1. Educational Debt Management Income Driven Repayment
And
Public Service Loan Forgiveness
West Virginia Association of Financial Aid Administrators April 12, Dave Dahlen Director of Financial Aid/Registrar Mayo Clinic College of Medicine and Science Mayo Clinic Rochester, MN, Scottsdale, AZ, Jacksonville, FL

2. Disclosures & Stuff to Know!
No financial incentives
All my stories and examples are true
I’m not creative
Married to a Practicing Financial Aid Administrator
Anne Dahlen, St. Olaf College, Current MAFAA President Elect
Minnesota Association President in
Bunch of other stuff
Practicing Financial Aid Professional 28 years
Large Land Grant Institution
Small Public Vocational/Technical College
Medium Public Community College
“Smallish School” in a Huge Medical Center
Mayo Clinic and Mayo Clinic College of Medicine and Science

3. About Mayo Clinic 1,100 Student FTE 2,700 Medical Resident/Fellows
65,000 Employees
1.3M unique patient visitors per year
Largest Private Employer in Minnesota

7. Educational Debt Refresher You all know this!

8. Types of Loans Federal Non-Federal Federal Direct FFELP Perkins
Subsidized, Unsubsidized and Grad PLUS
FFELP
Subsidized, Unsubsidized and Graduate PLUS
Perkins
SLS, GSL, NDSL etc. (for the old FAOs in the room)
Non-Federal
Private Loans
Institutional Loans
Credit Card Debt

9. Know the details! Federal Loans Private Loans
Discharged upon death or permanent disability
Private Loans
In many cases debt cannot be discharged.

10. I “D” R Eligible Loans ~ Income DRIVEN Repayment
IBR and PAYE, REPAYE
Note… There are others.
Eligible
Federal Loans: Stafford (DL and FFELP), SLS, Grad PLUS, Federal Consolidation Loans (DL and FFELP)
Ineligible Loans
Private/Alternative Loans
Credit Card Debt
Signature Loans

11. IDR Repayment Plans
Available on Federal Student Loans
Direct and FFELP
Not Available on non-Federal Student Loans
Income DRIVEN Repayment:
Income Based Repayment (IBR), Pay As You Earn (PAYE) & Revised Pay As You Earn (REPAYE)
Monthly payments are driven off of income rather than amount borrowed, interest rate and loan term.
Question:
Does a borrower OWE more than you EARN????
If YES, they will most likely qualify for an IDR payment

12. How are payments calculated?
IBR Payments are capped at 15% of whatever the borrower earns above 150% of the poverty level for the applicable family size
PAYE & REPAYE Payments will be capped at 10% of whatever the borrower earns above 150% of the poverty level for the applicable family size
Very Different than standard loan payments!

13. 2018 HHS Poverty Guideline

14. How are Payments Calculated? 3 ½ Steps
1st Step
HHS Poverty Amount X 150% = Income Protection Allowance (IPA)
2nd Step
Adjusted Gross Income (AGI) – IPA = Discretionary Income (DI)
3rd Step
DI X 15% in IBR OR DI X 10% in PAYE or REPAY = Annual Pmt.
½ Step! Divide Annual Pmt. by 12 months

15. Paul R. Student: Adjusted Gross Income = $30,000 Family Size = 1
Total Federal Debt $27,792
@ 5% = $294.78/month ~ Standard Repayment
2018 HHS Poverty guideline = $12,140 (family size = 1)

16. Paul: Income Based Repayment Example
The Math:
$12,140 x 150% = $18,210 (IPA)
$30,000 - $18,210 = $11,790 (DI)
$11,790 x .15 = $ (Annual Payment)
$ / 12 months = $ (Monthly Payment)

17. Paul PAYE and REPAYE Example
The Math:
$12,140 x 150% = $18,210 (IPA)
$30,000 - $18,210 = $11,790 (DI)
$11,790 x .10 = $1,179 (Annual Payment)
$1,178 / 12 months = $98.25 (Monthly Payment)

18. Annual Renewal ~ Important
Payments are determined for 12 months
Annual renewal is needed
Failure to renew = Standard Payment
10-Year Payment, or
Consolidated Payments

19. Before we proceed …

20. Shifting Gears: PLSF

21. IDR and PSLF
Income Driven Repayment can exit without Public Service Loan Forgiveness BUT can not exist without

22. Public Service Loan Forgiveness The Four “Rights”
The right loans
The right KIND of payment
The right number of payments
The right type of work
71% of those survey thought private loans qualified for PSLF

23. Public Service Loan Forgiveness
College Cost Reduction and Access Act of 2007 created this program
Eligible Loans: Direct Loan Program – ONLY
Prior to 2010 there were two Federal loan programs:
Direct Loan Program
Federal Family Educational Loan Program: FFELP
Periods of Deferment and Forbearance do not count
Time does not have to be consecutive
Discharges any remaining debt after 120 qualifying payments ~ while working full-time employment in public service.

24. What kind of work counts?
Eligible Jobs Include:
Must be “Full-Time” = 30+ Hours per Week
Federal, State, Local, or Tribal Government
military, police, fire fighters , emergency management
Public child or family service agency
Public interest law; early childhood education
Public health and public schools education
But not members of Congress … 
Full-Time AmeriCorps or Peace Corps
Tax-Exempt 501(c)(3) organizations
Most Residency Training Programs
Most not-for-profit colleges and universities

25. The future of PSLF
March 14, 2018

26. The “Great American Give-Away”?
Mathematically PSLF benefits borrowers with large debts
Who are they?
Are borrowers accessing too much debt?
More than they can repay?

27. Past Recommendations:
Limiting qualifying payments to IDR only
Capping PSLF at $57,500
Eliminating the program all together
None of these have been enacted!

28. PROSPER ACT Aid Like a Paycheck … One Loan One Grant Changes to PSLF
Issue of “grandfathering”
_ pdf

29. Questions/Comments Remember – All of us are smarter than any of us!

30. David L. Dahlen
Director of Student Financial Aid/Registrar
Mao Clinic College of Medicine
(507)