1. Federal Student Loan Exit Counseling
Presented by:
Financial Aid Office,
Thomas Jefferson School of Law
November 18, 2010
This presentation is intended for borrowers of both Federal Family Education Loan Program (FFELP) and Federal Direct Loan Program (FDLP).
Also, both Stafford and student PLUS requirements are discussed in this presentation.

2. Disclaimer
Federal regulations require that the name of the entity who developed and paid for the entrance counseling materials be disclosed. The material presented here was prepared by TG and the U.S. Department of Education. The completed document was reviewed for accuracy by the Financial Aid Office at Thomas Jefferson School of Law
This presentation is intended to help schools conduct exit counseling for Federal Direct Loan Program and Federal Family Education Loan Program borrowers.
Also, to ensure compliance with the minimum federal requirements for exit counseling, do not delete any of the slides. However, slides may be rearranged in a sequence that is most appropriate for the presenter.

3. Why do I need to attend?
Federal regulations require schools to provide exit counseling for students:
Who have borrowed a Stafford and/or Grad PLUS loan under the Federal Direct Loan Program (Direct Loan) and/or the Federal Family Education Loan Program (FFELP) and
who are graduating, have withdrawn or have dropped below half-time enrollment.
Suggested introduction:
“ The information that you will be provided in today’s session will be invaluable to helping you pay back your student loans. Also, take note of the numerous resources, websites and contact information that I will be presenting during the session. You can always refer back to these resources anytime you have a question about your student loan.
Remember that not paying back your student loan is something that can haunt you for the rest of your life. So please make sure that you ask lots of questions and pay close attention to today’s session.

4. Stafford Loan Master Promissory Note (MPN)
An agreement to pay back loan(s)
Multi-year feature vs. new MPN per year
Details borrower rights and responsibilities
The MPN
A binding legal agreement that a student signs where he/she promises to repay his/her student loan(s);
May be used for multiple loans up to 10 years, if the school uses the multi-year feature;
Student may be required to sign a new MPN if the student’s school does not use the multi-year feature. If the student transfers to a school that uses the multi-year feature, the student is generally not required to sign a new MPN.
If student would feel more comfortable completing and signing a new MPN for each new loan, he/she may do so. 

5. Stafford MPN Used for subsidized and unsubsidized Stafford Loans
Subsidized — need-based loan; government pays interest while enrolled
Unsubsidized — non-need based loan; student responsible for all interest

6. PLUS MPN
Used for:
Student PLUS loans (FDLP)
Grad PLUS loans (FFELP)

7. When repayment begins
Stafford loans have a grace period; repayment begins six months after student graduates, withdraws, or drops below half-time enrollment.
PLUS loans have a deferment period; repayment begins six months after student graduates, withdraws, or drops below half-time enrollment.
Direct Loan Servicing Center or lender will send notification of your first payment due date during your grace/deferment period.
Subsidized and unsubsidized Stafford Loans:
Enter repayment six months after cease half-time attendance
Grace period begins the day after the student drops below half time or the day after their last date of enrollment
There is no penalty for making payments during the grace period. Remind students that paying ahead will decrease the total amount of interest that they pay on their loan which will result in paying their loan faster.
PLUS loans:
have a post enrollment deferment period of 6 months.
first payment due six months after student graduates, withdraws, or drops below half-time enrollment
Recommend that students try to pay the interest on PLUS Loans while in school to avoid a higher principal balance that will occur when the interest is capitalized at the end of the 6-month post enrollment deferment period
For Direct Loans:
The Direct Loan Servicing Center will notify students about their first payment due date while they are in their grace/deferment period. If students do not receive this information, students must contact the Direct Loan Servicing Center at or TTY
For FFELP loans: Lender will send repayment schedule to student during their grace. Students must stay in contact with lender so that lender has student’s correct address.

8. Borrower responsibilities
Borrowing money is a serious matter and all loans must be paid back.
Not receiving billing statement is not an excuse for not making payments.
Even if you did not complete your program, didn't complete your program within the regular time for program completion, are dissatisfied with quality of education, or can’t find a job, you must pay back the loan(s).

