1. Student loan Overview

2. Agenda 1 Student loan types 2 Income-driven Repayment Plan 3
Public Service Loan Forgiveness Program 4
Identify options for federal loans 5
Opportunities to engage prospects

3. Student loan types

4. Student loan types Federal loans Private loans Category Sub Category
Income-Driven Repayment plan
Public Service Loan Forgiveness
Federal loans
Direct Loans
Direct Subsidized Loans
More options
Eligible
Direct Unsubsidized Loans
Direct PLUS Loans
Direct Consolidation Loans
Federal Family Education Loan
(FFEL)
FFEL Subsidized Loans
Less options
Eligible only after consolidate to Direct Loan
FFEL Unsubsidized Loans
FFEL PLUS Loans
FFEL Consolidation Loans
Other
Perkins Loans
Primary Care Loans (PCL)
Loans for Disadvantaged Students (LDS)
Private loans
Private/Institution Loans
N/A

5. Income-driven repayment plan

6. Income-driven repayment plan
What is an Income-driven repayment plan?
An income-driven repayment plan is a repayment plan that sets the monthly student loan payment at an amount that is intended to be affordable based on his/her income and family size.
Income-driven repayment plan type
Loan Forgiveness
Income-Based Repayment Plan (IBR)
Pay As You Earn Repayment Plan (PAYE)
Revised Pay As You Earn Repayment Plan (REPAYE)
Income-Contingent Repayment Plan (ICR)
Income-driven repayment plan usually results in lower payment.
Remaining balance is forgiven at the end of the term
Balance forgiven is a taxable income

7. Income-driven repayment plan
Monthly payment
Terms
IBR
Min (10% of discretionary income, 10yr standard repayment plan amount) after 7/1/14
Min (15% of discretionary income, 10yr standard repayment plan amount) before 7/1/14 20 25
PAYE
Min (10% of discretionary income, 10yr standard repayment plan amount)
REPAYE
10% of discretionary income
20 for under; 25 for graduate
ICR
Min (20% of discretionary income, 12 yr payment)
Discretionary income = AGI – 150% of annual poverty guideline amount for your family size at your residence state.
An individual has a Partial Financial Hardship (PFH) when the income-driven repayment amount is lower than 10 year standard repayment amount.

8. Comparison of income-driven repayment plan
Key
differences
Need a Partial Financial Hardship
Can use Married File Separately to lower payment?
Payment %
Has a Payment Cap?
IBR
Yes
15%*
PAYE
10%
REPAYE No
Interest cost
differences
Interest Benefit
Interest capitalization
IBR
Subsidized loan:100% of unpaid interest for the first 3 years.
Once payments exceeds Standard Repayment, 100% accrued interest capitalized.
PAYE
Once payments exceeds Standard Repayment, Accrued interest up to 10% of original loan amount capitalized.
REPAYE
Subsidized loan:100% of unpaid interest for the first 3 years & 50% for all remaining years.
Unsubsidzed loans: 50% for all years.
When you leave plan
*Only new borrowers after 7/2014 can use 10% for IBR.

9. Public Service Loan Forgiveness (PSLF)

10. To be eligible for Public Service Loan Forgiveness
Employment
Work for public service organization
Full-time employment (30 hours per week)
Loan
Direct Loans
Other Federal loans that are consolidated to Direct Loans
Payment Plan
Income Driven Repayment plan: ICR, IBR, PAYE, REPAYE
10Yr Standard Repayment plan
Payments
120 on-time, full, scheduled, monthly payments
Remaining balance at the end of 120 payments is forgiven.
120 payments “clock” will restart at consolidation.
Balance forgiven is not taxable.
Note, this is different than loan forgiveness from income-driven repayment plan.

11. Options for Federal loans

12. Understanding the options is the first important step
Not all Federal loans are eligible for a income-driven repayment plan.
Variation in income-driven repayment plan based on date of net borrowers.
Not all Federal loans are eligible for Public Service Loan Forgiveness.

14. Limited income-driven payment plan for FFEL loans
Limited income-driven payment plan for FFEL loans. No PSLF option for Perkins or FFEL loans
Consolidation to direct loan enables more Income-driven payment options and PSLF

15. Opportunities to engage young prospects

16. Planning opportunities for prospect with Federal loans
Income-driven repayment plan & PSLF
Best to minimize payments
Work for public service organization
Prefer lower payments
Work for private sectors
Prefer payoff faster

17. Planning opportunities for prospect with Federal loans
Take advantage of married filed separately
PAYE
Income-driven repayment plan & PSLF
Best to minimize payments
Lower interest cost (potentially higher payment)
REPAYE
Work for public service organization
Prefer a payment cap
PAYE
Other
IBR
Income-driven repayment plan
Forgiveness based on repayment plan
Prefer lower payments b
Work for private sectors
Refinance to a private loan w/ lower rate
Snowball approach w/ other debts
Prefer payoff faster

18. Take Aways
Student loan represents great opportunities to attract Gen X/Y prospect and provide values to Gen X/Y client.
Important three steps
Important first step is to understand what type of loan prospect has
Then, identify options available
Lastly, create a plan to meet client’s need
RightCapital will launch student loan module to help you to analyze client’s student loan situation and compare options. Stay tuned.
More student loan webinar with numerical examples. Stay tuned.