School of Public Health Exit Counseling April 22, 2010

Why do I need to attend? Federal regulations require schools to provide exit counseling for students who have borrowed a Stafford or Grad PLUS loan and who are graduating or have dropped below half-time.

Master Promissory Note (MPN): Borrower Responsibilities Agreement to pay back loan(s) Multi-year feature vs. new promissory note per year Used for subsidized and unsubsidized Stafford − Subsidized – need-based loan; government pays interest while enrolled − Unsubsidized – non-need based loan; student responsible for all interest Also used for Grad PLUS Borrower rights & responsibilities detailed on MPN

When Repayment Begins Stafford loans have a grace period: first payment due six months after student graduates, withdraws, or drops below half-time. Grad PLUS loans have a deferment period: first payment due six months after student graduates, withdraws, or drops below half-time enrollment Lender will advise you of your first payment due date during your grace/deferment period. If you don't receive this information, contact your lender.

Borrower Responsibilities Borrowing money is a serious matter and all loans must be paid back. Not receiving billing statement is not an excuse for not making payments. Even if you did not complete your program, didn't complete your program within the regular time for program completion, are dissatisfied with quality of education, or can’t find a job, you must pay back the loan(s).

Consequences of Default Loss of federal financial aid eligibility Withholding of federal income tax refunds Inability to renew professional license (e.g. lawyer, doctor) Negative credit history (will affect credit purchase of house, car, etc.)

Consequences of Default Wage withholding May be sued Collection fees and attorney’s fees assessed Enforcement of delinquent debt collection procedures

Repayment Options Standard plan Graduated plan Extended plan Income-sensitive plan Income-based repayment plan (IBR)

Repayment Options For all repayment plans, student can: − prepay loans without penalty − pay on a shorter schedule, and − change repayment plans

Standard Repayment Plan Lowest total loan cost Regular payments of both principal and interest are due monthly, excluding periods of deferment and forbearance Minimum monthly payment is $50 10-year repayment term

Graduated Repayment Plan Monthly payments are smaller at the start of the repayment period and gradually increase 10-year repayment term Total amount paid in interest will be greater than under the standard repayment plan

Extended Repayment Plan Lengthens repayment term up to 25 years Available to borrowers with more than $30,000 in federal student loans Total interest costs may be higher over life of the loan, although payment amount may be lower

Income-Sensitive Repayment Plan Monthly payment varies according to gross monthly income Monthly payment covers at least monthly accruing interest Must reapply annually Total interest costs will be higher over the life of your loan than with standard repayment

Income-Based Repayment Borrowers may qualify for lower monthly payments as determined by income, indebtedness level, and family size May forgive any remaining debt after 25 years of eligible payments Must reapply annually Determine eligibility at Calculator at

Income based Repayment (contd.) Borrowers who can benefit from IBR: Individuals entering careers with relatively high loan debt compared to starting salaries, such as: − Medicine − Law − Elementary/secondary education − Social work

Ineligible Loans to include in IBR Parent PLUS loans Consolidation loans that include Parent PLUS loans Private (or "alternative") student loans State loans Other loans not guaranteed by the federal government Defaulted loans

Partial Financial Hardship Borrower’s monthly loan payment using the standard 10-year repayment plan is greater than 15% of borrower’s AGI minus 150% of poverty line amount / 12 Based on family income and size

ExamplesSingle borrower with no dependents Married borrower with two children (and no spousal income or spousal student loan debt) Single medical resident borrower with no dependents Eligible student loan debt $40,000$80,000$150,000 Interest rate 6.8% Adjusted Gross Income $30,000$60,000$45, year standard plan monthly payment $460$920$1,726 Estimated monthly payment under IBR plan $170$340$359 Reduction in monthly payment amount $290$580$1,367

Repayment terms Once in IBR, repayment can extend beyond 10 years regardless of the amount of the eligible debt Borrower can elect to remain in IBR even when he or she no longer meets PFH Borrower is not locked into IBR, but could have consequences if he or she voluntarily leaves plan

Comparison of Sample Repayment Options ATTACHMENT B

Loan Balance = $60,000, Interest Rate = 6.8% StandardIncome Based GraduatedIncome Sensitive Extended Monthly Pmt$690$170Yr 1: $340 Yr 2-10: $812 Yr 1: $340 Yr 2-11: $690 $416 Term10 years25 years10 years11 years25 years Total Interest $22,858$81,981$26,118$26,938$64,933 Total Paid$82,858$98,564$86,118$86,938$124,933