9. Consequences of default
Loss of federal financial aid eligibility
Withholding of federal income tax refunds
Inability to renew professional license (e.g., lawyer, State Bar Licensure)
Negative credit history (will affect credit purchase of house, car, etc.)
Key points for students:
Encourage students to notify the Direct Loan Servicing Center/lender immediately if they anticipate difficulty making a payment. Failure to pay all or part of an installment payment when due can result in late charges.
Failure to make payments for 270 days results in default. Defaulting on a student loan can also result in:
damage to their credit rating, which could impact their ability to borrow;
referral of their account to a collection agency;
civil lawsuit, including court costs and legal expenses;
loss of deferment and forbearance entitlements and flexible repayment options;
loss of eligibility for further financial aid;
Three basic guidelines for students to follow in order to avoid delinquency and default:
Keep school informed of any changes in name, mailing address, telephone, or Social Security number so that all correspondence is promptly directed to them.
Read and keep all documents pertaining to their student loan; understand loan amounts and the payments that will be required.
For Direct Loan borrowers: If experiencing financial hardship and are unable to make payments, call the Direct Loan Servicing Center for information regarding alternative repayment plans. Once the loan has been disbursed, students may contact the Direct Loan Servicing Center for help, especially if having trouble repaying or student needs to report a change of address or a name change: or (TTY)
Direct Loan Servicing Online at:
FFELP borrowers: Should contact their lender when experiencing financial difficulty.

10. Consequences of default
Wage withholding
May be sued
Collection fees and attorney’s fees assessed
Enforcement of delinquent debt collection procedures
Delinquent debt collection procedures will be applied to the collection of student loans. This means that similar to other debt, collectors will follow procedures such as those dictated under the Fair Debt Collection Practices Act.
The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

11. Attachment A: Sample monthly repayment amounts
Interest Rates
Loan Amount 4% 5% 6% 7% 8% 9%
$70,000
$708.72
$742.46
$777.14
$812.76
$849.29
$886.73
$80,000
$809.96
$848.52
$888.16
$928.87
$970.62 $
$90,000
$911.21
$954.50
$999.18 $ $ $
$100,000 $ $ $ $ $ $
$110,000 $ $ $ $ $ $
$120,000 $ $ $ $ $ $
$130,000 $ $ $ $ $ $
Sample monthly repayment amounts in the chart above are based on the standard repayment plan (10 year term).
Effective 8/14/08:
The student borrower must be given an estimate of the average anticipated monthly payments that is based:
1) on his or her indebtedness, or
2)on the average indebtedness of other student borrowers for attendance at the same school or in the same program of study at the same school. If you use an average of other student borrowers, include Graduate/Professional PLUS borrowers in calculating the average only if you are providing the average amount to a student who has also borrowed Graduate/Professional PLUS
Resource: Monthly payments can be calculated using the Repayment calculator found at: or

12. Attachment A: Sample monthly repayment amounts
Interest Rates
Loan Amount 4% 5% 6% 7% 8% 9%
$140,000 $ $ $ $ $ $
$150,000 $ $ $ $ $ $
$160,000 $ $ $ $ $ $
$170,000 $ $ $ $ $ $
$180,000 $ $ $ $ $ $
$190,000 $ $ $ $ $ $
$200,000 $ $ $ $ $ $
Sample monthly repayment amounts in the chart above are based on the standard repayment plan (10 year term).
Effective 8/14/08:
The student borrower must be given an estimate of the average anticipated monthly payments that is based:
1) on his or her indebtedness, or
2)on the average indebtedness of other student borrowers for attendance at the same school or in the same program of study at the same school. If you use an average of other student borrowers, include Graduate/Professional PLUS borrowers in calculating the average only if you are providing the average amount to a student who has also borrowed Graduate/Professional PLUS
Resource: Monthly payments can be calculated using the Repayment calculator found at: or

