1. 2018 Counselor Training Paying For College Strategies after all of the student’s “free” money has been exhausted
Presented by
Becky Davis Jeff Johnston, MBA
Sr. Marketing Associate Director, Business Developmen Great Lakes Educational Loan Services Sallie Mae

2. OASFAA is a non-profit organization
OASFAA has provided the information today as a free service
to access staff and high school counselors
You have permission to copy and distribute these materials to your students and families. Charges may not be assessed for the material or for the information presented. Permission must be granted for other use of this information or these materials. Contact the Outreach Chairperson listed on the OASFAA web site or

3. Agenda Counseling Framework Federal Student Loans
Income Drive Repayment Plans
Counseling how to pay after Federal Unsubsidized Loans or “Gap Financing”
Updates on New Tax Law
Financing Options for Parents
Frame of the issue is ED will emphasize to students/parents that they should use the IRS retrieval process.
The problem is that some Ohio Schools have early deadlines (i.e. Feb. 15). It is crucial to not miss a school’s filing deadline, hence the 2 step process best practice.

4. How does America pay for college?
Sources of Funds for College by Percentage
The survey shows that American families use a wide variety of funding sources to pay for college.
This is the ‘composite picture’ created. It represents the average percentage of dollars contributed from each source toward the student’s total ‘cost of attendance’.
It was created by aggregating the reported average costs of college and the reported average amount of dollars spent from each source that we asked about.
Parent current income is the largest single source, representing almost one-fifth of the money paid for college. The next largest source is federal student loans, which contribute 12% of the funds used to pay for college. All other sources individually contribute less than 10%.
Combining like items into larger categories—contributions by participating parties (parent, student, and outside source) and contributions grouped by borrowed and non-borrowed funds—we have a more manageable pie chart…
[Note: you might toggle between this slide and the next when discussing detailed numbers on the next slide]
Source: Sallie Mae “How America Pays for College,” 2009

5. How does America pay for college?
Grants and scholarships constitute the largest portion of funding used to pay for college
Borrowed money covered more than one-quarter of costs
Students and parents covered a similar share (30% and 31%) from their combined income, savings, and borrowing
Source: Sallie Mae “How America Pays for College,” 2017

6. “There are only 3 Ways To Pay for College”
Before
Savings from Summer Job
Income protection allowance - $6,420
Gifts – Graduation party, holidays, birthdays…
Summer classes at CC after Senior Year
Parents - planning opportunity - 529

7. “There are only 3 Ways To Pay for College”
During - Families are not in this alone!
File the FAFSA to find out eligibility for Grants (federal and state) and Scholarships (from the school "outside“)
Work study
Summer classes, summer jobs, winter break,…
Parents – Tuition Payment Plans
Tax credits (Consult your tax advisor)

8. “There are only 3 Ways To Pay for College”
After
Federal Student Loans
Perkins
Direct Subsidized and Unsubsidized Loans (aka Stafford)
Parent PLUS versus Private Loans
Cosigning Student Loans or Parent Private Loans
Other financing (401(k) loans, HELOC, CC)

9. Not based on financial need
Direct Loans,
Direct Subsidized and Unsubsidized Loans are two separate, unique types of loans that are awarded separately.
Subsidized
Unsubsidized
Need based
Not based on financial need
Interest is fixed at 4.45% for new undergraduate loans disbursed during *. Interest is subsidized while the student is in school and during deferment.
Interest is fixed at 4.45% for all new loans disbursed during *. Interest accrues from time of disbursement of the funds.
Subsidized Loan-interest is deferred ONLY during periods of half-time or more enrollment.

10. Additional Unsubsidized Amount Total Available to Borrow
Direct Loans,
Class Year
Base Amount
Additional Unsubsidized Amount
Total Available to Borrow
Freshman
$3,500
$2,000
$5,500
Sophomore
$4,500
$6,500
Junior
$7,500
Senior
Independent Students and Dependent Students whose parents have been denied the PLUS Loan are eligible for additional Unsubsidized Stafford Loans ($4,000 as Freshmen and Sophomores and $5,000 as Juniors and Seniors)

11. Direct Loans, 2017-2018 Subsidized and Unsubsidized Loans
1.066% origination fee.
Parent and Graduate PLUS
4.264% origination fee.

