1. Student Loans: Before, During
And After You Borrow

2. Student Loan Basics
Loans have to be repaid! Borrow only what you need!!
Interest
What you are charged for using someone else’s money
Capitalization
The addition of unpaid interest to the principal balance. Then new interest is applied to the ENTIRE balance (principal plus capitalized interest)
Borrow only what you absolutely need.
Loans have to be repaid. This is not like borrowing a few bucks from a parent who decides you do not have to repay her.
Interest accumulates on student loans. This means that you will repay more than your borrowed in the beginning.
Capitalization is the addition of unpaid interest to the principal balance.
How fast it is added makes a difference in the total amount you have to repay

3. Financial Aid Programs Federal Subsidized Stafford Loan
Self help and need-based
Must be REPAID
Must sign Master Promissory Note
Must be at least half-time
5.05% Fixed interest rate
No interest to the student while in school
Repay 6 months after no longer half-time. Interest begins immediately.
3.4% for undergraduate loans disbursed after 7/1/2011
The Federal Subsidized Stafford Loan is a student loan that comes from one of two sources
Either a Direct Loan (from the federal government)
Or a Federal Family Education Loan from a private lender like CFI
Must sign a master promissory note
The loan is self help aid and is need-based.
The Subsidized Stafford Loan must be repaid.
Student must be at least half-time to borrow the loan
The interest rate for loans made to undergraduate students and disbursed between 7/1/2009 and 6/30/2010 is 5.6%. The interest rate will be reduced again on 7/1/2010.
There is no interest accruing while the student is in school because the federal government is paying the interest on behalf of the student.

4. Financial Aid Programs – Federal Subsidized Stafford Loan
1.062% Origination Fee
1st year: $3500 per year
2nd year: $4500 per year
3rd year: $5500 per year
4th year: $5500 per year
Undergraduate Stafford Loan aggregate limit is $31,000 ($23,000 of which must be in the form of Subsidized Stafford Loan)
There are standard loan fees that are/can be charged to the student borrower.
The maximum Subsidized Stafford Loan funds, based on the student’s academic level:
$ $ $ $8500
Undergraduate students can borrow up to $23,000 in SUBSIDIZED Stafford Loans – cumulative maximum.

5. Financial Aid Programs Federal Unsubsidized Stafford Loan
Undergraduates: $2000 per year
NOT need-based
Must be REPAID
Must sign Master Promissory Note
Must be at least half-time
5.05% Fixed interest rate
Interest accrues
Fees and Repayment – same as Subsidized Loan
The Federal Unsubsidized Stafford Loan also comes from one of two possible sources – Direct or FFEL.
It is a self help type of aid that must be repaid.
It is a student loan
Must sign a master promissory note
It is NOT based on need, although the student must still file the FAFSA to be considered for this loan.
The student must be enrolled at least half-time
The interest rate is fixed at 6.8%
Interest accrues while the student is in school, in his/her grace period, and during repayment.
The lender sends a statement about accumulated interest and if possible, it is in the student’s best interest to pay that interest while he/she is in school and during the grace period. That way, the total amount of loan repaid is lower.
Same information about fees applies to the Unsubsidized Loan.

6. Financial Aid Programs – Federal Parent Loan (PLUS)
NOT need-based but student must file FAFSA
Parent borrows on behalf of dependent undergraduate student (at least half-time)
Must be REPAID
Must sign Master Promissory Note
7.6%
This a loan that a parent borrows on behalf of his/her dependent undergraduate student who is enrolled at least half-time.
Again, there are two sources of Parent Loans – FFEL or Direct.
It must be repaid.
The parent must sign a Master Promissory Note.
Student must meet all federal student aid eligibility requirements.
Effective , the student must complete a FAFSA before the parent can borrow the FPLUS
Graduate/professional students MUST complete the FAFSA.
Interest rates and fees

7. Financial Aid Programs – Federal Parent Loan (PLUS)
Must not have adverse credit history
Repayment begins 60 days after loan is disbursed
Repayment can be deferred while student is enrolled at least half-time
Interest continues to accrue
Maximum: Cost of Attendance minus Other Financial Aid
The parent borrower must not have an adverse credit history. The lender will review the parent applicant’s credit history.
Repayment begins either 60 days after the loan is fully disbursed or can be deferred while the student is enrolled at least half-time.
The maximum PLUS that can be borrowed is the Cost of Attendance minus Other Financial Aid the student receives.
These same general rules apply to graduate/professional students who borrow PLUS

8. Loan Limits For Dependent Students
Grade Level
Subsidized Amt
Unsubsidized Amt
Annual Limit
1st Undergrad
$3,500
$2,000
$5,500
2nd Undergrad
$4,500
$6,500
3rd & 4th Undergrad
$7,500
Aggregate limit for undergraduate dependent students is $31,000 with no more than $23,000 in Subsidized Loans. You cannot borrow more than your cost of attendance minus any other financial aid you'll get, so you may receive less than the annual maximum amounts.