13. Repayment plans Offered under both FDLP & FFELP Standard Graduated
Extended
Income-based
Specific to loan program
Income-contingent (FDLP)
Income-sensitive (FFELP)
STANDARD REPAYMENT PLAN—Students will make fixed monthly payments to repay their loan in full within 10 years (not including periods of deferment or forbearance) from the date the loan entered repayment.
EXTENDED FIXED REPAYMENT or EXTENDED GRADUATED REPAYMENT PLAN—Students will make fixed or graduated monthly payments and repay their loan in full over a period of time, not to exceed 25 years (not including periods of deferment or forbearance). To be eligible for either Extended Repayment Plan, student must be a new borrower* on or after Oct. 7, 1998, and a student’s outstanding federal student loan debt must be more than $30,000.
GRADUATED REPAYMENT PLAN— payments will be lower at first and then will increase, usually every 2 years. Students must repay their loan in full within 10 years (not including periods of deferment or forbearance). At a minimum, payments must cover the interest that accumulates on the loan between payments.
INCOME-BASED REPAYMENT PLAN—the required monthly payment amount will be based on the student’s income during any period when they have a partial financial hardship. The monthly payment amount may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If student’s meet certain requirements over a specified period of time, they may qualify for cancellation of any outstanding balance on their loans.

14. Repayment plans For all repayment plans, student can:
Prepay loans without penalty;
Pay on a shorter schedule; and
Change repayment plans once per year.

15. Standard Repayment Plan
Lowest total loan cost
Regular payments of both principal and interest are due monthly, excluding periods of deferment and forbearance
Minimum monthly payment is $50
10-year repayment term
STANDARD REPAYMENT PLAN—Students will make fixed monthly payments to repay their loan in full within 10 years (not including periods of deferment or forbearance) from the date the loan entered repayment.

16. Graduated Repayment Plan
Monthly payments are smaller at the start of the repayment period and gradually increase
10-year repayment term
Total amount paid in interest will be greater than under the standard repayment plan
GRADUATED REPAYMENT PLAN— payments will be lower at first and then will increase, usually every 2 years. Students must repay their loan in full within 10 years (not including periods of deferment or forbearance). At a minimum, payments must cover the interest that accumulates on the loan between payments.

17. Extended Repayment Plan
Lengthens repayment term up to 25 years
Available to borrowers with more than $30,000 in federal student loans
Total interest costs may be higher over life of the loan, although monthly payment amount may be lower
EXTENDED FIXED REPAYMENT or EXTENDED GRADUATED REPAYMENT PLAN—Students will make fixed or graduated monthly payments and repay their loan in full over a period of time, not to exceed 25 years (not including periods of deferment or forbearance). To be eligible for either Extended Repayment Plan, student must be a new borrower* on or after Oct. 7, 1998, and student must have more than $30,000 in federal student loan debt.

18. Income-Based Repayment Plan (IBR)
Borrowers may qualify for lower monthly payments as determined by adjusted gross income, federal student loan debt, and family size
After 25 years (300 payments), remaining balance and accrued interest is forgiven
Must reapply annually
INCOME-BASED REPAYMENT PLAN—the required monthly payment amount will be based on the student’s income during any period when they have a partial financial hardship. The monthly payment amount may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If student’s meet certain requirements over a specified period of time, they may qualify for cancellation of any outstanding balance on their loans.
What federal student loans are eligible to be repaid under an IBR plan?
Any Stafford, Grad PLUS or Consolidation loan made under either the Direct Loan or FFEL program is eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans, or consolidation loans that repaid a parent PLUS Loan. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).
Who is eligible for IBR?
You may enter IBR if your federal student loan debt is high relative to your income and family size. You can use the Departments IBR calculator or (other calculators listed below) to estimate if you would likely benefit from the IBR plan. It looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment under a 10-year standard repayment plan, then you are eligible to repay your loans under IBR.
25-YEAR CANCELLATION - If you repay under the IBR plan for 25 years, make 300 payments and meet certain other requirements, any remaining balance will be cancelled.
Resources:
Project on Student Debt website
(source,
Adventures in Education

