Repaying Your Federal Student Loans Managing Your Loans After Medical School Spring 2008 © Copyright, 2008 by Access Group, Inc. All rights reserved.

Student loans are debt that must be repaid. But remember, that debt has allowed you to make a significant INVESTMENT in yourself!

Which of YOUR financial resources have you been using to pay for your education? A Question... How have you been paying for your education? Savings and other assets Gifts from family and others In-school earnings Your future income You need a sound “loan repayment strategy” if you hope to spend your future income wisely!

To successfully manage loan repayment... Know how much you have to repay and to whom Understand the terms and conditions of your loans, your options in repayment, and your rights and responsibilities as a borrower Consider a payment plan that will extend repayment or that is based on your income if you need to reduce your monthly loan payments Think twice before you consolidate Take advantage of loan forgiveness programs when you qualify for them Develop an affordable budget plan to help you decide what repayment plan is best for you ü

Repayment Realities How much will you have to repay? Who must you repay?

How much have you borrowed and what will it cost to repay? Your Student Loan Debt Total Student Loan Debt*$ Estimated Monthly Loan Payment $ *The “Total Student Loan Debt” should include both the principal amount borrowed while in school AND any accrued interest that was not paid while in school–that accrued interest will be capitalized (added to the loan principal) prior to the loans entering repayment ü

How much have you borrowed and what will it cost to repay? End of Grace End of 3-Year Residency End of 5-Year Residency Average total student loan borrowing $165,000 Estimated approximate capitalized interest– UFSL $23,400$50,200$68,000 Estimated approximate total debt at repayment $188,400$215,200$233,000 Estimated approximate monthly loan payment $2,170$2,475$2,680 Assumptions:Subsidized Federal Stafford Loan (SFSL) = $34,000 Standard (Equal) 6.8% for 10 years Unsubsidized Federal Stafford Loan (UFSL) = $131,000 Standard (Equal) 6.8% for 10 years

Assumptions:- 10-year repayment period - No payment incentives Sample Loan Repayment Total Debt 6.8% Interest Rate8.5% Interest Rate Monthly Payment Total Paid Monthly Payment Total Paid $10,000$115$13,810$124$14,878 $60,000$690$82,858$744$89,270 $75,000$863$103,572$930$111,587 $100,000$1,151$138,096$1,240$148,783 $125,000$1,439$172,620$1,550$185,979 $150,000$1,726$207,145$1,860$223,174 $175,000$2,014$241,669$2,170$260,370 $200,000$2,302$276,193$2,480$297,566

Who must you repay? Develop a Detailed Listing of All Your Loans with the Loan Holder/Servicer Information Your must repay your current loan holder/servicer Loan Type/ Account # Loan HolderLoan Servicer Stafford Name: Address: Phone Number: Website: PLUS Name: Address: Phone Number: Website: Information about the current loan holder/servicer of your Title IV federal student loans is stored in the NSLDS at:

Loan Repayment Timeline Class of 2008 Federal Stafford Sub & Unsub NEW BORROWER Not consolidated 6 month grace Check with your loan servicer about Economic Hardship Deferment MUST APPLY EACH YEAR Repayment or forbearance Federal Stafford Sub & Unsub CONSOLIDATED LOANS No Grace. Repayment Begins. Apply for 6 month forbearance or Economic Hardship Deferment MUST APPLY EACH YEAR Repayment or forbearance GRADPLUSNo Grace. Repayment Begins. Apply for 6 month forbearance or Economic Hardship Deferment MUST APPLY EACH YEAR Repayment or forbearance Federal Perkins on or after July 1, month grace Check with the Student Loan Office Economic Hardship Deferment MUST APPLY EACH YEAR 6 month grace Repayment or forbearance Access Alternative9 month grace 4 Years Residency Forbearance MUST APPLY EACH YEAR ALTERNATIVE LOANS (OTHER) 4 Years Residency Forbearance/DefermentRepayment or forbearance Institutional LoansCheck your promissory note for details or ask your financial aid officer 12/08 12/09 12/10 12/11 12/12 12/13 6/08 6/09 6/10 6/11 6/12 6/13 6/14 │ │ │ │ │ │ │

Deferment Eligibility Defined by law and the terms of your promissory note Based on your earliest outstanding FFELP loan Interest subsidy for subsidized Stafford Loans You must request a deferment from the current holder/servicer of your loan(s) You must provide required documentation Loan must be in good standing Temporary postponement of monthly loan payments Contact your current loan holder/servicer for more information about deferment and/or to obtain the appropriate deferment request form

