Student Loans The Comics of a Debt Revolution

LOAN AGENDA 1.What are Student Loans? 2.Loan Terminology 3.Types of Loan 4.FAFSA 5.Student Loan Database 6.Repayment Options

Student Loans: Simply Stated Student loans are monies borrowed from the government and other entities to pay for educational expenses which include: 1)Tuition 2) Room & Board 3) Books & Supplies 4) Fees (parking, online charges) 5) Equipment and Room Materials (laptop) 6) Travel and Miscellaneous Expenses (clothing and phone)

Loan Terminology: TermDefinition CapitalizationAdding unpaid interest to the amount borrowed ConsolidationCombining multiple loans into one CreditSummary of your financial strength DefaultFailure to repay a loan DefermentPostponement of loan payments under authorized conditions. Interest does not accrue for subsidized loans. Expected Family Contribution (EFC)Index that determines eligibility for federal student aid ForbearancePeriod in which loan payments are temporarily suspended or reduced. Based off certain financial hardships. Grace PeriodTime period between last day of enrollment and repayment begins InterestLoan expense charged by lender at a rate.

WOW!

Types of Loans Loan ProgramLoan Description Federal Perkins University is lender 9 month grace period Interest doesn’t accrue until repayment Need based Subsidized Stafford Government is lender Interest doesn’t accrue until repayment Need based Unsubsidized Stafford Government is lender Interest accrues immediately after disbursement Can pay interest while in college (not required) Capitalization occurs (increases principal balance with additional interest) Need based Direct Plus Government is lender Interest accrues immediately after disbursement Credit based Amount determined by schools cost of attendance minus other aid Private Any creditor can be a lender Repay loans immediately Credit based

FAFSA: The purpose of FAFSA is to determine how much aid a student is eligible for. What you need: Income tax return Drivers license SSN Number W-2’s FAFSA is free, do not pay! fafsa.ed.gov

National Student Loan Data System: Provides personalized information regarding your: Loan Type Loan Disbursement schedule Loan disbursement location Principle Balances Interest Accrued to Date Loan Eligibility as a Percentage Contact info for Lenders Grant Disbursement

These apply to Federal Student Loans only! Repayment Options: Repayment PlanDescription Standard Automatic plan Monthly payment of at least $50 Graduated Start off with lower payments Monthly payment increases every two years ***will increase the cost of the loan in interest Extended Fixed or graduated Requires loan principal to be at least $30,000 Payment will likely be less than the standard repayment Income-Sensitive Repayment Plan Monthly payment is based off income Usually less than 10% of gross income (before taxes) Can increase or decrease in accordance to income Income-Contingent Repayment Plan Based off annual income Must pay on time for 25 years, the balance will be forgiven Forgiven portion will be considered income and will be taxed. Income-Based Repayment Based off income Capped at 15% of discretionary income Must display financial hardship Must pay on time for 25 years, the balance will be forgiven Forgiven portion will be considered income and will be taxed

Don’t become the Class of IOU’s!!!

Questions? Don’t Wait! Learning Assistance Programs (573) Student Financial Services (573) Financial Literacy Project (573)

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