12. Follow instructions at school attending
Direct Loans,
FAFSA
Follow instructions at school attending
Entrance Counseling
MPN
Follow your school’s process, most schools have great instructions on their web site for incoming students. Counselors can help students understand that loan fund will disburse directly to their student account (i.e. they will never hold the money or a check), but this is still borrowed money that they will owe.

13. IBR – Income Based Repayment
Available to federal loan borrowers experiencing financial hardship
Borrower qualifies if annual monthly student loan payments exceed 15% of “discretionary income”
If eligible for IBR, borrower’s monthly payment will be determined by a formula that takes into account household size and adjusted gross income. Increases in income will impact the required monthly payment amount
Unpaid balance may be forgiven after 25 years of scheduled monthly payments

14. Pay As You Earn
Available to new Direct loan borrowers (except Parent PLUS) experiencing financial hardship
No loan balance as of October 1, 2007, and
Received a Direct loan on or after October 1, 2011
Borrower qualifies if annual monthly student loan payments exceed 10% of “discretionary income”
Similar to IBR, borrower’s monthly payment will be determined by a formula that takes into account family size and adjusted gross income.  Increases in income will impact the required monthly payment amount
Unpaid balance may be forgiven after 20 years of qualifying repayment (which is a taxable event)

15. Revised Pay As You Earn (REPAYE)
Available to Any Direct Loan borrower with an eligible loan type may choose this plan.
Your monthly payments will be 10 percent of discretionary income.
Similar to IBR, borrower’s monthly payment will be determined by a formula that takes into account family size and adjusted gross income.  Increases in income will impact the required monthly payment amount
Unpaid balance may be forgiven after years of qualifying repayment (which is a taxable event)

16. Public Service Loan Forgiveness
120 qualifying payments on Direct Loans while on qualified repayment plans while working at a qualified employer.
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
Source: Slide 39, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”

17. Public Service Loan Forgiveness
Qualifed employer.
Any government organization
501(c)3 not-for-profit organization
Other not-for-profit organizations providing specific qualifying services
Does not matter what the borrower’s job duties are
Borrower can work at multiple organizations
Source: Slide 43, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”

18. Public Service Loan Forgiveness
Qualified Repayment Plans
10 year standard
ICR
IBR
Pay As You Earn
Revised Pay As You Earn
Others>= 10-Year Standard (Any other Direct Loan Repayment Plan, but only payments that are at least equal to the standard payment)
Source: Slide 41, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”

19. IDR and PSLF FAQ’s
Federal Student Aid Public Service Loan Forgiveness Frequently Asked Questions
Income-Driven Repayment Program Questions and Answers

20. Student Loan Calculator
Department of Education
Allows you to pull in your actual loans from NSLDS and project your payment, total interest, repayment term, etc. under different payment plans.

21. New Tax Law – Impacts on Higher Education
1. Deductions for interest on home equity loans and lines of credit are eliminated.
2. Families can use 529 plans to pay for K-12 education.
3. Colleges and universities will pay a new excise tax on endowments.
A new excise tax levies a 1.4 percent on a private educational institution's endowments that amount to more than $500,000 per student.
4. Student loans discharged for death or disability are now tax-exempt.
5. Alimony for recipients is no longer taxable.
Source:

22. “After Federal Unsub” or Gap Counseling
Tuition Payment Plan (student and/or Parent)
Parent PLUS (Federal Loans
Home Equity Line of Credit
Private Student Loans (Parent or Student)
Retirement Plan Loans
Roth IRA
401(k)
Importance of Providing Planning Framework
Connect future loan payment to earnings.

23. Parent PLUS Parent PLUS Loans Loans to parents of dependent students.
Loan limits are up to the cost of education less any financial aid received.
16-17 Interest rate is 6.31% fixed* (fee is 4.276%).
Repayment begins within 60 days of full disbursement. Payments may be deferred while the student is in school.
FAFSA completion is required.
*Interest rates recalculated annually and are effective July 1st based on the 10-year Treasury note index plus 4.60%, capped at 10.50%

24. Reauthorization? Two current political climate drivers: Partisanship
Budget politics dictating policy