Current Deferment Types In-school (at least half-time) Education-related Graduate fellowship program (full-time) Rehabilitation training program (full-time) Unemployment Economic hardship Military New FFELP borrowers as of 7/1/93 may be eligible for the following deferments: Contact your current loan holder/servicer for information about loan deferment eligibility if you first borrowed a FFELP loan prior to 7/1/93

Deferment During Residency FFELP Loans Determine when you borrowed your 1 st Stafford Loan First-time borrower prior to July 1, 1993 Eligible for two years Residency Deferment First-time borrower on or after July 1, 1993 May qualify for up to three years Economic Hardship Deferment Apply near the end of your grace period Holder/servicer should not defer loans until the end of the GRACE period on your loans

Economic Hardship Deferment FFELP Loans You must apply for the deferment with your current loan holder/servicer on an annual basis using the Economic Hardship Deferment Request form (HRD) Eligibility is tied to your: Income Total federal student loan balance Loan interest rate(s)

Economic Hardship Deferment First Year Medical Residency Salary by Region Region Mean Salary (PGY1) Min. Federal Debt Needed to Qualify* (approximate) All Regions $44,747$74,900 Northeast $46,631$88,400 South $42,751$60,600 Midwest $43,913$68,900 West $44,514$73,200 Salary data from: “AAMC Survey of Housestaff Stipends, Benefits and Funding,” Table 5 -- Autumn 2007 Report * Calculated using information on Worksheet B of the Economic Hardship Deferment Request Form including the 2008 HHS poverty guideline figure for a household size of 1 living in the contiguous 48 states or D.C., the new definition of economic hardship created by the College Cost Reduction and Access Act (CCRAA), and an assumed interest rate of 6.8% (rounded up to 7.0% for calculation)

Forbearance You are responsible for all accrued interest Discretionary forbearances may be available You must request a forbearance from the current holder/servicer of your loan(s) You must provide whatever documentation is requested by your loan holder/servicer Mandatory forbearance may be available in certain cases including during any periods of medical/dental internship or residency Temporary postponement or reduction of monthly payments, or extension of time for making payments

Mandatory Forbearance During Medical/Dental Residency Temporary suspension of loan payments Interest accrues — can be capitalized annually Available during entire residency May qualify during GME fellowship Must be requested from loan holder/servicer Must be renewed on annual basis

Understanding Your Loans

never graduate don’t get a job don’t like quality of education you received never use the information you learned don’t receive a monthly statement or bill A Repayment Reality... Student loans must be repaid, even if you: ü

Master Promissory Note (MPN) The Promise You Made... Remember, the MPN is the legally binding agreement between you and your lender of a Federal Stafford or a Federal PLUS Loan You may have: used it as a ONE-TIME-ONLY application, and completed a new MPN each year, OR used it as a SERIAL application and completed only one MPN that covered all the Stafford/PLUS Loan funds you borrowed while in this degree program Whichever case applies to you, you must repay all that you borrowed along with all accrued interest and any fees that are charged ü

Partners in the process Interest rate and repayment terms Repayment plans Consolidation options Your rights and responsibilities Understanding Your Loans What You Need to Know

Health Professions Students Lender / Loan Holder Servicer Secondary Market Guarantor U.S. Department of Education U.S. Department of Health and Human Services (HHS) Partners in the Process Federal Student Loans

Federal Stafford Loan Interest Rate Stafford Loans first disbursed prior to 7/1/06 Variable Rate (effective July 1, 2007 thru June 30, 2008) In-school, grace, and deferment periods 91-day T-Bill (4.92%) + 1.7% = 6.62% In-repayment and forbearance periods 91-day T-Bill (4.92%) + 2.3% = 7.22% Maximum rate = 8.25% Stafford Loans first disbursed on/after 7/1/06 Fixed Rate All periods = 6.8% ü

Federal Stafford Loan Repayment Terms- An Overview Repayment period begins following GRACE period of 6 months Length of repayment period Depends on repayment plan chosen; ranges from years Four repayment plans currently available Minimum monthly payment requirement $50 Minimum payment may be larger due to amount owed and maximum repayment period allowed No prepayment penalty ü

Federal PLUS Loan Interest Rate and Repayment Terms Interest Rate Fixed at 8.5% in FFELP (Fixed at 7.9% in Direct Loan Program) (interest is not subsidized, it begins accruing as soon as loan funds are disbursed) Grace Period None; repayment begins within 60 days after loan is fully disbursed (deferments or forbearance may be available) Repayment PlanFour repayment plans Repayment Period 10 to 25 years (depends on repayment plan chosen) Minimum Monthly Payment $50 (can be higher based on amount owed) No prepayment penalty ü