19. Income-Contingent Repayment Plan
Offered only to borrowers under the Direct Loan Program
Monthly payment based on adjusted gross income, family size, and total Direct Loan debt
If payment does not cover interest accrued, unpaid amount is capitalized annually.
Maximum repayment period is 25 years, and any balance after 25 years is forgiven.
**Income Contingent Plan is only available to FDLP borrowers**
Monthly payment amount will be based on:
student’s annual income (and that of their spouse if married),
family size, and
the total amount of Direct Subsidized and Unsubsidized Loans.
As income changes, payments may change. If students do not fully repay their loan after 25 years under this plan, the unpaid portion will be forgiven. Students may have to pay income tax on any amount forgiven.

20. Sample Comparison of Repayment Plans
Federal regulations require that students be provided with sample information showing
the average anticipated monthly payment s under each repayment plan
the difference in interest paid and
Total payments under each repayment plan
To meet this requirement, examples found in Attachment B must be provided to the student and discussed with them as part of this session.

21. Loan consolidation Option to combine federal education loans
Loans must be in grace or repayment status
Temporary provision to consolidate while in-school (July 1, 2010–June 30, 2011)
Original loans are paid in full
New loan for the combined balances is issued with new terms, including a new interest rate that is fixed for the life of the loan
Loan consolidation
Consolidation is available if loans are in grace period or in repayment. This program enables the student to pay their existing student loans in full with one loan, with one interest rate and repayment schedule. While loan consolidation can extend the repayment period and lower monthly payments, the interest rate (a fixed rate) and total interest paid on the loan will likely be greater.
Interest rate on a Consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded to the nearest 1/8th of a percent.
Contact the Direct Loan Origination Center's Consolidation Department to apply for a Direct Consolidation Loan. You can reach them by calling TTY users may call Or visit loanconsolidation.ed.gov.
Temporary provision- Between July 1, 2010 and July 1, 2011, students have the option to consolidate their federal student loans while in-school. However, students should consider this option carefully as students will lose their grace period and immediately enter into repayment after consolidation.

22. Consolidation — factors to consider
Negatives
Total interest paid may be greater
May extend repayment period
May lose benefits (e.g., grace period, loan forgiveness, cancellation, deferment, or a reduced interest rate)
It is recommended that you consolidate your loans close to the end of your grace period. Otherwise you will lose your grace period if you consolidate too soon. Once you consolidate your loan enters repayment and you can not get your grace period back.
Also, consolidating your loans may mean that you will have to pay more interest on your loan over time. As a result, you will pay on the loan for a longer period of time . Carefully consider the following factors when deciding whether consolidation is a good idea for you:
Are your monthly payments manageable? If you have trouble meeting your monthly payments, have exhausted your deferment and forbearance options, and/or want to avoid default, a Direct Consolidation Loan may help you.
Too many monthly payments driving you crazy? If you send payments to more than one lender every month, and want the convenience of a single monthly payment, consolidation may be right for you. With a Direct Consolidation Loan, you will have a single lender - the U.S. Department of Education - and a single monthly payment.
What are the interest rates on your loans? If you have variable interest rates on your Federal education loans, you may want to consolidate. The interest rate for a Direct Consolidation Loan is fixed for the life of the Direct Consolidation Loan. The rate is based on the weighted average interest rate of the loans being consolidated, rounded to the next nearest higher one-eighth of one percent and can not exceed 8.25 percent.
How much are you willing to pay over the long term? Like a home mortgage or a car loan, extending the years of repayment increases the total amount you have to repay.
How many payments do you have left on your loans? If you are close to paying off your student loans, it may not be worth the effort to consolidate or extend your payments.
***Students who have a Federal Perkins Loan, should carefully consider loan consolidation, since it could affect benefits that they currently have under the Federal Perkins Loan.
Consolidating a Federal Perkins loan may result in the following:
Lose all interest-free periods that would have been available for the Perkins Loan Program
No longer be eligible for public service cancellation of all or a portion of the Perkins loan
Occupations that qualify for Perkins loan cancellation

