Money Management for Entering Students Entrance Interview Michael T. Goodman Associate Vice President Tulane University Financial Aid 8/9/2012 Disclaimer: All information and estimates are based on AAMC interpretation of federal regulations as of June 2011 and are subject to change. These are estimates only. Students should always contact their servicer(s) to discuss the terms and conditions of the loans.

©2011 Association of American Medical Colleges. All rights reserved. Introduction Operations Know the Details of Your Loans The Timeline Borrowing Strategically Have a Spending Plan Understand and Protect Your Credit Disbursements of aid Refunds for living expenses Reconsiderations Applying for Aid for 2013 summer Additional information Questions??? Agenda

©2011 Association of American Medical Colleges. All rights reserved. Introduction Tulane University Health Sciences Center Office of Financial Aid Suite 1213, Tidewater Building 1440 Canal Street Serving… School of Medicine School of Public Health & Tropical Medicine

©2011 Association of American Medical Colleges. All rights reserved. Operations Counselor by alphabet (last name): A-HO:Carl Hudson, Counselor HP-MB: James Bourgeois, Associate Director MC-Z: Shirley Davis, Counselor Monday-Thursday from the 15 th floor of the Murphy Building…Jonathan Jouet, Counselor Program Coordinator: Donna Fasullo

©2011 Association of American Medical Colleges. All rights reserved. Operations Tidewater Office Hours: 9AM – 5PM, Monday – Friday Counselors available: M-W 1PM – 4PM Th & F 9AM – 1PM Recommend appointments Communications: (504) (504) fax Website:

©2011 Association of American Medical Colleges. All rights reserved. Where Are We? Accepted aid award via Gibson on-line Completed Direct Loan entrance counseling on- line (for both Stafford and Graduate PLUS Loans) Completed Direct Loan master promissory notes (MPNs) on-line (for both Stafford and Graduate PLUS Loans) If awarded and accepted Federal Perkins Loan, completed Perkins MPN on-line (via ACS) Completed direct deposit information on-line with the Tulane Accounts Receivable Office

©2011 Association of American Medical Colleges. All rights reserved. Know the Details of Your Loans

©2011 Association of American Medical Colleges. All rights reserved. The FIRST Stop… Medloans ® Organizer and Calculator

©2011 Association of American Medical Colleges. All rights reserved. Finding Your Federal Loans To access, provide: - SS# - Date of Birth - First 2 letters (last name) - PIN # (

©2011 Association of American Medical Colleges. All rights reserved. Finding Other Loans To access, provide: - Name - Address - Date of Birth - Social Security #

©2011 Association of American Medical Colleges. All rights reserved. Rights include the ability to: Prepay any federal loan without penalty Request a shorter repayment schedule Change repayment plans Request a deferment or forbearance Review your promissory note for all rights Rights and Responsibilities

©2011 Association of American Medical Colleges. All rights reserved. Rights and Responsibilities Responsibilities include: Make on time loan payments Make payments despite receipt of bill Notify the lender of changes in contact info Attend an Exit Counseling session Review your promissory note for all responsibilities

©2011 Association of American Medical Colleges. All rights reserved. A Serious Obligation Student loans must be repaid Manage your debt - don’t let it manage you

©2011 Association of American Medical Colleges. All rights reserved. Delinquency Default Consequences of…

©2011 Association of American Medical Colleges. All rights reserved. Interest Rates

©2011 Association of American Medical Colleges. All rights reserved. Loan Fees Federal Perkins: none Federal Stafford:1.0% example:borrow $10,000 with 1.0% fees: $10,000 x 1.0% = $100 $9,900 disbursed, yet repayment = $10,000 Federal Graduate PLUS: 4.0% Alternative Loans: usually 0% front fees, varies on back-end fees, check with private loan lender

©2011 Association of American Medical Colleges. All rights reserved. Subsidized vs. Unsubsidized Sub si dy [suhb-si-dee] noun - Financial assistance granted by the government to cover accruing interest while in-school, in grace, or in a qualifying deferment. Source:

©2011 Association of American Medical Colleges. All rights reserved. Subsidized vs. Unsubsidized Perkins* Primary Care Loans LDS Loans* Instiututional Loans (some) Consolidations Loans (underlyng subsidized loans) Unsubsidized Stafford Direct PLUS Private Loans Institutional Loans (some) Consolidation Loans (underlying unsubsidized loans) SubsidizedUnsubsidized *subsidy and deferment rights lost during consolidation

©2011 Association of American Medical Colleges. All rights reserved. Capitalization Addition of unpaid interest to the principal Principal + Interest = Larger Principal

Debt Management Tip Pay the interest on unsubsidized loans PRIOR to capitalization

©2011 Association of American Medical Colleges. All rights reserved. If dropping below half-time or withdrawing: Contact the Financial Aid Office immediately Exit Counseling is required Payments are required or grace periods begin For questions contact your Financial Aid Office NOTICE: Repayment Begins

©2011 Association of American Medical Colleges. All rights reserved. Direct PLUS loans Enters repayment upon full disbursement In-school deferment will post-pone payments Interest begins accruing upon disbursement Interest accrues continuously Maximum interest rate is 7.9% NOTICE: Repayment Begins

©2011 Association of American Medical Colleges. All rights reserved. The Timeline

©2011 Association of American Medical Colleges. All rights reserved. Grace Periods Grace A period when payments are not required : Occurs automatically Subsidized loans are interest free during grace Unsubsidized loans continue to accrue interest Availability and duration is based on loan type

©2011 Association of American Medical Colleges. All rights reserved. Options During Residency During residency, there are two choices: Postpone Payments Make Payments Deferment Forbearance Select a Repayment Plan

©2011 Association of American Medical Colleges. All rights reserved. Deferment A period when payments are not required Must apply and qualify Interest does not accrue on subsidized loans Unsubsidized loans continue to accrue interest NOTE: For more details on deferment or to request a deferment, contact your servicer Options During Residency

©2011 Association of American Medical Colleges. All rights reserved. Options During Residency Forbearance A period when payments are not required Must request from the servicer Interest accrues on sub and unsub loans Many types (administrative, discretionary, mandatory) NOTE: For more details on forbearance or to request a forbearance, contact your servicer

©2011 Association of American Medical Colleges. All rights reserved. Options During Residency Determines the payment amount & interest cost $2,130 /mo $1,280 /mo $1,050 /mo $ 630 /mo $ 400 /mo

©2011 Association of American Medical Colleges. All rights reserved. Strategic Borrowing

©2011 Association of American Medical Colleges. All rights reserved. Alternatives to Debt Scholarships Support Forgiveness/ Repayment Options Outside Service based Institutional I II IIi Financial Aid Office Family

©2011 Association of American Medical Colleges. All rights reserved. 86% of class report having educational debt 59% of class report debt $150,000 or higher Public Schools Private Schools All Schools Median$155,000$180,000$162,000 Class of 2011 Indebtedness Source: AAMC 2011 Graduate Questionnaire (GQ) National Data

©2011 Association of American Medical Colleges. All rights reserved. MEDIAN$263,227 82% of class had educational debt 78% of class had debt $150,000 or higher Class of 2011 Indebtedness Source: AAMC 2011 Graduate Questionnaire (GQ) Tulane Class of 2011 Data

©2011 Association of American Medical Colleges. All rights reserved. How Will You Borrow? Do NOT borrow just because you are eligible Borrow what you need, not what you want Decline loans that exceed your need Accepting loans may affect eligibility for other aid Avoid forfeiting low rate loans for higher rate debt

Financial Aid Fact If a shortfall occurs, previously declined monies may be obtained – see financial aid for assistance

©2011 Association of American Medical Colleges. All rights reserved. CHALLENGE Borrowing $5,000 less each year will REDUCE: Monthly Payment By: $400 (+) The Total Loan Cost By: $39,000 (+) Repayment Term By: 2 (+) years Borrow Wisely Note: Assumes amount borrowed in Stafford Loans with 6.8% interest with forbearance during a 3-year residency Source: AAMC FIRST Analysis TIP: Have a budget and borrow less