Interest Rate Typically variable – based on credit history, usually calculated using an index (LIBOR or Prime) plus a spread/margin Grace Period6 to 12 months (depends on lender) Repayment planStandard, Graduated, other(?) Repayment Period 10 to 30 years (depends on lender) Minimum Payment Depends on lender Private Loans Interest Rate and Repayment Terms

Federal Student Loan Repayment Plans

Repayment Plans Federal Family Education Loan Program (FFELP) Standard (Fixed) Repayment Graduated Repayment Extended Repayment Income-Sensitive Repayment Income-Based Repayment (effective 7/1/2009) Choice of a repayment plan may depend on your eligibility for that plan. Once you have chosen a plan, you are allowed to change to a different plan provided you qualify for that plan. ü

FFELP Repayment Plan: Standard Repayment Monthly payment is fixed – the same minimum payment is due each month (your monthly payment typically changes only if your loan has a variable interest rate and that interest rate changes) Maximum repayment period is 10 years on Federal Stafford/Federal PLUS Loans Results in lowest amount of total interest paid Requires the highest initial monthly payment Your loan holder/servicer will place you on this repayment plan unless you choose one of the other available repayment plans and notify your loan holder/servicer of that choice

FFELP Repayment Plan: Graduated Repayment Initial monthly payments cover only the interest that has accrued since the previous billing period They increase in one or more increments over time so that a portion of your monthly payment also reduces your outstanding principal balance Maximum repayment period is 10 years on Federal Stafford/Federal PLUS Loans Results in larger amount of total interest paid than with the Standard Repayment Plan Lenders must offer at least one graduated repayment plan; some lenders offer more than one graduated plan

FFELP Repayment Plan: Extended Repayment Provides for fixed or graduated monthly loan payments over a 25-year repayment period rather than 10 years Results in a lower monthly payment than with the Standard Repayment Plan based on a 10-year repayment period, but also results in a larger amount of total interest paid Plan is available only to those borrowers who have no outstanding balance on a FFELP loan made prior to 10/7/98 Borrower also must have more than $30,000 in total FFELP loan debt

Comparing Standard, Graduated and Extended Repayment - $150,000 Stafford Loan Balance Options Standard Repayment Graduated Repayment Extended Repayment Monthly Payment $1,726 $850 (2 yrs) $1,041 $2,030 (8 yrs) Repayment Period 10 years 25 years TOTAL PAID$207,145$215,295$312,332 Assumptions:- 6.80% fixed interest rate - No payment incentives

FFELP Repayment Plan: Income-Sensitive Repayment Monthly payment is based on total gross monthly income received from all sources and loan amount Payment must at least pay accrued interest charges Eligibility for plan and payment amount are reviewed and adjusted annually in accordance with any change to your income Maximum repayment period is 15 years on Federal Stafford/Federal PLUS Loans Results in a lower monthly payment than with the Standard Repayment Plan based on a 10-year repayment period, but also results in a larger amount of total interest paid

FFELP Repayment Plan: Income-Based Repayment (IBR) Effective date: July 1, 2009 Eligibility criteria: Available for repayment of FFEL/Direct Stafford, Grad PLUS and Federal Consolidation Loans (FCL) Cannot be used to repay Parent PLUS Loans Cannot be used to repay FCL that included payoff of a Parent PLUS Loan Must be experiencing “Partial Financial Hardship” Eligibility and minimum monthly payment must be re-evaluated each year by your loan holder/servicer

Income-Based Repayment (IBR) “Partial Financial Hardship” Annual amount due on your total eligible federal student loan debt in repayment When calculated using the Standard Repayment Plan based on a 10-year repayment period Exceeds 15% of your household AGI (including spouse’s income, if married, and filing joint federal tax return) above 150% of the poverty line for your family size If eligible, the IBR monthly payment is 1/12 th of 15% of the AGI above 150% of the poverty line You have “Partial Financial Hardship” when: Calculator available at: Finaid.Org/calculators

Income-Based Repayment (IBR) A Simpler Explanation... When considering IBR, the annual amount you can pay on your total eligible federal student loan debt is the lesser of: Amount due using the Standard Repayment Plan based on a 10-year repayment period, OR 15% of your annual AGI (including spouse’s income, if married, and filing joint federal tax return) that is above 150% of the poverty line for your family size Of course, you also have the option to choose one of the other loan repayment plans for which you qualify if IBR is not right for you In essence, Congress is offering the following in creating the Income Based Repayment plan:

