“Financial Aid Evolution: Change Agents” OASFAA Fall Conference 2015 Student Loan Repayment, Forgiveness and Teacher’s Loan Benefits

OASFAA Conference Sponsor – Fall 2015 Thank you to Great Lakes Educational Loan Services, Inc. for their sponsorship of the OASFAA 2015 Fall Conference! “Financial Aid Evolution: Change Agents” OASFAA Fall Conference 2015

Bureau of Health Workforce Loan Repayment Programs  NURSE Corps Loan Repayment Program  NURSE Corps Loan Repayment Program participants receive 60 percent of their total outstanding qualifying educational loan balance incurred while pursuing an education in nursing in exchange for a 2-year service commitment. Qualifying participants may receive an additional 25 percent of their original loan balance for a third year of service.  The full loan repayment award is taxable, however, taxes are deducted from the award.   National Health Service Care (NHSC) Loan Repayment Program  Offers two levels of funding, based upon the need of the community in which the qualified health care providers work, as defined by Health Professional Shortage Area (HPSA) score: Up to $50,000 for 2-year, full-time or $25,000 for 2-year, half-time service commitment. With continued service, nurse practitioners may be able to pay off all of their qualified student loans.  The Loan Repayment award is not taxable  Source:

Forgiveness Programs for Teachers  There are two types of loan forgiveness programs for teachers: Teacher Loan Forgiveness and Teacher Cancellation*  Teacher loan forgiveness for Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans Teacher loan forgiveness  The Teacher Loan Forgiveness Program is intended to encourage individuals to enter and continue in the teaching profession. Under this program, if you teach full-time for five complete and consecutive academic years in certain elementary and secondary schools and educational service agencies that serve low-income families, and meet other qualifications, you may be eligible for forgiveness of up to a combined total of $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans. If you have PLUS loans only, you are not eligible for this type of forgiveness.Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford LoansPLUS loans  You apply for teacher loan forgiveness after you have completed the five-year teaching requirement.  *Some argue that technically it is 3 given the Teach Grant Program.

Forgiveness Programs for Teachers  Teacher Cancellation: If you have a loan from the Federal Perkins Loan Program you might be eligible for loan cancellation for full-time teaching at a low-income school, or for teaching in certain subject areas. You can also qualify for deferment for these qualifying teaching services. up to 100 percent of the loan may be canceled for teaching service, in the following increments:Federal Perkins Loan Programdeferment  15 percent canceled per year for the first and second years of service  20 percent canceled for the third and fourth years  30 percent canceled for the fifth year  To apply, you must request the appropriate forms from the office that administers the Federal Perkins Loan program at the school that holds your loan. You must also provide any documentation the school requests to show that you qualify for cancellation of your Perkins Loan. It is the school’s responsibility to determine whether you qualify, and the school’s decision cannot be appealed to the U.S. Department of Education.  Source:

Income-Driven Plans - Overview  Three main plans Income-Contingent Repayment Plan (ICR) – 1994  Direct Loan Program only Income-Based Repayment Plan (IBR) – 2009  Available in both the Direct Loan and FFEL Program  New terms and conditions for “new borrowers” on/after July 1, 2014 Pay As You Earn Plan (PAYE) – 2012  Direct Loan Program only  For new borrowers in FY 2008 who receive new loans in or after FY 2012  Modeled on IBR, incorporating statutory IBR changes scheduled to take effect for new borrowers in 2014  Negotiated rulemaking in Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

 Coming in December, 2015: Revised Pay As You Earn (REPAYE) – 2015*  Direct Loan Program only  From the Department of Education press Release: Revised Pay As You Earn (REPAYE) Plan regulations responds to (the President’s 2014) directive by expanding repayment options to allow five million more Direct Loan borrowers to cap their monthly student loan payment amount at 10 percent of their annual income allocated per month, without regard to when the borrower first obtained their loans.  To learn more about Income-Driven Repayment Plans: Income-Driven Plans – New for 2015 Source: U.S. Department of Education, Press Release, “…Final Regulations to Protect Students and Help Borrowers” October 27, 2015

Eligible Borrowers 8 Eligible DL ICR Debt-to- income ratio* Eligible DL/FFEL IBR Recent borrowers Debt-to- income ratio* Eligible DLPAYE * = partial financial hardship Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

Eligible Loans 9 Loan TypeICRIBRPAYE Sub. StaffordXXX Unsub. StaffordXXX Grad PLUSXXX Parent PLUS Consolidation (did not repay Parent PLUS) XXX Consolidation (repaid Parent PLUS) X Loan ProgramICRIBRPAYE Direct LoansXXX FFELPX Perkins Loans Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

Payment Amounts 10 Repayment PlanPayment based only on income Payment based on loan debt ICR20% of discretionary income 12-year standard payment adjusted based on income IBR15% of discretionary income 10-year standard amount PAYE / “new” IBR10% of discretionary income 10-year standard amount Each IDR plan has two formulas. Borrowers always pay the lesser of the two. Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

Interest Subsidy Benefit  On subsidized loans, borrower receives subsidy for first 3 consecutive years on IBR and Pay As You Earn during periods of negative amortization  Subsidy amount = difference between amount of interest that accrues on subsidized loans and payment amount toward subsidized loans  3-year clock doesn’t stop except for Economic Hardship Deferments 11 Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