9. Graduate or Professional Not eligible $20,500
Loan Limits - Independent Students and Dependent Students Whose Parents Are Denied PLUS
Grade Level
Subsidized Amt
Unsubsidized Amt
Annual Limit
1st Undergrad
$3,500
$6,000
$9,500
2nd Undergrad
$4,500
$10,500
3rd & 4th Undergrad
$5,500
$7,000
$12,500
Graduate or Professional
Not eligible
$20,500
No annual or aggregate limits for Grad PLUS.
For enrollment periods starting on or after July 1, 2012 – NO subsidized loans for grad/professional students
Exception: can borrow a subsidized loan for preparatory course work necessary for admission into either an undergraduate or graduate/professional program or for course work required for teacher certification or recertification.
Aggregate limit for undergraduate students is $57,500 with no more than $23,000 in Subsidized Loans.
Aggregate limit for graduate/professional students is $138,500 with no more than $65,000 in Subsidized Loans

10. Create a FSA ID – Students and Parents
Families will encounter this screen regardless of whether they click “Start a New FAFSA” or “Login.” The FSA ID, which consists of a user-created username and password, replaced the PIN effective May, It allows users to electronically access personal information on Federal Student Aid Web sites as well as electronically sign a FAFSA.
The FSA ID replaces the Federal Student Aid PIN. If families already have a PIN, they can link their information to your new FSA ID by entering their PIN while registering for your FSA ID. (This will save time when registering for the FSA ID.) However, a PIN is not required to create an FSA ID.

11. Complete your Master Promissory Note
Studentloans.gov

12. Your Master Promissory Note (MPN)
Contains your Rights and Responsibilities
Is a binding legal document that you signed
You indicated your commitment to repay your loans by signing the MPN
Your MPN may have been used for only one year at a time or as a multi-year note
Your MPN expires after 10 years or if you declare bankruptcy or for other reasons – check with your lender
Check with your loan servicer or your campus if you have questions about your MPN

13. Loan Disbursement
Schools generally make one disbursement for each payment period. Examples of a payment period - a semester, or a summer term.
If the loan covers only one payment period, the school may make two disbursements, one at the beginning of the period and one half-way through the period
Schools may disburse on a different schedule for module-based programs, programs that are clock-hour based, on-line programs, etc.
Check with the campus for details about loan disbursement.

14. Loan Disbursement Checks Direct Deposit to student accounts
Schools pay for direct costs (charged by the school, like tuition and fees, for example) first.
Any loan funds in excess of direct costs are disbursed to the borrower.
Schools use a variety of methods to disburse funds
Checks
Direct Deposit to student accounts
Debit cards
Check with the campus for more information

15. You Have to Repay Your Loan Even If
You did not complete your education
You are not employed
You did not find employment in your field of study
You feel the education you received did not meet your expectations

16. Student Loan Repayment Basics
Grace Period
Time during which you do not have to make any loan payments.
Deferment
Time during which loan payments are temporarily suspended
Forbearance
Temporary change in loan payment due to some financial hardship you are experiencing. You may still have to pay the interest that is accumulating during this time.
A grace period is a time during which you do not have to make any loan payments.
Deferment is a time during which your loan payments are temporarily suspended. You might be granted a deferment because you are enrolled in college – or you are in the military – or following active duty.
Forbearance means that there is a change in your loan repayment on a temporary basis – due to some financial hardship you are experiencing. You may still have to pay the interest that is accumulating on your loan.

17. Deferment At least half-time enrollment at an eligible school
Time period when repayment is temporarily suspended
A deferment period may be granted for:
At least half-time enrollment at an eligible school
Graduate fellowship
Rehabilitation program
Unemployment
Economic hardship
Military Service
These deferments apply to loans made on or after July 1, If you have a loan made before that date, check your promissory note.
Always check your promissory note and with your lender for the detailed requirements to qualify for a deferment. Deferment conditions may change as a result of legislation, so ask and do not assume.

18. Forbearance Reduce the amount of your payment
You are unable to make your scheduled payments but you do not qualify for a deferment
Forbearance allows you to
Reduce the amount of your payment
Temporarily stop payments
Most forbearance is discretionary – it is up to your lender to decide to grant forbearance.

19. Forbearance Personal problems such as poor health or economic hardship
These conditions might qualify you for forbearance
Personal problems such as poor health or economic hardship
Being affected by circumstances such as a national or local emergency, military mobilization or natural disaster
Exhausting your eligibility for an internship deferment
Serving in a position that may qualify you for loan forgiveness, partial repayment of your loan or national service educational award

20. Forbearance
You are still responsible for the interest that accrues during forbearance.
Try to pay it. Capitalized interest is added to the principal balance and increases your total outstanding debt and possibly your monthly payments

21. Repayment Tips Keep your loan records organized.
Keep copies of everything related to your loan.
Know how much your loan payments will be – your lender will send you a repayment schedule.
Create a monthly budget.
Direct Loan servicers will offer you the Standard Repayment Plan and will provide information about other repayment plans.