Income-Based Repayment (IBR) 2008 HHS Poverty Guidelines Persons in Family or Household 48 Contiguous States and D.C. AlaskaHawaii 1$10,400$13,000$11, ,00017,50016, ,60022,00020, ,20026,50024, ,80031,00028, ,40035,50032, ,00040,00036, ,60044,50040,940 For each additional person, add 3,6004,5004,140 Source: Federal Register, Vol. 73, No. 15, January 23, 2008, pp

Income-Based Repayment (IBR) More Payment Provisions Monthly IBR payment can be less than the accrued interest that billing period (i.e., it allows for negative amortization) Secretary of ED is authorized to pay any unpaid interest that accrues during IBR repayment on qualifying subsidized Stafford debt for not more than 3 years (not counting periods of Economic Hardship deferment) Unpaid interest and principal can be capitalized by your loan holder when you stop using the IBR plan Repayment period using IBR can extend beyond 10 years regardless of the amount of your eligible debt, but not beyond 25 years

Income-Based Repayment (IBR) Loan Cancellation After 25 Years Any outstanding eligible FFEL or Direct loan balance (other than PLUS) is cancelled after 25 years of being “economically challenged” To be “economically challenged” you must have used IBR during a portion of the repayment period AND you must meet at least one of the following requirements during the 25-year period: Made reduced monthly payments under IBR Made monthly loan payments using Income Contingent Repayment (ICR) Made monthly payments of not less than the monthly amount calculated using Standard Repayment based on a 10-year repayment period when you first used IBR Were in an Economic Hardship deferment Any loan amount that is cancelled may be taxable in the calendar year it is cancelled

Income-Based Repayment (IBR) Sample Calculation Using 2008 Poverty Guideline Eligible federal student loan debt$165,000 Estimated monthly payment (Standard 6.8% over 10 years) $1,899 [1] Annual amount due ([1] × 12) $22,788 [2] Household size1 Household AGI$120,000 [3] Poverty line (in 2008) for household size$10,400 [4] 150% of poverty line (1.5 × [4]) $15,600 [5] AGI – 150% of poverty line ([3] – [5]) $104,400 [6] 15% of calculated amount from (0.15 × [6]) $15,660 [7] Eligible for Partial financial hardship – YES or NO YES, if [7] is less than [2] NO, if [7] is equal to or greater than [2] YES IBR monthly payment, if eligible ([7] ÷ 12) $1,305 Maximum AGI permitted in this example to qualify for IBR$167,519

Income-Based Repayment (IBR) Beware of Negative Amortization Eligible federal student loan debt$165,000 Estimated monthly payment (Standard 6.8% over 10 years) $1,899 Interest paid in 1 st month$935 Loan principal paid in 1 st month$964 New principal balance after 1 st payment$164,036 Comparison with IBR payment, if eligible IBR monthly payment in first month$1,305 New principal balance after 1 st payment$164,630 Unpaid interest after 1 st payment$0 Maximum AGI resulting in negative amortization AGI needed with IBR to pay accrued interest$90,320 IBR monthly payment in first month$934

Income-Based Repayment (IBR) Approx. Maximum AGI Needed to Qualify for IBR at Specified Debt Assumptions:- Interest rate = 6.8% - Household size of 1 residing in 48 contiguous states Poverty Guidelines DebtAGI $25,000$38,616 $30,000$43,219 $35,000$47,822 $40,000$52,425 $45,000$57,028 $50,000$61,632 $55,000$66,235 $60,000$70,838 $65,000$75,441 $70,000$80,044 DebtAGI $75,000$84,648 $80,000$89,251 $85,000$93,854 $90,000$98,457 $95,000$103,061 $100,000$107,664 $105,000$112,267 $110,000$116,870 $115,000$121,473 $120,000$126,077 $125,000$130,680

Income-Based Repayment (IBR) Approx. Maximum AGI Needed to Qualify for IBR at Specified Debt Assumptions:- Interest rate = 6.8% - Household size of 1 residing in 48 contiguous states Poverty Guidelines DebtAGI $130,000$135,283 $135,000$139,886 $140,000$144,489 $145,000$149,093 $150,000$153,696 $155,000$158,299 $160,000$162,902 $165,000$167,506 $170,000$172,109 $175,000$176,712 DebtAGI $180,000$181,315 $185,000$185,918 $190,000$190,522 $195,000$195,125 $200,000$199,728 $205,000$204,331 $210,000$208,934 $215,000$213,538 $220,000$218,141 $225,000$222,744

