of Consolidation Lower interest rate One lender and one monthly payment Reduced monthly payments Four different repayment plans Deferment options

36 Disadvantages of Consolidation Extended repayment (30 years) adds more interest expense. Interest rate may be higher than the original amount. Federal Perkins loan borrowers may lose eligibility for different types of cancellations.

37 Consolidation Agencies Federal Direct Loan Consolidation Nelnet 866-4CONSOL ( ) Sallie Mae

38 Deferment A deferment allows you to postpone your monthly payments. No interest accrues during deferment. With Federal Subsidized Stafford Loans, the government pays the interest during the deferment period. Obtaining a deferment requires you to: Submit an application with supporting documents and Secure approval from the lender. Note: Until the approval is given, you MUST continue to pay on your current repayment plan. There are different types of deferments. One type, an Economic Hardship deferment, may be renewed for a max of 3 years.

39 Forbearance A forbearance allows you to delay or reduce payments, usually for 3-12 months at a time Interest will continue to accrue No application is required It can be renewed yearly for a max of 5 years If your Federal Stafford Loan debt exceeds 20% of your monthly income, lenders are required to honor your request

40 Default When you fail to make payments on your student loans for 270 days (approx. 9 months), you are in DEFAULT!

41 Consequences of Default Your entire loan will become immediately due You may be forced to pay attorneys fees, court costs, and other expenses if the lender employs a collection agency to recover the debt You will not be able to obtain future deferments or forbearances You will not be able to obtain additional financial aid Your tax return refund may be withheld to pay the debt Your wages may be garnished Your professional license may be revoked Your default will be on your credit report for 7 years

42 Tips on Lowering Your Interest Rates Most lenders offer incentives to help you reduce your student loan Pay on time Set up automatic deduction

43 Conclusion Wrap-up Questions Comments Contact Information Carla Lord-Hardy, Coordinator of Debt Management Phone: