1. An Exit Program a Repayment Plan Create Manageable Office of Student Financial Aid Information based on federal regulations in effect through June 30, 2006

2. Steps To Manageable Repayment Gather information and prepare for repayment Understand repayment plans Learn options for postponing repayment Identify opportunities to manage your debt

3. School’s Average Profile

4. Student Debt Profile Note: 3.50% interest rate assumed Values shown are estimates and intended for use as a guideline

5. Repayment Ability 8.00%16.00%24.00%32.00%40.00%48.00%56.00%64.00%72.00%80.00%88.00% 6.00%12.00%18.00%24.00%30.00%36.00%42.00%48.00%54.00%60.00%66.00% 4.80%9.60%14.40%19.20%24.00%28.80%33.60%38.40%43.20%48.00%52.80% 2.40%4.80%7.20%9.60%12.00%14.40%16.80%19.20%21.60%24.00%26.40% 1.92%3.84%5.76%7.68%9.60%11.52%13.44%15.36%17.28%19.20%21.12% 1.60%3.20%4.80%6.40%8.00%9.60%11.20%12.80%14.40%16.00%17.60% 1.37%2.74%4.11%5.49%6.86%8.23%9.60%10.97%12.34%13.71%15.09% 1.20%2.40%3.60%4.80%6.00%7.20%8.40%9.60%10.80%12.00%13.20% 1.07%2.13%3.20%4.27%5.33%6.40%7.47%8.53%9.60%10.67%11.73%.96%1.92%2.88%3.84%4.80%5.76%6.72%7.68%8.64%9.60%10.56% $200$400$600$800$1,000$1,200$1,400$1,600$1,800$2,000$2,200 $30,000 $40,000 $50,000 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 Manageable (8% or less) Challenging (between 8% and 18%) Complex (18% or greater) Estimated Salary Educational Payment as a Percent of Gross Monthly Income Monthly Student Loan Payment

6. Gather information and prepare for repayment

7. Master Promissory Note (MPN) and Promissory Note States your promise to repay the loan Defines loan terms and your rights and responsibilities Signed an MPN for Stafford Loan funds Signed promissory note for other loans

8. It’s an Obligation Do not complete your academic program Are not satisfied with your education from the school Do not find employment after leaving school Do not receive a payment notice from your lender You must repay your student loans even if you:

9. Rights & Responsibilities For Stafford Loans, you have a right to: Request a written statement of your loan Prepay your loan without penalty Request a deferment or forbearance You also have a responsibility to: Participate in an entrance and exit session Notify your lender/servicer of changes to your name, address and enrollment status Repay the loan and notify the lender/servicer when your ability to repay changes Review your Exit Handbook for a complete list.

10. Sorting Through the Information Identify your lender(s) and servicer(s) A lender or servicer will: –Send interest statements –Calculate and monitor grace period –Set your first payment due date –Process payments –Write or call if you are late with a payment Request an account statement from each lender

11. Keep a File of Information Account statements Lender and servicer contact information Promissory notes Financial aid office correspondence Lender and servicer correspondence

12. Phases of Your Federal Loans Private loan borrowers should contact their lender for details.

13. They Differ from Federal Loans Is there a grace period, and what is the length? When does repayment begin, and how long does it last? Can I postpone repayment? What are my deferment and forbearance options and requirements? How and when is interest calculated? What are your interest capitalization policies? Is there a repayment incentive? Private or Institutional Loans: Ask Questions

14. Understand repayment plans

15. Thinking Beyond Today

16. Repayment Plans Repayment Term Monthly Payment Amount Standard Graduated Income- Sensitive Higher monthly payment; lower interest cost Helpful option if you initially require smaller payments Helpful option if you initially require smaller payments; adjusted regularly

17. Remember Prepayment Make extra payments or pay entire balance at any time without penalty It’s an option for every repayment plan Pay less in interest expense because your principal balance is decreasing faster

18. Interest Capitalization Lender adds accrued interest to the outstanding principal balance of the loan Accruing interest on interest Frequency of capitalization varies by lender –Less frequent capitalization is better T.H.E. has a borrower-friendly interest capitalization policy Private loan borrowers should contact their lender for details.