Income-Based Repayment (IBR) A Few Things to Consider Use of IBR can help make loan repayment more manageable by reducing the minimum monthly payment on your eligible federal student loans But, use of IBR will increase the total cost of your debt since more total interest will accrue IBR does not replace the Income Sensitive Repayment or Income Contingent Repayment options Extended Repayment also is an option to consider if you need to reduce your monthly payment and you want to avoid the possibility of negative amortization and/or the need to have your IBR payment plan re- evaluated each year by your loan holder/servicer

Income-Based Repayment (IBR) Extended repayment as an alternative to IBR Eligible federal student loan debt$165,000 Estimated monthly payment (Standard 6.8% over 10 years) $1,899 Estimated monthly payment (Extended plan with fixed 6.8% over 25 years) $1,145 Interest paid in 1 st month$935 Loan principal paid in 1 st month$210 Estimated monthly payment (IBR 6.8% over ? years) $1,305 Difference in first monthly payment between Extended Repayment plan and IBR $160

Federal Loan Consolidation

Consolidation is... Paying off one or more eligible federal education loans by borrowing a new federal education loan All federal student loans except the Primary Care Loan (PCL) are eligible for federal loan consolidation

Reasons to Consolidate To reduce your monthly loan payment Increases monthly cash flow To have single statement billing Increases convenience To take advantage of the fixed interest rate structure of the Federal Consolidation Loan (FCL) by consolidating your loans with variable interest rates Can reduce long-term cost

Consolidation May Not Be Right If any of the following are true: You only have eligible federal student loans with FIXED interest rates You qualify for Extended Repayment You qualify for on-time payment incentives on your Federal Stafford/PLUS Loans Then, you might be better off financially by NOT consolidating Your monthly payment could be less without consolidating The total interest cost of your student loan debt likely will be less if you do not consolidate

Example #1 $40,000 Federal Stafford Loan (FSL) Federal Stafford Loan (FSL) Extended Repayment Consolidation of Stafford (FSL) Loan Principal $40,000 Interest Rate 6.80%6.875% Length of Repayment 25 years 30 years Monthly Payment $277.63$279.53$ Total Paid $83,288.65$83,859.02$94,597.75

What if you get an 0.8% on-time payment interest rate reduction on FSL? Federal Stafford Loan (FSL) Extended Repayment Consolidation of Stafford (FSL) Loan Principal $40,000 Interest Rate 6.00%* 6.875% Length of Repayment 25 years 30 years Monthly Payment $ $279.53$ Total Paid $77,316.17$83,859.02$94, *Assumes interest rate is reduced by 0.8% after you make your first scheduled monthly loan payment on time; benefit continues as long as your payments are received on time

Consolidation May Be Right If any of the following are true: You have eligible federal student loans with VARIABLE interest rates You do NOT qualify for Extended Repayment You have multiple loan holders/servicers of your eligible federal student loans and you want to be able to pay your federal student loans with a single monthly payment Then, you may want to consider consolidation Timing of the consolidation loan still is an important issue if loans with variable interest rates are being consolidated

When to Consolidate Factors Related to All Federal Loans To be eligible, loans must be: Fully disbursed In grace or in repayment NO deadline for consolidating once loans are eligible for consolidation Can request funding of FCL be delayed until near the end of your Federal Stafford Loan grace period Must provide Federal Stafford Loan Grace Period End Date on your FCL application

When to Consolidate Factors Related to Variable Rate Federal Loans Should be aware of trends in the 91-day Treasury Bill used to set variable rate If increasing, consolidate before rate is reset on 7/1 If decreasing, consolidate after rate is reset on 7/1 Consolidate variable rate loans while in grace or deferment Allows you to take advantage of lower interest rate spread/margin

2007–2008 Variable Interest Rates Federal Stafford Loans With 2007– day T-bill = 4.92%: In-school/grace/deferment variable interest rate = 4.92% + 1.7% = 6.62% Consolidation (FCL) fixed rate = 6.625% In-repayment/forbearance variable interest rate = 4.92% + 2.3% = 7.22% Consolidation (FCL) fixed rate = 7.25%

Recent 91-day T-bill Rate Trends Source: “Treasury Security Auction Results.” U.S. Department of the Treasury, Bureau of the Public Debt, Washington, DC. 2.39% 4.92%

