STUDENT LOAN FUNDAMENTALS 2014 TASFAA NAOW Workshop May 12-14, 2014 – Arlington, Texas Tanya Vittitow Associate Director – UT Arlington

Student Loan Programs and Eligibility Student Loan Application Process Student Loan Repayment

Federal Student Loan Programs Direct Subsidized Loan Direct Unsubsidized Loan Direct PLUS Loans Direct Consolidation Loans – Student Loan Repayment Perkins Loan Program Alternative Loans

Direct Subsidized Loans Need-based Loan for Undergraduate Students Enrolled at Least Half Time No In- School Accrued Interest – 6 Month Grace Period 150% Direct Subsidized Loan Limit Rule Applies Fixed Interest Rate 3.86% – July 1 Annual Adjustment Origination Fee 1.072% – Sequester Adjustment on October 1, 2014

150% Direct Subsidized Loan Limit New Borrowers on/after July 1, 2013 – 0 Loan Balance Ineligible for Additional Subsidized Loans Beyond 150% of the Published Program Length Replaced with Unsubsidized Loan Additional Dependent Subsidized Loan – Parent PLUS Denial

Direct Unsubsidized Loans Non-Need-based Loan for Undergraduate & Graduate Students Enrolled at Least Half Time In- School Accrued Interest – 6 Month Grace Period Fixed Interest Rate 3.86% Undergrad & 5.41% Grad – July 1 Annual Adjustment Origination Fee 1.072% – Sequester Adjustment on October 1, 2014

Direct PLUS Loans Parent/Gaurdian of Dependent Undergraduate Students Graduate Students Non-Need-based Loan - Student Enrolled at Least Half Time Borrow to Cost of Attendance – No Aggregate Limit Credit Check Required – Adverse Credit = Additional Unsubsidized for Undergraduate Students Fixed Interest Rate 6.41% – July 1 Annual Adjustment Origination Fee 4.288%– Sequester Adjustment on October 1, 2014 Interest Accrues and Repayment Begins at 100% Loan Disbursement Deferment Can be Requested at Application

Independent Undergraduate Student Base Eligibility (Sub or Unsub) Additional Unsubsidized Loan Freshman$3,500$6,000 Sophomore$4,000$6,000 Junior/Senior$5,500$7,000 Maximum Total (Aggregate) Limit: $57,500 ($23,000 can be subsidized) Graduate/Professional Student Unsubsidized Loan$20,500/academic year Maximum Total (Aggregate) Limit:$138,500 ($65,500 may be subsidized) Dependent Undergraduate Student Base Eligibility (Sub or Unsub) Additional Unsubsidized Loan Freshman$3,500$2,000 Sophomore$4,000$2,000 Junior/Senior$5,500$2000 Maximum Total (Aggregate) Limit: $31,000 ($23,000 can be subsidized)

Direct Loan Application Process Eligible Student in Eligible Program with Pell Eligibility Determination Complete Entrance Counseling First Time Subsidized/Unsubsidized and PLUS Student Borrowers Completed Prior to First Disbursement Master Promissory Note Loan Note for All Programs Valid for 10 Years

Additional Direct Loan Requirements Exit Counseling Required when Student Ceases to Attend Half Time – Includes Transfers 14 Day Disbursement Notification – Right to Cancel Per Disbursement

Perkins Loan Program Need-based Loan – Student Enrolled at Least Half Time School with Funds – Lender and Servicer Undergraduate and Graduate Students Annual Limit – Undergraduate $5,500 and Graduate $8,000 Aggregate Limit - Undergraduate $27,500 and Graduate $60,000 Grace Period 9 Months - 10 Year Max Repayment

Alternative Loan Programs Non-need Based External Loan Interest Rates, Origination Fees and Repayment Terms Vary Should Require School Certification - AppSelfCert.pdf AppSelfCert.pdf School Provided List – Consumer Disclosure Requirements

Student Loan Repayment Single Source – Multiple Repayment Options Via Servicer Standard – Monthly payment remains consistent for up to10 years Graduated – Monthly payments are lower at first but then increase every 2 years up to 10 years. Income-sensitive – Monthly payments are based on your annual income and payments change as your income changes. Extended – Payments may be fixed or graduated for up to 25 years. Income Contingent – payments based on annual calculations and adjusted so as not to cause “undue hardship”; (25 year forgiveness) Income Based- Monthly payments will not exceed 15% of the amount by which your adjusted gross income exceeds 150% of the poverty guideline for your family size. (25 year forgiveness) Pay As You Earn – Monthly payments will not exceed 10% of the amount by which your adjusted gross income exceeds 150% of the poverty guideline for your family size. (20 year forgiveness)

Student Loan Repayment Continued Grace Period – Period of time (generally 6 months) in witch a student has to begin repayment. Deferment – Period of time payments are postponed for an approved set of reasons; no-accrued interest on Subsidized Loans. Consolidation – Can be fix for default issues and/or way to combine all loans into one with one servicer.

Student Loan Repayment Continued Cohort Default Rate Includes DL loans, and loans underlying DL consolidation loans CDR = % of borrowers who enter repayment in a given federal fiscal year who then default within the next 3 fiscals years High rate has consequences for schools >15% = loss of 1 installment/semester 15% = 30 day hold on 1st time, 1st year borrowers > 40% = loss of participation in Title IV funding

THANK YOU Questions Tanya Vittitow Associate Director – UT Arlington