©2011 Association of American Medical Colleges. All rights reserved. Have a Spending Plan

©2011 Association of American Medical Colleges. All rights reserved. Have a Spending Plan A Spending Plan in ) Put it in writing 2) Review periodically to identify leaks 3) Make necessary adjustments “Live like a student while you are a student…”

©2011 Association of American Medical Colleges. All rights reserved. Have a Spending Plan

©2011 Association of American Medical Colleges. All rights reserved. The Basics of Budgeting Your Total Income Your Total Expenses Your Discretionary Income

©2011 Association of American Medical Colleges. All rights reserved. Tulane Budgeting & Billing You will receive by a monthly billing statement detailing charges and credits that occurred during the prior month School of Medicine’s tuition & fees: $25, tuition per semester $ 1, academic support fee per semester $ student activity fee per semester $ health services fee per semester $ rec. center fee per semester $27, = Total tuition & fees per semester Other charges: Books, Parking, Deming Pavilion, Health Insurance

©2011 Association of American Medical Colleges. All rights reserved. Tulane Budgeting & Billing Financial Aid Budget for the Academic Year: assumption: not residing with parents Tuition & fees:$54,255 Room & board:$14,100* Books & supplies$ 1,500 Transportation:$ 3,100* Miscellaneous:$ 4,000* TOTAL:$76,955 *$21,200 living expenses equates to $2,120/month

©2011 Association of American Medical Colleges. All rights reserved. Tulane Budgeting & Billing Financial Aid Award for the Academic Year: Federal Direct Unsubsidized Stafford Loan:$40,500 Federal Direct Graduate PLUS Loan:$36,455 TOTAL:$76,955 Thus, total financial aid award = total cost of attendance.

©2011 Association of American Medical Colleges. All rights reserved. Disbursements of Aid Example of 2012 Fall Semester disbursements: Tuition & fees $27, = $27, Unsub. Staff. ($20,048.00) - Grad. PLUS($17,499.00) = $37, = A/R balance ($10,419.50) + Refund $10, = A/R balance $ 0.00

Are Credit Cards Bad?

©2011 Association of American Medical Colleges. All rights reserved. The Minimum Payment Trap $5,000 Balance with an 18% Interest Rate (Making minimum monthly payments) Source: BankRate.com years to repay in full $6,923 in total interest costs alone What could possibly be worth paying more than twice its original value?

©2011 Association of American Medical Colleges. All rights reserved. Credit: Understand & Protect

©2011 Association of American Medical Colleges. All rights reserved. 35 % 30 % 15 % 10 % Payment history Utilization rate (amount owed) Length of credit history New credit Type of credit used A FICO Score is Based On …

©2011 Association of American Medical Colleges. All rights reserved. How to Improve Your Score During medical school, be sure to: Pay bills on time Pay down debt on lines of credit Apply for credit sparingly

©2011 Association of American Medical Colleges. All rights reserved. Check your Credit Report

©2011 Association of American Medical Colleges. All rights reserved. Your loan servicers’ and their websites Your medical school financial aid office Support Along the Way FACEBOOK: FIRST for Medical Education Careers in Medicine ® Medloans ® Organizer and Calculator

©2011 Association of American Medical Colleges. All rights reserved. Reconsiderations Computer purchase (max. = $2,500) only allowed once during medical school career Combined MD/MPH degree program Special financial circumstances Receive any other financial assistance: outside scholarship and/or grant

©2011 Association of American Medical Colleges. All rights reserved. Applying for FAFSA School of Medicine Financial Aid Addendum No need for new federal loan MPN Apply for Grad PLUS or private loan (since credit-based) 2013 Summer aid for MD/MPH

©2011 Association of American Medical Colleges. All rights reserved. Additional Information Outside Scholarships: check bulletin board and Communication:Tulane address Emergency loans: not an ATM $1,000 maximum per academic year

Questions?