What would be the 2008–2009 interest rates if they were set as of 1/28/08? Assuming 2008– day T-bill = 2.39 %: In-school/grace/deferment variable interest rate = 2.39% + 1.7% = 4.09% Consolidation (FCL) fixed rate = 4.125% ( 2.5% decrease from fixed FCL rate) In-repayment/forbearance variable interest rate = 2.39% + 2.3% = 4.69% Consolidation (FCL) fixed rate = 4.75% ( 2.5% decrease from fixed FCL rate) And note, 4.75% is 1.875% less than the consolidation rate of 6.625% that is based on the in-school variable rate for

Borrower Rights

Your Rights You have the right to: Deferment, forbearance, discharge, loan forgiveness, if eligible Loan prepayment without penalty Assistance from U.S. Department of Education Ombudsman to resolve conflicts with loan holders/servicers Possibility of federal income tax deduction for student loan interest paid ü

Deferment Eligibility Defined by law and the terms of your promissory note Based on your earliest outstanding FFELP loan Interest subsidy for subsidized Stafford Loans You must request a deferment from the current holder/servicer of your loan(s) You must provide required documentation Loan must be in good standing Temporary postponement of monthly loan payments Contact your current loan holder/servicer for more information about deferment and/or to obtain the appropriate deferment request form

Current Deferment Types In-school (at least half-time) Education-related Graduate fellowship program (full-time) Rehabilitation training program (full-time) Unemployment Economic hardship Military New FFELP borrowers as of 7/1/93 may be eligible for the following deferments: Contact your current loan holder/servicer for information about loan deferment eligibility if you first borrowed a FFELP loan prior to 7/1/93

Deferment During Residency FFELP Loans Determine when you borrowed your 1 st Stafford Loan First-time borrower prior to July 1, 1993 Eligible for two years Residency Deferment First-time borrower on or after July 1, 1993 May qualify for up to three years Economic Hardship Deferment Apply near the end of your grace period Holder/servicer should not defer loans until the end of the GRACE period on your loans

Economic Hardship Deferment FFELP Loans You must apply for the deferment with your current loan holder/servicer on an annual basis using the Economic Hardship Deferment Request form (HRD) Eligibility is tied to your: Income Total federal student loan balance Loan interest rate(s)

Economic Hardship Deferment First Year Medical Residency Salary by Region Region Mean Salary (PGY1) Min. Federal Debt Needed to Qualify* (approximate) All Regions $44,747$74,900 Northeast $46,631$88,400 South $42,751$60,600 Midwest $43,913$68,900 West $44,514$73,200 Salary data from: “AAMC Survey of Housestaff Stipends, Benefits and Funding,” Table 5 -- Autumn 2007 Report * Calculated using information on Worksheet B of the Economic Hardship Deferment Request Form including the 2008 HHS poverty guideline figure for a household size of 1 living in the contiguous 48 states or D.C., the new definition of economic hardship created by the College Cost Reduction and Access Act (CCRAA), and an assumed interest rate of 6.8% (rounded up to 7.0% for calculation)

Forbearance You are responsible for all accrued interest Discretionary forbearances may be available You must request a forbearance from the current holder/servicer of your loan(s) You must provide whatever documentation is requested by your loan holder/servicer Mandatory forbearance may be available in certain cases including during any periods of medical/dental internship or residency Temporary postponement or reduction of monthly payments, or extension of time for making payments

Mandatory Forbearance During Medical/Dental Residency Temporary suspension of loan payments Interest accrues — can be capitalized annually Available during entire residency May qualify during GME fellowship Must be requested from loan holder/servicer Must be renewed on annual basis

Loan Discharge Loan discharge available due to: Death Total and permanent disability Documentation must be provided to the holder/servicer of the loan(s) Partial discharge or loan forgiveness may be available for certain types of employment (e.g., teaching in a shortage area) Contact the current holder/servicer of the loan(s) for more information about loan discharge or to apply for a discharge

Loan Prepayment You have the right to make prepayments on your federal student loan(s) without penalty In other words, you can pay more than the minimum amount required or make an extra payment at any time This will reduce the amount of interest you pay over the life of repayment because you will save the interest that would have accrued on the funds had you not made the prepayment When prepaying on a loan: Verify where your prepayment should be mailed and include a written explanation as to how the prepayment is to be applied to your account Request that your prepayment be applied to principal, if permitted Prepayments should be targeted at your loans having the highest interest rate

Public Service Loan Forgiveness New Federal Loan Forgiveness Program The balance of interest and principal due on any of your eligible Federal Direct Loans will be cancelled by the U.S. Department of Education provided you have met the following three conditions: Your Federal Direct Loans are not in default You have worked full-time for a total of 10 years (120 months) in a qualifying public service position on or after October 1, 2007 You have made 120 qualifying loan payments on your Federal Direct Loans during the period of qualifying public service employment