19. Repayment Strategies Calculator www.theloanprogram.org/tlc/Calculators/ RepayStrategyCalc.aspx

20. Learn options for postponing repayment

21. Reduce total repayment: pay accrued interest during grace and deferment. Deferment Basics Postponement of repayment for a specific time period Apply and meet criteria Borrower responsible for interest on unsubsidized loans –Accrues or can be paid Interest rate lower than in repayment (Stafford only)

22. Common Deferments In-School Deferment Economic Hardship Deferment Graduate Fellowship Deferment Unemployment Deferment

23. Forbearance Basics Use only if you are not eligible for deferment or have exhausted deferment benefits Temporary postponement or reduction of payment Apply and meet criteria

24. In-School Deferment Enrolled at least half- time at an eligible school No limit, as long as you continue to be enrolled

25. Economic Hardship Deferment Qualification based on a ratio of income to monthly student loan payments Ideal for early years of medical residency Must apply and qualify each year Available for up to 3 years Find out if you may qualify by using our online calculator: www.theloanprogram.org/tlc/Calculators/HardshipCalc.aspx Find out if you may qualify by using our online calculator: www.theloanprogram.org/tlc/Calculators/HardshipCalc.aspx

26. Unemployment Deferment Apply with documentation of employment status Granted in six-month intervals Up to 24 or 36 months of deferment –Depending on date received Federal Stafford Loans

27. Forbearance Basics Use only if you are not eligible for deferment or have exhausted deferment benefits Temporary postponement or reduction of payment Apply and meet criteria Interest accrues on both subsidized and unsubsidized loans Interest rate equals current repayment rate Interest capitalization occurs at the end of each forbearance period with some lenders T.H.E. has a borrower-friendly interest capitalization policy

28. Repayment Timeline Federal Stafford Loans Subsidized & Unsubsidized Federal Perkins Loans on or after July 1, 1993 6-month Grace Period 9-month Grace Period Economic Hardship Apply each year, up to three years Economic Hardship Apply each year, up to three years Repayment or Forbearance Private & Institutional Loans Contact your lender (private) or school (institutional) for details Apply Graduation Apply Graduation 6-mo. Post- Deferment Grace Period

29. Loan Discharge Release of a borrower’s obligation to repay his or her federal loan, either in whole or in part –Death –Disability Application process differs according to discharge situation Private/Alternative Loan discharge terms vary by lender.

30. Identify opportunities to manage your debt

31. Budgeting for Success Prevent financial trouble Learn how to be a smart consumer Prepare a secure future by setting and achieving goals Wise borrowing and smart financial habits can help lower your debt.

32. Smart Financial Habits Get organized Determine your income Identify your expenses Balance your budget

33. Get Organized Collect information –Bills –Account statements –Receipts Know your income Track expenses with a spending journal

34. Determine Your Income Total the Sources: Employment Personal Savings Family Contribution

35. Identify Your Expenses Fixed Expenses Rent/Mortgage/Association Dues Car payments Insurance premiums Child care Taxes Student loan payments

36. Identify Your Expenses Variable Expenses Utilities Food Clothing Medical/Dental Household Transportation Credit card Using credit cards is not a good option for covering expenses you cannot handle. You have the power to control your expenses.

37. Is Your Budget Balanced?

38. Expenses Exceeding Funds? Eliminate or modify budget items that you control: Necessity vs. need Share — split the cost Get a roommate Planned buying Loan consolidation Refinance your mortgage Consider automobile options

39. Managing Credit Understand what is included in your credit report Maintain a high FICO ® score Pay all bills on time Open new accounts over time, not all at once Pay off debt, rather than moving it around to other credit cards

40. Federal Consolidation Loan Simplify multiple student loans with one point of contact Reduce your monthly payment amount Lock in a fixed interest rate for up to 30 years A Federal Consolidation Loan can make things easier!

41. Federal Loan Consolidation Will Be Changing Information based on federal regulations in effect through June 30, 2006

42. Must be in grace period or have entered repayment on loans selected for consolidation –Includes loans in deferment or forbearance –In-school loans are eligible after student requests early repay Eligible loans include: –Federal Stafford –Perkins –Others in handbook Consolidation Requirements Private loans are not eligible for Federal Consolidation.

43. Repayment Term Extending the term lowers monthly payments Length is limited based on your total outstanding student loan debt Amount OwedLoan Term (Years) Less than $7,50010 $7,500 - $9,99912 $10,000 - $19,99915 $20,000 - $39,99920 $40,000 - $59,99925 $60,000 or more30

44. Interest Rate Interest rate is the weighted average of consolidated loans’ rates –rounded up to the nearest 1/8% Grace period and deferment ideal times to apply Direction of rates around July 1 can influence timing

45. Eligible Deferments Economic Hardship Pursuing a Graduate Fellowship Enrolled at Least Half Time Unemployment Gain peace of mind and simplify your student loan debt today.