22. Repayment Options Standard Repayment Graduated Repayment
You always have the option to prepay your loan.
You can always pay your loan on a shorter schedule.
Repayment Schedules
Standard Repayment
Graduated Repayment
Income-Contingent Repayment (Direct Loan)
Income-Based Repayment
Pay as You Earn (PAYE)
Extended Repayment

23. Standard Repayment Schedule
Minimum monthly payment is $50 – amount of monthly payment depends on how much borrowed; payment required may be higher than the minimum
Maximum standard repayment period is 10 years

24. Graduated Repayment Schedule
Begins with lower payments
Payments increase over time
More interest will accrue over the life of the loan
Principal balance decreases at a slower rate

25. Extended Repayment
Available to new borrowers on or after October 7, 1998 with balance of more than $30,000
Payment amounts can be fixed annually or graduated
Maximum repayment term is 25 years
More interest may accrue over the life of the loan
Principal balance decreases at a slower rate

26. Contact your Direct Loan Servicer!
Trouble Paying?
Contact your Direct Loan Servicer!
You may be able to reduce your monthly payments if you qualify for an alternate repayment schedule
You may be able to temporarily postpone your payments if you qualify for a deferment or if you qualify for a forbearance

27. Combining Loans You have multiple lenders
You are making the minimum payment on multiple loans
Consolidation means one monthly payment to one lender
The only consolidation opportunity at this time is with the U.S. Department of Education’s Direct Loan program
Possibility of in-school consolidation of FFEL into DL from July to June due to discontinuation of the FFEL program.

28. Federal Consolidation Loan
Benefits
Extended repayment of up to 30 years, based on your loan balance
One monthly payment
Can prepay or change repayment plans
Fixed interest rate

29. Loan Cancellation – Direct Stafford Loan
Your death
You become totally and permanently disabled
Your school fails to pay a refund if you withdraw
Your school closes and you are unable to complete your program of study as a result
Your loan was falsely certified as a result of identity theft
Your school falsely certified or fraudulently completed a loan application in your name without your approval

30. Loan Forgiveness First loan was made on or after October 1, 1998
Teacher Loan Forgiveness – Direct Stafford Loans
First loan was made on or after October 1, 1998
You teach in a qualifying low-income school for 5 consecutive years

31. Loan Forgiveness
Public Sector Employee Forgiveness – Direct Stafford & Direct Grad PLUS Loans
You made 120 monthly payments on eligible loans after October 1, 2007
You are employed in a public-service job at the time of forgiveness and have been employed in a public-service job during the 120 month period

32. PSLF – Qualifying Employment
Each of the 120 payments must have been made during a period of qualifying employment
Qualifying employment includes any job at:
A government organization
A not-for-profit, 501(c)(3) organization or
Any other not-for-profit organization that is not a labor union or partisan political organization and that provides public services in the following categories:
Emergency management, military service, public safety, law enforcement, public interest legal services, early childhood education, public service for individuals with disabilities, public health, public education, public library services, school library services, or other school-based services
Borrower can work at multiple organizations while making the required120 payments

33. Loan Repayment Programs Direct Stafford Loan
These programs may help you repay your loan
AmeriCorps service program
Service as an enlisted person in the National Guard or Reserve program
Contact your recruiter for more information

34. Use NSLDS National Student Loan Data System (NSLDS)
Use NSLDS to monitor all of your federal student loan debt
Use NSLDS to identify who is servicing your loan
You’ll need your federal student aid PIN to access.
Any private or alternative loans you have borrowed will not be listed on NSLDS.

35. Use NSLDS FedLoan Servicing (AES/PHEAA)
Federal Direct Loan Servicers include
FedLoan Servicing (AES/PHEAA)
Great Lakes Educational Loan Services, Inc.
Nelnet
Sallie Mae
Additional not-for-profit loan servicers

36. Possible Tax Benefits
You may be eligible to deduct up to $2500 of the student loan interest you paid
Check with the IRS or your tax advisor
Tax benefits can change on an annual basis
Review IRS publication 970 “Tax Benefits for Education”
More information available at

37. Delinquency and Default
When you fail to make your payment on time, you are delinquent in meeting your obligation
When you fail to make your payments for 270 days, you will be in default on your student loan
There are serious consequences to defaulting on your student loan obligation

38. Consequences of Default
Damaged credit rating
Referral to a collection agency
Collection costs are added to your debt
Garnishment of your wages
Federal or state tax refunds, Social Security benefits, etc. can be withheld
Civil lawsuit filed against you (court costs and legal fees)
Loss of deferment and forbearance entitlements
Loss of repayment option flexibility
Loss of eligibility for further financial aid
Suspension of professional license

39. Resources CFNC resources are available to all students
Mappingyourfuture.org
CFNC.org
CFNC resources are available to all students
Ed.gov
NSLDS.ed.gov

40. Studentloans.gov Complete Entrance and Exit counseling
Sign Master Promissory Note
Calculate payments in
various payment plans
Request income-driven
repayment
Consolidation Loan app
Review your loan
information by signing in