23. Consolidation — factors to consider
Positives
May significantly lower monthly payments
Simplifies repayment — one monthly payment
No minimum or maximum loan amounts or fees with Direct Loan consolidation
These are some advantages to consolidation:
One Loanholder and One Monthly Payment With only one lender and one monthly bill, it is easier than ever for borrowers to manage their debt. Borrowers have only one lender, the U.S. Department of Education, for all loans included in a Direct Consolidation Loan. For FFELP borrowers, students will only have one lender to make payments to.
Flexible Repayment Options Borrowers can choose from as many as four different plans with various term selections to repay their consolidation loan(s), including an Income Contingent Repayment Plan. These plans are designed to be flexible to meet the different and changing needs of borrowers. With a consolidation loan, borrowers can switch repayment plans at anytime.
No Minimum or Maximum Loan Amounts or Fees There is no minimum amount required to qualify for a Direct Consolidation Loan! In addition, consolidation is free.
Varied Deferment Options Borrowers with consolidation loans may qualify for renewed deferment benefits. If borrowers have exhausted the deferment options on their current Federal education loans, a consolidation loan may renew those deferment options. In addition, borrowers may be eligible for additional deferment options if they have an outstanding balance on a FFEL Program loan made before July 1, 1993, when they obtain their first Direct Loan.
Reduced Monthly Payments A consolidation loan may ease the strain on a borrower's budget by lowering the borrower's overall monthly payment. The minimum monthly payment on a consolidation loan may be lower than the combined payments charged on a borrower's Federal education loans.
Retention of Subsidy Benefits There are two (2) possible portions to a consolidation loan: Subsidized and Unsubsidized. Borrowers retain their subsidy benefits on loans that are consolidated into the subsidized portion of a consolidation loan.

24. Consolidation tips Compare and weigh all options
For more information on consolidating your loans, and how to apply go to

25. Tax benefits For students and parents Student loan interest deduction
reduces the taxable income based on the amount of student loan interest paid.
Tuition and fees deduction
reduces the taxable income based on college tuition and fees paid during the tax year

26. Tax benefits For students and parents
Hope and Lifetime Learning tax credit
a credit against federal income taxes for college tuition and fees paid during the tax year
See IRS publication 970 at for more information.

27. Debt management strategies
Make a budget
Loan payments are a fixed cost like utilities and rent
Be realistic about expected earnings for your major
Stick to one credit card. Keep in mind that credit cards are loans!
You can get rough estimates of salaries in different careers by checking the Occupational Outlook Handbook at:
You can also find some money management tips at

28. Deferments and Forbearances
School is required to provide students with a description of the terms and conditions for deferment and forbearances. Such information can be found on Attachments C & E. It is recommended that schools review this information with the student, and not just provide a copy of the attachment.

29. Deferment Contact your lender or servicer to find out if you qualify
You could postpone your payments for several reasons, such as:
Unemployment
Economic hardship
Student enrollment
Students are entitled to defer their student loan payments when certain criteria are met. Through deferment students can postpone their scheduled student payments for various reasons, such as unemployment, economic hardship, and student enrollment. Their lender or servicer determines if they meet the requirements for a deferment.
Students can also get information and download the correct forms to apply for a deferment at or 29

30. Forbearance
Forbearance is an option that lenders or servicers can offer that permits:
Reduced payments,
An extension of time for making payments, or
The temporary cessation of payments.
Medical or financial problems that do not meet the requirements for a deferment might qualify you for forbearance, as will other special circumstances.
Forbearance is an option that lenders or servicers can offer that permits reduced payments, an extension of time for making payments, or the temporary cessation of payments. Medical or financial problems that do not meet the requirements for a deferment might qualify students for forbearance, as will other special circumstances. 30

31. Public Service Loan Forgiveness
School is required to provide students with a description of terms and conditions for loan forgiveness and cancellation/discharge. Such information can be found on Attachments C & E. It is recommended that schools review this information with the student, and not just provide a copy of the attachment.