Loan Balance = $81k, interest rate = 6.8% StandardIncome Based GraduatedIncome Sensitive Extended Monthly Pmt $932.15$234.44Yr 1-2: $459 Yr 3-10: $1096 Yr 1: $459 Yr 2-11: $932 $562 Term10 years25 years10 years11 years25 years Total Interest $30,858$70,332$35,260$36,366$87,660 Total Paid$111,858$151,332$116,260$117,366$168,660

Consolidation Loans Allows borrowers to combine one or more federal education loans Original loans are paid-in-full − New loan for the combined balances is issued with new terms, including a new interest rate that is fixed for the life of the loan

Consolidation: Factors to Consider Negatives − Total interest paid may be greater − May extend repayment period − May lose benefits (e.g., grace period, deferment, forgiveness, and cancellation) − Borrower benefit programs may vary among lenders

Consolidation: Factors to Consider Positives − May significantly lower monthly payments − Simplifies repayment: one monthly payment − May prepay or change repayment plans without penalty

Consolidation Tips Compare and weigh all options Start with your financial aid office

Tax Benefits For students and parents: − Student loan interest deduction reduces the taxable income based on the amount of student loan interest paid. − Tuition and fees deduction reduces the taxable income based on college tuition and fees paid during the tax year

Tax Benefits For students and parents: − Hope and Lifetime Learning tax credit a credit against federal income taxes for college tuition and fees paid during the tax year See IRS publication 970, at for more information.

Debt Management Strategies Make a budget Loan payments are a fixed cost like utilities and rent Be realistic about expected earnings for your major Stick to one credit card. Keep in mind that credit cards are loans!

Accessing your loan information National Student Loan Data System (NSLDS) − U.S. Department of Education's (ED's) central database for student aid − NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of ED programs − To access loan records visit − Students will need their PIN for access

Reminders! Keep copies of all correspondence − Sent to you − You send Keep lender informed of status changes − Going to graduate school − Change of address

Problem Resolution Process Federal Student Aid Ombudsman of the Department of Education − helps resolve disputes − when you have done all you can do yourself and haven’t been able to reach a solution, the ombudsman provides a process and resources to assist student. −

Deferments & Forbearance Deferments Economic Hardship Unemployment Military Deployment Enrollment in School Internship National Service Forbearance Lets you suspend or reduce your student loan payments under certain circumstances and for specified periods of up to one year at a time Bottom Line: If you are ever unable to make the payments on your loans, contact your lender to request assistance through deferment, forbearance or revised repayment plan!!

Public Service Loan Forgiveness Public Service Loan Forgiveness is a new program for federal student loan borrowers who work in certain kinds of jobs. It will forgive remaining debt after 10 years of eligible employment and qualifying loan payments Only Federal Direct Student Loans are eligible for this program so consolidation of FFEL loans is necessary.

Public Service Loan Forgiveness To be eligible for forgiveness: Borrower has to have made 120 payments on the loan after October 1, 2007 Loan must not be in default Borrower must be employed in public service job − During the period in which each of the 120 payments were made − At the time forgiveness is applied

Eligible Public Service Jobs for Loan Forgiveness Employment, in any position, by a public service organization Service in a position in Americorps or the Peace Corps Employment or service must meet the definition of “full-time”

Definition of Public Service Organization A Federal, State, local, or Tribal government organization, agency, or entity – A job in government excludes time served as a member of the United States Congress A public child or family service agency A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code A Tribal college or university

Definition of Public Service Organization (contd.) Public service organization is a private organization that provides public services: – Emergency management – Military service – Public safety – Law enforcement – Public interest law services (legal advocacy may be provided “on behalf of” low-income communities at a nonprofit organization rather than strictly “in” low-income communities at a non-profit organization

Definition of Public Service Organization (cont.) Public service organization is a private organization that provides public services: – Early childhood education (including licensed or regulated health care, Head Start, and statefunded pre-kindergarten) – Public service for individuals with disabilities and the elderly – Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner and health care support occupations)

Definition of Public Service Organization (cont.) A private organization is not: –A for-profit business –A labor union –A partisan political organization or –An organization engaged in religious activities unless activities are unrelated to religious instruction, worship services, or any form of proselytizing

Public Service Loan Forgiveness For more information about PSLF access: english/PSF.jsp english/PSF.jsp Check out several PSLF Q&As at the same link

You may wonder?? Q: How can I benefit from the PSLF if I pay off my loans in 10 years?? A: You cannot – reconsider your repayment strategies by incorporating IBR to extend your repayment thus allowing you to benefit from PSLF

Check List 1. Graduate! 2. Find a job 3. Organize all federal loans 4. Consolidate all FFEL (bank) and previously consolidated loans into a Direct Loan ( Take into consideration grace period on existing loans (consolidating eliminates grace). 5. Contact repayment servicer(s) requesting IBR 6. Maintain employment records to qualify for PSLF