Public Service Loan Forgiveness General Provisions Effective for qualifying monthly loan payments made on or after October 1, 2007 Loans eligible for forgiveness are limited to: Federal Direct Stafford Loans Federal Direct PLUS Loans Federal Direct Consolidation Loans Any loan amount that is cancelled may be taxable in the calendar year in which it is cancelled

Public Service Loan Forgiveness Qualifying Payment Requirements You must be working in an eligible public service position AND be making monthly loan payments for 120 months on your eligible Federal Direct Loan(s) as part of: Income Contingent Repayment (ICR) plan, or Income Based Repayment (IBR) plan, or Standard Repayment plan based on a 10-year repayment schedule, or Repayment plan where the monthly amount paid was not less than the monthly amount required under Standard Repayment over a 10-year repayment period.

Public Service Loan Forgiveness Reconsolidation in Direct Effective date is July 1, 2008 Allows you to reconsolidate any existing FFELP Federal Consolidation Loan (FCL) in the Federal Direct Loan Program to take advantage of the new public service loan forgiveness program

Public Service Loan Forgiveness Additional Eligibility Provisions Your 120 qualifying months do NOT have to be consecutive You must be working in qualifying public service position at time of loan forgiveness Loan payments made prior to October 1, 2007 do NOT count toward the 120-month requirement Loan payments on non-eligible loans (e.g., FFELP loans, Federal Perkins Loans) do NOT count toward the 120-month requirement

Public Service Loan Forgiveness Definition of “Public Service” As defined in P.L Full-time employment in: Emergency management Government Military service Public safety Law enforcement Public health Public education (including early childhood education) Social work in a public child or family service agency MORE...

Public Service Loan Forgiveness Sample Benefit Scenario-$165,000 eligible debt Eligible federal student loan debt$165,000 Estimated monthly payment-Standard Plan$1,899 Principal balance after 10 years$0 Total amount paid after 10 years$142,158 Comparison with IBR Plan Assumed starting AGI in year 1$120,000 Assumed Annual Growth Rate in AGI 4% Assumed Annual Increase in Poverty Guideline 3% Assumed Annual CPI 3% IBR monthly payment in 1 st month (using 2007 HHS Guideline) $1,309 IBR monthly payment in 120 th month (using 2007 HHS Guideline) $1,885 Assumed AGI in year 10$170,797 Total interest paid in IBR over 10 years$85,160 Total principal paid using IBR over 10 years$104,615 Total accrued interest forgiven after 10 years$0 Total principal forgiven after 10 years$60,385 Total amount forgiven after 10 years$60,385

Public Service Loan Forgiveness Questions You Should Consider Will you work full-time in a qualifying public service position for at least 10 years? This forgiveness program can be very helpful to those who plan to make a career of public service and who have high federal student loan debt relative to their income Will you be making qualifying loan payments during the entire 10 year period of public service employment? What will you be giving up by consolidating your FFELP loans in the Federal Direct Loan Program? Borrower benefits? Customer service experience with current FFELP lender? Other value-added services?

Public Service Loan Forgiveness For more information... Public Law – September 27, 2007 Schrag, Philip G., "Federal Student Loan Repayment Assistance for Public Interest Lawyers and other Employees of Governments and Nonprofit Organizations". Hofstra Law Review, Vol. 36, Fall Equal Justice Works at: EqualJusticeWorks.org Calculator available at: Finaid.Org/calculators

U.S. Department of Education Office of the Ombudsman   Toll-free telephone     Web site   Serves as mediator between you & loan holder/servicer to settle disputes that arise regarding your federal student loan(s) ü

Federal Income Tax Deduction for Student Loan Interest Paid in 2007 Maximum 2007 deduction is smaller of: $2,500 Student loan interest paid in 2007 Deduction amount may be reduced based on: Filing status Modified Adjusted Gross Income (MAGI) MAGI Income guidelines for 2007 $55,000 - $70,000 single, head of household $110,000 - $140,000 married, filing jointly Source: IRS Publication 970, “Tax Benefits for Education” (For use in preparing 2007 returns). Chapter 4. Student Loan Interest Deduction, Tables 4-1 and 4-2