32. Loans Eligible for Public Service Loan Forgiveness
Federal Direct Unsubsidized Stafford Loans
Federal Direct Subsidized Stafford Loans
Federal Direct PLUS Loans for parents and grad/professional students
Federal Direct Consolidation Loans

33. Loans Eligible for Public Service Loan Forgiveness
Other Federal loans may qualify for public service loan forgiveness if consolidated into a Direct Consolidation Loan, including:
FFEL Subsidized/Unsubsidized Stafford Loans
FFEL PLUS Loans for parents and grad/professional students
FFEL Consolidation Loans (excluding joint spousal consolidation loans)
Federal Perkins Loans
Certain Health Professions and Nursing Loans

34. Repayment Plans Under Which 120 Payments Must be Made
Income-based repayment plan (not available for parent PLUS loans)
Income-contingent repayment plan (except parent PLUS borrower)
10-year Standard repayment plan
Any other repayment plan if monthly payment is not less than that paid under Direct Loan standard repayment plan

35. Eligible Public Service Jobs for Loan Forgiveness
Employment, in any position, by a public service organization
Service in a position in Americorps or the Peace Corps
Employment or service must meet the definition of “full-time”

36. Definition of Public Service Organization
A Federal, State, local, or Tribal government organization, agency, or entity
A job in government excludes time served as a member of the United States Congress
A public child or family service agency
A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code
A Tribal college or university

37. Definition of Public Service Organization (cont.)
Public service organization is a private organization that provides public services:
Emergency management
Military service
Public safety
Law enforcement
Public interest law services (legal advocacy may be provided “on behalf of” low-income communities at a nonprofit organization rather than strictly “in” low-income communities at a non-profit organization

38. Definition of Public Service Organization (cont.)
Public service organization is a private organization that provides public services:
Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten)
Public service for individuals with disabilities and the elderly
Public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner and health care support occupations)

39. Definition of Public Service Organization (cont.)
Public Service Organization is a private organization that provides public services:
Public Education
Public Library Services
School Library and other school-based services

40. Definition of Public Service Organization (cont.)
A private organization is not:
A for-profit business
A labor union
A partisan political organization or
An organization engaged in religious activities unless activities are unrelated to religious instruction, worship services, or any form of proselytizing

41. Eligible Public Service Jobs for Loan Forgiveness
Americorps position means:
A position approved by the Corporation for National and Community Service under section 123 of the National and Community Service Act of 1990
Peace Corps position means:
A full-time assignment under the Peace Corps Act as provided for under 22 U.S.C. 2504

42. Treatment of Lump Sum Payments from Americorps or Peace Corps
If a borrower makes a lump sum payment using all or part of an Americorps service award or Peace Corps transition payment, qualifying payments equal lesser of:
# of payments resulting after dividing the amount of lump sum by monthly payment amount required under appropriate repayment plan or
Twelve payments

43. Definition of “Full-time” for Qualifying Employment
Full-time means working in qualifying employment in one or more jobs for the greater of:
An annual average of at least 30 hours weekly, or
For a contractual or employment period of at least 8 months, an average of 30 hours per week; or
Unless the qualifying employment is with two or more employers, the number of hours the employer considers full-time.

44. Definition of “Full-time” for Qualifying Employment
Definition of full-time (cont.):
Vacation or leave time provided by the employer or leave taken for a condition that is a qualifying reason for leave under the Family and Medical Leave Act is not considered in determining the average hours worked on an annual or contract basis.

