Student Loan Repayment Presented by Bill Bufkins

The Master Promissory Note  You signed a Master Promissory Note (MPN) when you first received student loans.  The MPN is a legally-binding agreement where you promised to repay all federal loans you received.  You may have used one MPN for all of the loans you received. –MPNs can be used for multiple loans with the same lender for up to 10 years.

Rights and Responsibilities  Disclosure statement  Copy of the Master Promissory Note and actual note when paid in full  Repayment schedule  Interest rate benefits, if eligible  Grace period  Prepayment without penalty  Notice of loan sale or transfer, if payments are sent to a new location  Deferments, when eligible  Forbearance requests

Federal Loan Repayment  Generally a six-month grace period  Repayment date  Repayment term may be years  No prepayment penalties; prepaying can reduce length of term  Need to make payments on time  Know who all of your lenders are  Know who your loan servicer is and where payments, change of address notification and inquiries should be directed

Federal Loan Repayment Options Standard Repayment:  Most repayment plans are standard, unless you arrange for a different plan  10 years of equal monthly payments  Offers the least total interest costs Income-sensitive Repayment:  Monthly payments increase or decrease based on your income  Borrowers must reapply annually  Higher total interest costs in the long run

Federal Loan Repayment Options (continued) Income-based Repayment:  Effective July 1, 2009, Federal Stafford and Grad PLUS Loan borrowers with a partial financial hardship may cap monthly payments at 15% of discretionary income. The monthly payment amount is adjusted annually, based on changes in annual income and family size. Graduated Repayment:  Monthly payments will gradually increase over a period of time  Offers higher total interest costs in the long run Extended Repayment:  If FFELP debt is at least $30,000 and you are a new borrower (on or after October 7, 1998), you will have up to 25 years to repay  Offers lower monthly payments over a longer period of time  Offers higher total interest in the long run

Borrower Benefits  Borrower benefits are money-saving incentives that borrowers may receive as a reward for things such as making on-time payments and making payments via auto-debit.  Visit your lender’s Web site or call your lender to determine which benefits are available to you.

Managing Credit Responsibly  Obtaining and maintaining credit is an important responsibility.  You can get a free copy of your credit report at AnnualCreditReport.com.  Understand your credit responsibilities.

A Budget You Can Live With  Live within your means  Be aware of your expenses  Income to debt calculations  Compare costs with the estimated repayment schedule  Loan payment is a fixed cost, like rent or utilities  Plan now and avoid problems later

Deferment  Deferment allows you to temporarily suspend payment on your federal student loans.  Government pays interest on subsidized loans during periods of eligible deferment.  Interest continues to accrue for unsubsidized loans during deferment.  Check with your lender or servicer for more information. Common Deferments:  In-school  Unemployment (max 3 years)  Hardship (max 3 years)  Approved fellowship/rehabilitation training programs  Military Remember to continue paying your loans until the request has been approved.

Forbearance  Forbearance allows you to temporarily postpone or reduce your monthly student loan payment.  It is typically granted in 12-month intervals.  It is typically granted at the discretion of the lender or servicer; some are also mandatory.  You are responsible for interest as it accrues, regardless of loan type.  You may pay interest as it accrues.  Any unpaid interest may be added to your principal balance at the end of the forbearance period (capitalization). Common Forbearances:  Discretionary: –Economic hardship –Disability –Other acceptable reasons  Mandatory: –Medical/dental internship/residency –Debt exceeds monthly income –Natural disasters Remember to keep paying your loans until the request has been approved.

Cancellation  Total and permanent disability  You cannot complete your course of study because your school closed  False certification, including identity theft  Death  Note that in most cases, student loans are NOT dischargeable in bankruptcy (only in cases where court determines undue hardship)

Delinquency  Elimination of borrower benefits  Reports to credit bureaus  Late charges, etc. If you are having trouble making your monthly payments, contact your lender immediately. As few as five to 30 days of delinquency could result in the following:

Default Default occurs when a payment has not been made for more than 270 days. Consequences:  Your entire loan amount, plus interest and penalties, is immediately due in full.  Default is reported to national credit bureaus and will affect your credit rating.  Your account may be turned over to a collection agency.  You may become ineligible for additional financial aid.  The federal government may garner your income tax refunds.  Your college record and information may be placed on “hold”.  Your wages may be garnished.  Default may impact professional licenses.  Default may result in legal action.

National Student Loan Data System  Students can access loan information from the National Student Loan Data System (NSLDS) by visiting nslds.ed.gov. –You must know your federal PIN number.  Information on the NSLDS site is updated by lenders and guaranty agencies and may not be as current as the latest information from the individual loan holder.  If you do not have Internet access, call the Federal Student Aid Information Center toll free at FED-AID ( ).

Federal Student Aid Ombudsman The Ombudsman’s office is a resource for borrowers when other approaches to resolving student loan problems have failed. Borrowers should first attempt to resolve complaints by contacting the school, company or agency involved. If the borrower has made a reasonable effort to resolve the problem through normal processes and has not been successful, contact the ombudsman. Federal Student Aid Ombudsman 830 First Street, NE Fourth Floor Washington DC T: fsahelp.ed.gov

Update Your Information Collect and update the following:  Expected permanent address after leaving school  Address of the borrower’s next of kin  Name and address of borrower’s expected employer (if known)  Changes in name, address, Social Security Number and references  Current driver’s license number and state

Other Important Information  Your school may provide you with the current name and address of your lender, based on the latest information available.  You should always keep copies of all correspondence to and from lenders about your loans.  Your lender will send you the due date and the payment address before your first payment is due. If you have more than one lender, you will receive this information separately from each.  If you do not hear from your lender, the money is STILL DUE and you should contact them.

*Important Information: The information contained within this document was correct at the time of publication and is subject to change. Contact Chase for the most up-to-date product terms. © 2009 JPMorgan Chase & Co. All rights reserved /09