1. Loans 101 presented by the Office of Financial Education

2. About our office The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills.The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills. As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and empower them to make wise financial decisions while attending school and beyond.As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and empower them to make wise financial decisions while attending school and beyond. The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills.The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills. As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and empower them to make wise financial decisions while attending school and beyond.As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and empower them to make wise financial decisions while attending school and beyond.

3. What is the cost of attendance at MSU? In-State Tuition=$6,705 w/ housing, books, misc. =$19,185 Out-of-State Tuition=$20,062 w/ housing, books, misc. =$32,542 2012-2013 (http://www.montana.edu/opa/facts/quick.htm#Expenses)2012-2013 (http://www.montana.edu/opa/facts/quick.htm#Expenses)

4. Income Sources ParentsSavings Federal Grants (FAFSA) Scholarships Earned Income (making tuition payments) Student Loans (federal, Perkins, and/or private)

5. Loan Limits Dependent students=$31,000 Independent students=$57,500 Graduate students=$138,500

6. Types of Student Loans SubsidizedUnsubsidizedPerkins Parent PLUS Private

7. Federal Subsidized Lender is Dept. of Education Stafford and Direct 6.8% + 1% origination fee During periods of deferment, interest is paid by federal government Grace period=6 months after student graduates/leaves school

8. Federal Unsubsidized Lender is Dept. of Education Stafford and Direct 6.8% + 1% origination fee During periods of deferment, interest is NOT paid by federal government Grace period=6 months after student graduates/leaves school

9. Perkins loans Lender is Montana State University Current interest rate at 5% (subsidized) Grace period=9 months after student graduates/leaves school Can be consolidated with federal loans

10. PrivatePrivate Private lender (ex. Wells Fargo, Sallie Mae) Varying interest rates; can be fixed or adjustable May or may not have a grace period Cannot be consolidated with federal or Perkins loans Use as a last resort and use sparingly!

11. National Student Loan Data System http://www.nslds.ed.gov You will need your PIN to log in If you don’t have your PIN, visit http:pin.ed.gov to “Request A Duplicate PIN” http:pin.ed.gov Refer back to NSLDS once a year Make sure information is accurate and up to date Locate your loan servicer!

12. Loan servicers

13. Identifying Your Loan Servicer Servicer for Perkins Loans is Montana State University Contact the Perkins & Nursing Loan Servicer at (406)994-2702

14. Identifying Your Loan Servicer Servicers for all other federal loans: FedLoan Servicing (PHEAA) Nelnet Great Lakes Educational Loan Services Sallie Mae

15. About Loan Servicers Make payments Choose a payment plan Request a deferment or forbearance

16. Making Payments 6 month grace period from the time you graduate or leave school; 9 month grace period for Perkins loans You can make payments any time...even while you’re still in school!

17. Payment Plans Standard-automatically enrolled; 10 years Extended: 25 years; smaller payments, pay more interest over time Graduated: 10 or 25 years; payment amount increases every 2 years Various Income-based Repayment: 20-25 years; based on your annual income

18. Avoid Default!!! Default=non-payment for 270 days (9 months) Potential consequences include: Loan becomes due in full immediately Collection fees of up to 24% Garnished wages, seized tax refunds Negatively affect credit scores and reports State licenses could be suspended Always stay in contact with your loan servicer!

19. Minimize Loan Debt Now Budget loan refunds...pay back what you don’t need Make payments now! Even small amounts here and there help. Consider working while in school to help reduce need for loans.

20. General Debt Repayment If you have a variety of debt, ideally pay off whatever has the highest interest firstIf you have a variety of debt, ideally pay off whatever has the highest interest first However, you can also create a “debt snowball” by paying off the smallest debt you have first and then rolling the momentum from that onto other debt loadsHowever, you can also create a “debt snowball” by paying off the smallest debt you have first and then rolling the momentum from that onto other debt loads You won’t save as much on interest perhaps, but it may have enough impact to get you to stick to the planYou won’t save as much on interest perhaps, but it may have enough impact to get you to stick to the plan Once you’ve repaid one debt, you can just roll the money from those payments over to your next debt categoryOnce you’ve repaid one debt, you can just roll the money from those payments over to your next debt category

21. For More Information National Student Loan Data System: http://nslds.ed.gov http://nslds.ed.gov Federal Student Aid: http://studentaid.ed.gov http://studentaid.ed.gov Get Money Smarts: http://www.getmoneysmarts.org http://www.getmoneysmarts.org General debt repayment calculator: http://www.youcandealwithit.com/borrowers/calculators-and- resources/calculators/debt-repayment-calculator.shtml http://www.youcandealwithit.com/borrowers/calculators-and- resources/calculators/debt-repayment-calculator.shtml http://www.youcandealwithit.com/borrowers/calculators-and- resources/calculators/debt-repayment-calculator.shtml

22. Thank you! Any questions?Any questions?