45. Public Service Loan Forgiveness Process
Borrower requests loan forgiveness after making 120 qualifying payments
Generally, borrowers repaying under IBR or ICR will have outstanding balances left to forgive after 120 qualifying payments
ED will determine borrower’s eligibility and notify borrower accordingly
In the interim, ED will:
Develop a forgiveness application form
Develop a process to review, maintain and track borrower’s employment and payments

46. INCOME-BASED REPAYMENT
§ FFEL
§ Direct Loans

47. Income-Based Repayment
New repayment plan that began July 1, 2009 for FFEL and Direct loan borrowers
Caps monthly payments on eligible loans to an affordable amount, based on income and family size 47

48. Loans Eligible for IBR FFEL or Direct Loans must not be in default
Stafford loans
Subsidized and Unsubsidized
Grad PLUS loans; not Parent PLUS
Consolidation loans, except consolidation loans that paid off Parent PLUS loan
Loans must not be in default

49. Borrower Eligibility
Determined by comparing monthly payment for all eligible loans under year Standard repayment plan to the calculated IBR payment
If IBR amount is less than Standard repayment, borrower is eligible (deemed to have “partial financial hardship”) and may choose to make IBR payment

50. Calculating the IBR payment
Annual IBR payment is 15% of the difference between borrower’s income and 150% of the HHS Poverty Guidelines, adjusted for family size and state of residence

51. Calculating the IBR payment Borrower’s Income
Adjusted Gross Income (AGI), as reported to IRS
If married and filed joint return, combined AGI is used as borrower’s AGI for IBR calculation

52. Calculating the IBR Payment Borrower’s Income (cont.)
Other documented proof of current income may be accepted if AGI is not available or AGI reported to IRS does not reasonably reflect current income

53. Calculating the IBR Payment HHS Poverty Guidelines
Income amounts based on family size and state of residence
Published annually in Federal Register
Posted on IFAP as an Electronic Announcement

54. Calculating the IBR Payment Family size
Borrower and borrower’s spouse
Borrower’s children who receive more than half their support from borrower
includes children expected to be born in year of certification
Other individuals who live with, and receive more than half their support from the borrower

55. Calculating the IBR Payment Sample Maximum Payments
Family Size 1 2 3 4 5 6
10,000 $0
20,000
$47
30,000
$172
$102
$32
40,000
$297
$227
$157
$87
$16
50,000
$442
$352
$282
$212
$141
$71
Annual Income

56. Calculating the IBR Payment Special Rules
If calculated IBR amount is less than $5.00, monthly payment is $0.00
If calculated IBR amount is equal to or greater than $5.00 but less than $10.00, monthly payment is $10.00

57. Calculating the 10-year Standard Repayment
Based on 10-year repayment of aggregate amount of IBR-eligible loans outstanding at point of entering repayment

58. Comparison of IBR and Standard Repayment Amount
If monthly amount calculated under 10-year Standard repayment plan is LESS than IBR monthly amount, borrower is not eligible for IBR
If monthly amount calculated under 10-year Standard repayment plan is MORE than IBR monthly amount, borrower is eligible and may choose to repay under IBR

59. Example 1: Eligible for IBR
AGI: $50,000
Family size: 4
State of residence: California
Eligible student loan debt: $20,000
Interest rate: 6.8%
10-year Standard repayment: $230
IBR repayment: $212

60. Example 2: Not Eligible for IBR
AGI: $30,000 Family size: 1 State of residence: New York Eligible student loan debt: $10,000 Interest rate: 6.8% 10-year Standard repayment: $115 IBR repayment: $172

61. Online help
Calculator available to estimate amount of IBR payment and borrower eligibility:
NSLDS available to borrower to obtain complete Federal student loan information -
Websites of individual loan holders

62. IBR Process
Borrower must annually provide the loan holder with information needed to determine eligibility and calculate IBR payment amount
Proof of AGI
Borrower authorizes IRS verification of AGI
Alternative documentation required if AGI does not reflect current income

63. IBR Process (cont.)
If borrower requests IBR from loan holder, all loans held by that entity must be repaid under IBR unless borrower requests otherwise
If there are multiple loan holders, the borrower must apply to each loan holder to qualify on all loans
Loan holders pro-rate payment amounts

64. Subsequent Years
Borrower may continue if still eligible for reduced payment based on annual recalculation
Amount of IBR payment may change

65. Subsequent years (cont.)
If borrower no longer eligible for IBR reduced payment or chooses to stop making reduced payments under IBR
May stay in IBR program with maximum monthly payment recalculated on 10-year Standard repayment of amount owed at point borrower initially started IBR
Repayment period may exceed 10 years

