College Board TRENDS IN STUDENT AID Total Aid Awarded $134.8 Billion Graduate & Undergraduate 51% or 69 Billion in Loans (FFELP and Direct) –Undergrad Annual Average $3,074 Subsidized $3,398 Unsubsidized

College Board TRENDS IN STUDENT AID PARENT LOANS –820,000 Borrowers –$9,984 Average Loan

College Board TRENDS IN STUDENT AID PELL GRANTS –# Recipients % Increase % Increase –Average Award $2, $2,354

College Board TRENDS IN STUDENT AID PELL GRANTS As a result of the lower average Pell Grant, the percentage of tuition, fees, room, and board covered by the maximum Pell Grant at the average public four-year college, DELCINED by 9 percent from to

College Board TRENDS IN STUDENT AID PRIVATE LOANS –Total Volume = $17.3 Billion –27% average annual growth since –Accounted for 20% of all borrowing in

College Board TRENDS IN STUDENT AID STUDENT DEBT $19,300 Median student debt bachelor’s degree $24,600 Student borrowers graduating in 2004 from for- profit colleges had the highest median debt, followed by $19,500 students from private nonprofit colleges

College Board TRENDS IN STUDENT AID STUDENT DEBT Graduate student borrowing is increasing more rapidly than undergraduate student borrowing; The fastest growing student aid program over the decade was Parent Loans for Undergraduate Students (PLUS).

College Board TRENDS IN COLLEGE PRICING TUITION & FEES –4-Year Public Tuition Avg. = $5, % Increase -4-Year Private Tuition -Avg. = $22, % Increase Total tuition, fee, room, and board charges for undergraduate in-state students at public institutions, now average $12,796—up $669 from the previous year.

College Board TRENDS IN COLLEGE PRICING UNDERGRADS (Public & Private) COSTS (Tuition & Fees) 42% < $ 6,000 13% > $24,000 4-Year Public Net tuition & fees = $2,700

College Board EDUCATION PAYS 2005, median earnings for bachelor’s degree holders between the ages of 25 and 34 working full-time were $13,900 higher than median earnings of high school graduates working full-time

Higher Education Reconciliation Act of 2005 Signed by President Bush 2/8/06 (Senate Bill 1932) The bill authorized PLUS Loans for graduate/ professional students All terms & conditions of PLUS Loan for parents are identical for graduate/professional students

Graduate PLUS Loan Terms & Conditions –Fixed Interest Rate of 8.5% – 3% origination fee will be deducted from the loan proceeds at disbursement and paid to the Department of Education – Up to a 1% default fee may be charged by the guarantor and will be deducted from the loan proceeds at disbursement

Graduate PLUS Loan Terms & Conditions –Students must complete the (FAFSA) Free Application for Federal Student Aid –Students must apply for their annual loan maximum eligibility under the Federal Subsidized and Unsubsidized Stafford Loan Program before applying for the Graduate PLUS Loan

Graduate PLUS Loan Terms & Conditions –Determination that student does not have adverse credit via credit check; no income requirement; no co-signer requirement –Maximum loan amount equal to cost of attendance minus other financial aid received

Graduate PLUS Loan Terms & Conditions –Multiple disbursements may be required depending upon the school attended –Interest accrues from date of disbursement

Graduate PLUS Loan Terms & Conditions –In-school deferment available while student is enrolled at least half time –Various deferment and forbearance options are available if student has difficulty repaying loan; interest will continue to accrue –Death and Total Disability benefit

Graduate PLUS Loan Terms & Conditions Repayment begins 60 full days from disbursement (unless student remains enrolled at least half-time) –10 year repayment period –Flexible repayment options Standard Extended Graduated

Application Process Credit pre-approval (web or phone) Master Promissory Note – legal commitment to repay loan Lender sends request to school to certify student’s eligibility for the loan Schools may certify Graduate PLUS Loans beginning 7/1/06 Lender disburses funds to school based upon recommended dates from school that follow Federal guidelines

Graduate PLUS vs. Private Loans If a graduate student has limited or no credit history, it may be more difficult to qualify for a private loan Graduate PLUS Loans have no income requirement and no co-signer requirement Graduate PLUS Loans will have a fixed interest rate, while private loans typically do not have an interest rate cap

Graduate PLUS vs. Private Loans Graduate PLUS Loans may charge up to 4% in fees Private loan fees may vary Graduate PLUS Loans offer flexible repayment options such as Standard, Extended and Graduated ; Private loans typically offer only Standard repayment option Forbearance option available for Graduate PLUS Loan borrowers that have difficulty repaying loan

Graduate PLUS vs. Private Loans Graduate PLUS Loans offer Death and Total Disability benefit that is typically not available for private loans Graduate PLUS Loans may be consolidated into a Federal Consolidation Loan

Graduate PLUS Loan QUESTIONS & DISCUSSION

Graduate PLUS Loan DAVE RICE St. Louis College of Pharmacy (314)