Single, head of household Modified AGI not more than $55,000 Max. = $2,500 Modified AGI more than $55,000, but less than $70,000 Max. = $0-$2,499 Modified AGI is $70,000 or more No deduction Married, filing jointly Modified AGI not more than $110,000 Max. = $2,500 Modified AGI more than $110,000, but less than $140,000 Max. = $0-$2,499 Modified AGI is $140,000 or more No deduction Source: IRS Publication 970, “Tax Benefits for Education” (For use in preparing 2007 returns). Chapter 4. Student Loan Interest Deduction, Tables 4-1 and 4-2 Federal Income Tax Deduction for Student Loan Interest Paid in 2007

Borrower Responsibilities

You must: Repay all loans according to the terms of their promissory note Participate in exit counseling and provide current information regarding: Name, address, SSN, references, driver’s license number/state of issue, expected permanent address, address of next of kin, name and address of expected employer (if known) Notify your loan holder/servicer of changes in the above information Call your loan holder/servicer if you are unable to make a loan payment by the due date Your Responsibilities ü

Avoid default! Default occurs when: You do not repay a loan as agreed You fail to meet your other responsibilities as stated in the promissory note ü

Consequences of Default U.S. Department of Education can declare that the entire balance and accrued interest on your loan is due immediately Wages can be garnished Eligibility for deferments will be lost Eligibility for federal student assistance will be lost Account can be turned over for collection More... You will NOT achieve your financial goals because of the following: ü

MORE Consequences of Default IRS can withhold federal/state income tax refunds Total debt can be increased by late fees, additional accrued interest, court costs, collection fees, attorney’s fees, and other costs Federal government can take legal action against you Credit rating can be damaged for at least seven years Eligibility to obtain/maintain professional license(s) can be lost ü

Make all payments on time Enhances your chance to qualify for any on-time payment benefits that may be offered by your lender Helps you maintain or improve your credit record When paying more than is due: Verify where payment should be mailed Apply additional payment to principal, if permitted Include written explanation Confirm payment was applied as intended with loan holder/servicer or by checking next billing statement Managing Your Loans Payment Tips

Managing Your Loans Keeping Accurate Records Create master listing of all loans National Student Loan Data System (NSLDS) Arrange by loan holder/servicer and loan type Records to retain Applications Promissory notes Disclosure statements Correspondence/contact log

Loan Repayment Timeline Class of 2008 Federal Stafford Sub & Unsub NEW BORROWER Not consolidated 6 month grace Check with your loan servicer about Economic Hardship Deferment MUST APPLY EACH YEAR Repayment or forbearance Federal Stafford Sub & Unsub CONSOLIDATED LOANS No Grace. Repayment Begins. Apply for 6 month forbearance or Economic Hardship Deferment MUST APPLY EACH YEAR Repayment or forbearance GRADPLUSNo Grace. Repayment Begins. Apply for 6 month forbearance or Economic Hardship Deferment MUST APPLY EACH YEAR Repayment or forbearance Federal Perkins on or after July 1, month grace Check with the Student Loan Office Economic Hardship Deferment MUST APPLY EACH YEAR 6 month grace Repayment or forbearance Access Alternative9 month grace 4 Years Residency Forbearance MUST APPLY EACH YEAR ALTERNATIVE LOANS (OTHER) 4 Years Residency Forbearance/DefermentRepayment or forbearance Institutional LoansCheck your promissory note for details or ask your financial aid officer 12/08 12/09 12/10 12/11 12/12 12/13 6/08 6/09 6/10 6/11 6/12 6/13 6/14 │ │ │ │ │ │ │

U.S. Department of Education National Student Loan Data System (NSLDS)   Toll-free telephone   FED - AID   Web site   nslds.ed.gov Information about your Title IV federal student loans is stored in the NSLDS ü

Final Comments

When Choosing a Repayment Plan Consider the following... If you want to pay the least amount of total interest over the life of repayment Standard Repayment Plan with a 10-year repayment schedule will result in the least amount of interest paid If you want the lowest possible monthly loan payment Income-Based Repayment likely will require the lowest monthly payment for those who qualify, but it could result in negative amortization and that will add to the total debt being repaid Extended Repayment over 25 years will result in a lower monthly payment than Standard Repayment over 10 years without the possibility of negative amortization And what if you want to maximize your financial net worth in the long run?

Remember, to successfully manage loan repayment... Know how much you have to repay and to whom Understand the terms and conditions of your loans, your options in repayment, and your rights and responsibilities as a borrower Consider a payment plan that will extend repayment or that is based on your income if you need to reduce your monthly loan payments Think twice before you consolidate Take advantage of loan forgiveness programs when you qualify for them Develop an affordable budget plan to help you decide what repayment plan is best for you

We are here to help you! Access Group AccessGroup.Org FederalConsolidation.Org