46. Selecting the Right Lender The only differences between consolidation lenders are service and incentives

47. Selecting the Right Lender Knowledge and experience Accessibility Credibility Long-term commitment Service

48. Compare Incentives T.H.E. Repayment Bonus: Monthly credit Starts immediately upon repayment Will not lose benefit Deferments/forbearances do not harm availability More than 95% of our borrowers in repayment receive the bonus Ask the Lender: What is the incentive? Is there a waiting period? What happens if I miss a payment? What happens if I request a deferment? How many of your borrowers receive it?

49. Compare Incentives From U.S. News & World Report

50. I consolidated some of my loans while I was enrolled in school this past year. Now what?

51. Need to Know No grace period on existing consolidation loan Options –Deferment –Forbearance –Minimum Payment Be proactive, contact your lender regarding repayment

52. Consolidation Options Second Consolidation Loan Consolidate outstanding eligible loans separate from previous consolidation loan Re-Consolidate Combining previous consolidation loan with other outstanding eligible loans

53. How to Decide Keeping them separate vs. re-consolidation Separate: If you made the right choice on who holds your first consolidation loan, then it makes sense to create a second consolidation loan with that same lender Why? — Maximize your savings –Pay down the higher rate loan faster as finances allow

54. How to Decide Keeping them separate vs. re-consolidation Re-consolidation: If you find that another lender has a better reputation of service and a deliverable incentive, then bring all your loans together with that new lender (previous consolidated debt with recent consolidated debt) Why? — Simplification and savings –Loans at one place, one point of contact and one payment –Minimize your monthly payment by maxing out your repayment term

55. Second Consolidation Loan Application Process Submit your Consolidation Application –List loans to be consolidated (e.g. recent Stafford) on page 2 –List previous consolidated debt on page 3 –To retain grace period, complete question #26 Separate interest rate Typically one consolidation account with one payment

56. Second Consolidation Loan Remember Your Repayment Strategy Minimize Interest Expense Maximize your repayment term Pre-pay consolidation loan with higher interest rate as finances allow

57. Re-Consolidation Application Process Submit your Consolidation Application –List loans to be consolidated, including previous consolidated debt on page 2 –To retain grace period, complete question #26 –Manage repayment on previous Consolidation Loan during Stafford grace: make payments, request deferment or forbearance Interest rate re-calculated New payment schedule issued

58. Create Your Repayment Strategy ConsolidationExtend Term Interest OnlyDeferment/Forbearance ComplexChallengingManageable 8.00%16.00%24.00%32.00%40.00%48.00%56.00%64.00%72.00%80.00%88.00% 6.00%12.00%18.00%24.00%30.00%36.00%42.00%48.00%54.00%60.00%66.00% 4.80%9.60%14.40%19.20%24.00%28.80%33.60%38.40%43.20%48.00%52.80% 2.40%4.80%7.20%9.60%12.00%14.40%16.80%19.20%21.60%24.00%26.40% 1.92%3.84%5.76%7.68%9.60%11.52%13.44%15.36%17.28%19.20%21.12% 1.60%3.20%4.80%6.40%8.00%9.60%11.20%12.80%14.40%16.00%17.60% 1.37%2.74%4.11%5.49%6.86%8.23%9.60%10.97%12.34%13.71%15.09% 1.20%2.40%3.60%4.80%6.00%7.20%8.40%9.60%10.80%12.00%13.20% 1.07%2.13%3.20%4.27%5.33%6.40%7.47%8.53%9.60%10.67%11.73%.96%1.92%2.88%3.84%4.80%5.76%6.72%7.68%8.64%9.60%10.56% $200$400$600$800$1,000$1,200$1,400$1,600$1,800$2,000$2,200 $30,000 $40,000 $50,000 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 Estimated Salary Monthly Student Loan Payment

59. Remember: Consequences of Delinquency/Default Delinquent: late monthly payment –Collection activity –Damage to credit rating Default: failure to pay for 270 days –Collection and legal activity –Damage to credit rating for seven years or more –Wages could be garnished –Professional license could be suspended or revoked Update your address and phone number with lenders/servicers. Don’t ignore mail. Delinquency/Default terms may differ for private and other federal loans.

60. An Exit Program Questions & Discussion Contact Us: 888-843-0004 www.northstar.org Office of Student Financial Aid