Capitalization 12 ICR Negative amortization10% limitNormal rules apply IBR Income-based  Non- income based payment Leaving the planNormal rules suspended PAYE Income-based  Non- income based payment Leaving the plan10% limitNormal rules suspended Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

Month 0 Borrower applies: 2/14/2014 Month 1 Borrower enters plan: 3/1/2014 Month 2 Borrower receives educational notice about plan: 3/2/2014 Month 9 Borrower receives request to submit new income documentati on: 11/26/2014 Month 10 Soft deadline: 1/25/2015 Month 11 Hard deadline*: 2/4/2015 Month 12 Anniversary date: 3/1/2015 *If borrower submits documentation by hard deadline, payment amount will not change if loan servicer cannot process it before anniversary date. Annual Life Cycle 13 Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

 Revised Pay As You Earn (REPAYE) is modeled on the existing Pay As You Earn repayment plan, and will be available to all Direct Loan student borrowers regardless of when the borrower took out the loans.  Will allow student borrowers cap their student loan payments at 10 percent of their monthly discretionary income.  Will forgive remaining debt after 20 years for those who only borrowed for undergraduate study and 25 years for those who borrowed for graduate study.  The REPAYE plan will also “provide a new interest subsidy benefit to prevent ballooning loan balances for those whose income-driven payments cannot keep up with accruing interest.”  Available to borrowers starting in December of this year. REPAYE – What We Know Source: HomeRoom (the official blog of the U.S. Department of Education), 10/27/15, and final unofficial rules 10/26/15.

Chart on Different IDR Plans Source: IBRinfo, a service of the Project on Student Debt, Project on Student Debthttp:// a Borrowers may be able to consolidate their FFEL and Perkins loans into a Direct Consolidation Loan to repay them in REPAYE, PAYE, or ICR. Find out more about the pros and cons of consolidation at b Borrowers have a “partial financial hardship” (PFH) if their calculated payment based on income and family size is less than what they would pay under the fixed 10-year repayment plan. c For all of these plans, monthly payments can be as low as $0. For REPAYE, 2014 IBR, PAYE, and Original IBR, discretionary income is defined as the amount of adjusted gross income (AGI) above 150% of the poverty level for the borrower’s household size. For ICR, discretionary income is defined as the amount of AGI above 100% of the poverty level for the borrower’s household size. d Parent PLUS loans can be repaid in ICR if consolidated into a Direct Consolidation Loan.

Public Service Loan Forgiveness 16 Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

Public Service Loan Forgiveness  Borrower must also be employed by a qualifying organization at the time that the borrower applies for and receives PSLF  According to the IRS, the forgiven amount is not treated as taxable income qualifying payments On Direct Loans On qualifying repayment plans While working at qualifying employer Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

PSLF – Qualifying Employment 18 1 Any government organization 2 501(c)(3) not-for-profit organization 3 Other not-for-profit organizations providing specific qualifying services Doesn’t matter what you do, it matters where you work. Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

PSLF – Qualifying Payments 19 Qualifying payments Must make 120 separate, monthly payments After October 1, 2007 Do not need to be consecutive Must be for full amount due under plan Must be made with 15 days of due date Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

PSLF – Qualifying Repayment Plan  Income-driven plans are most likely to leave a remaining balance for forgiveness after 120 qualifying payments Year StandardIBRICRPay As You EarnOthers >= 10-Year Standard Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

PSLF – Eligible Loans PSLF is only for Direct Loans, but all Direct Loans qualify. 21 Direct Consolidation Loan Parent PLUS Loans FFELP Loans Perkins Loans Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

PSLF – Full-Time Employment Must be a full-time employee or work multiple part-time jobs that equal full time For borrowers at a not-for-profit organization hours spent on religious instruction, worship services, or proselytizing cannot be factored into meeting the full- time employee requirement 22 Employer’s definition 30 hours/week Full-time is the greater of: Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

PSLF – Employment Certification Borrowers who want confirmation that employment and payments qualify should submit the Employment Certification Form to FedLoan Servicing. 23 FedLoan Servicing updates count of qualifying payments to account for new period of employment Borrower submits another Employment Certification Form FLS determines whether borrower made qualifying payments during period of employment on form All federally held loans transferred to FedLoan Servicing FedLoan Servicing determines whether employment qualifies FedLoan Servicing determines whether borrower has Direct Loans Borrower submits form to FedLoan Servicing Source: 2014 FSA Conference, Session 28, Income Driver Repayment Plans and PSLF

PSLF FAQ’s “Financial Aid Evolution: Change Agents” OASFAA Fall Conference 2015 The ED’s Questions & Answers document on PSLF was up to 20 pages as of November, Best Practice: Suggest that all students pursuing PSLF read this document.

Peace Corps and Americorps  Service in either of the Peace Corps or Americorps is considered “qualifying employment” for the Department of Education's Public Service Loan Forgiveness program (PSLF).  Volunteers are often trying to determine if an IDR/PSLF strategy is best, or if they should forbear during service.  Americorps Volunteers who have successfully completed a term of service in AmeriCorps or Silver Scholars are eligible to have the Trust pay as much as 100% of the interest that accrued on their qualified student loan during their service. The portion that the Trust will pay is determined by the type of service (full or part-time) and the length of your service period ( 