66. Subsequent years (cont.)
Any borrower who leaves IBR plan will be placed on Standard repayment
For non-consolidation borrowers, payment recalculated under 10-year Standard plan, based on time remaining and amount outstanding at the point the borrower discontinued payments under IBR

67. Subsequent Years (cont.)
Any borrower who leaves IBR plan (cont.)
For a consolidation loan, payment is recalculated based on
repayment period remaining in period originally set for consolidation repayment (up to 30 years),
balance owed on consolidation loan and other student loans at time borrower discontinued paying under IBR

68. Subsequent Years (cont.)
Interest capitalization
Interest is capitalized if borrower is no longer eligible for reduced IBR payment or if borrower chooses to leave IBR

69. Interest Subsidy
If reduced IBR payment does not cover full amount of interest that accrues each month on borrower’s subsidized Stafford loans (or subsidized portion of consolidation loans), Secretary pays remaining interest for borrower for period up to 3 consecutive years from repayment period start date.

70. Loan Forgiveness
Amount of accrued interest and principal remaining after borrower makes the equivalent of 25 years of payments through combination of eligible monthly payments and Economic Hardship deferment is forgiven.
Eligible payments counted towards total of 25 years:
Monthly reduced payments under IBR calculation

71. Loan Forgiveness (cont.)
Eligible Payments (cont.)
Monthly reduced payments capped at maximum payment under 10-year repayment based on repayment of loans outstanding at time entered IBR
Monthly payments under ICR (DL)
Monthly payments under any repayment plan if amount is not less than 10-year Standard repayment based on loans outstanding at initial repayment of loans

72. Changes in Regulations
Proposed change to calculation of 10-year Standard repayment for purposes of determining IBR eligibility would be based on the greater of the amount due at the time
Borrower initially entered repayment or
Borrower elected repayment under IBR
Proposed change concerning borrowers filing joint tax return would take into account the combined amount of borrower and spouse’s eligible loan debt

73. Advantages of IBR Affordable payments (including $0)
If borrower’s calculated IBR payment does not cover the monthly accrued interest, the remaining interest is paid for borrower for three years on subsidized loans
Remaining principal and interest forgiven after 25 years of payments
IBR payments count for Public Service Loan Forgiveness

74. IBR Disadvantages More interest paid over time
Repayment period more than 10 years
Annual submission of information on income and family size to prove continued eligibility for reduced payments under IBR

75. Accessing your loan information
National Student Loan Data System (NSLDS)
U.S. Department of Education's central database for student aid
NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of Education programs
Need a PIN for access
Examples of when NSLDS may be useful for students:
If student is considering consolidating their loans, they can go to NSLDS to look up all their loans OR if
Student is trying to find out the name of their lender
The PIN used to access NSLDS is the same one as the one used to complete their FAFSA. If student lost their PIN, they can go to the PIN website to request it. 75

76. Reminders Keep copies of all correspondence
Keep the Direct Loan Servicing Center or lender informed of status changes (e.g., address change or going to graduate school)
Direct Loan borrowers
or (TTY)
FFELP borrowers
Know your lender’s phone number
Key Reminders:
Once a Direct Loan has been disbursed, students may contact the Direct Loan Servicing Center for help, especially if they are having trouble repaying or need to report a change of address or a name change: or (TTY)
FFELP borrowers:
Keep your lender informed.
Contact your lender/holder immediately if you are having trouble making your monthly payments.
Important websites for Direct Loan borrowers:
(Online Direct Loan Servicing Center)
(Overview of federal student aid programs and repayment plans and calculators)
(Direct Loan Program) 76

77. Problem resolution process
Federal Student Aid Ombudsman of the Department of Education
Helps resolve disputes
When you have  done all you can do yourself  and haven’t been able to reach a solution, the Ombudsman provides a process and resources to assist you, the student. 77

78. Questions Please e-mail questions or comments to
or call me at x1353. 78