1. 1 G General Audiences All ages admitted. No content that would be objectionable to most parents. Polite language. No swearing. Only mild violence.

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3. 3 Bill Mack Associate Director of Financial Aid University of Texas at Dallas

4. 4 Federal Insured Student Loans (FISL) Guaranteed Student Loan (GSL) Auxiliary Loans to Assist Students (ALAS) Supplemental Loan for Students (SLS) Federal Family Education Loan Program (FFELP) Robert T. Stafford Loan Program William D. Ford Federal Direct Loan Program

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6. 6 www.studentloans.gov Entrance Counseling Entrance Counseling First-time borrowers Inform them of their rights and responsibilities of taking out this loan www.nslds.ed.gov Exit Counseling Exit Counseling All borrowers that depart from your institution Graduate, withdraw, transfer, do not return

7. 7 The school is required to notify the borrower that a loan disbursement has been made, and that the borrower may reduce or cancel the disbursement The school is required to notify the borrower that a loan disbursement has been made, and that the borrower may reduce or cancel the disbursement

8. 8 Document executed by borrower, which spells out the terms & conditions of the loan disbursements, use and repayment Document executed by borrower, which spells out the terms & conditions of the loan disbursements, use and repayment If the note is for multiple loan periods and varying amounts, the school may elect to have the borrower use a If the note is for multiple loan periods and varying amounts, the school may elect to have the borrower use a Master Promissory Note

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10. 10 Oldest active educational loan Institution administers this loan Institution administers this loan Previous allocations came from the Dept of Ed, now schools operate this loan from repaid funds Previous allocations came from the Dept of Ed, now schools operate this loan from repaid funds Fixed 5% interest rate Fixed 5% interest rate Repayment begins 9 months after student ceases to be enrolled at least 1/2 time Repayment begins 9 months after student ceases to be enrolled at least 1/2 time Minimum payment as low as $30 Minimum payment as low as $30 Maximum repayment term is 10 years Maximum repayment term is 10 years

11. 11 Undergraduate annual limit $5,500 Underclassman (first two years) Aggregate limit $11,000 Undergraduate Aggregate limit $27,500 Graduate annual limit $8,000 Graduate Aggregate limit $60,000

12. 12 Federal PLUS Loan is a loan for parents of dependent students Federal PLUS Loan is a loan for parents of dependent students Parent borrower is fully liable for loan Parent borrower is fully liable for loan FAFSA is required, but not based on need FAFSA is required, but not based on need Eligibility Eligibility Borrower must be the natural or adoptive parent of the student, or spouse of one of those people (step-parent can borrow if he/she is included in the FAFSA) Borrower must be the natural or adoptive parent of the student, or spouse of one of those people (step-parent can borrow if he/she is included in the FAFSA) Borrower must be a US Citizen, U.S. National or eligible non- citizen Borrower must be a US Citizen, U.S. National or eligible non- citizen Borrower must have no Title IV loans in default Borrower must have no Title IV loans in default Borrower must be credit worthy, or have credit worthy endorser Borrower must be credit worthy, or have credit worthy endorser

13. 13 No Annual limit, other that COA minus Aid No Annual limit, other that COA minus Aid No Aggregate limit No Aggregate limit If the parent is not eligible, the student may borrow a Stafford Loan using the independent student limits. If the parent is not eligible, the student may borrow a Stafford Loan using the independent student limits.

14. 14 Eligibility Eligibility Borrower must complete a FAFSA, not need-based Borrower must complete a FAFSA, not need-based Eligible graduate student attending at least half- time Eligible graduate student attending at least half- time Borrower must pass a credit evaluation (or have an eligible “endorser”. Borrower must pass a credit evaluation (or have an eligible “endorser”. Annual Loan Limit Annual Loan Limit COA minus other aid COA minus other aid No aggregate maximum No aggregate maximum 7.9 percent fixed interest. 4% Origination fee. 7.9 percent fixed interest. 4% Origination fee.

15. 15 Eligible student in an eligible program at an eligible institution (per General Provisions) Eligible student in an eligible program at an eligible institution (per General Provisions) Enrolled at least 1/2 time Enrolled at least 1/2 time COA-aid= greater than zero COA-aid= greater than zero COA-EFC-aid=greater than zero for subsidized loan COA-EFC-aid=greater than zero for subsidized loan

16. 16 Subsidized DL (-based) (Need-based)Interest: ED pays during ED pays during In-school In-school Grace Grace Deferment Deferment * Student pays during Repayment Repayment Unsubsidized DL (-based) (Non need-based)Interest: Student responsible for all Can be capitalized, or Can be capitalized, or Student can choose to pay interest while enrolled Student can choose to pay interest while enrolled

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18. 18 * As of July 1, 2012 Graduate students will no longer be eligible for subsidized Stafford Loans.

19. Combined Sub & Unsub Sub may not exceed Undergrad Dependent $31,000$23,000 *Undergrad Independent $57,500$23,000 Grad and Professional $138,500$65,500 19 * And dependent student whose parent is unable to obtain a PLUS loan; denial of parent’s PLUS produces add’l unsub

20. 20 Must occur when an undergraduate student’s academic program is less than 1 year in length Must occur when an undergraduate student’s academic program is less than 1 year in length Must occur when a student is completing a remaining period of enrollment that is less than one academic year Must occur when a student is completing a remaining period of enrollment that is less than one academic year Standard proration formula: Amount of DL student could have for grade level ÷ 24 x number of enrolled hours Standard proration formula: Amount of DL student could have for grade level ÷ 24 x number of enrolled hours

21. 21 Perkins Loans – no fees Perkins Loans – no fees Fixed interest = 5% (no interest while enrolled or when in grace period) Fixed interest = 5% (no interest while enrolled or when in grace period) Direct Loans – 1% origination fee Direct Loans – 1% origination fee 0.5% rebate 0.5% rebate Undergrad sub = fixed interest of 3.4% Undergrad sub = fixed interest of 3.4% Graduate sub and unsubsidized = fixed interest of 6.8% Graduate sub and unsubsidized = fixed interest of 6.8% Direct Parent PLUS / Grad PLUS – 4% origination fee Direct Parent PLUS / Grad PLUS – 4% origination fee 1.5% rebate 1.5% rebate fixed interest = 7.9% fixed interest = 7.9% To retain rebates,1 st 12 pymts must be on time

22. 22 As of July 1, 2012 the borrower will be charged the full origination fee at disbursment. As of July 1, 2012 the borrower will be charged the full origination fee at disbursment.

23. 23 Subsidized Stafford interest Subsidized Stafford interest 7/1/98-6/30/06 2.36 (varies annually) 7/1/98-6/30/06 2.36 (varies annually) 7/1/06-6/30/08 6.8 fixed 7/1/06-6/30/08 6.8 fixed 7/1/08-6/30/09 6.0 fixed 7/1/08-6/30/09 6.0 fixed 7/1/09-6/30/10 5.6 fixed 7/1/09-6/30/10 5.6 fixed 7/1/10-6/30/11 4.5 fixed 7/1/10-6/30/11 4.5 fixed 7/1/11-6/30/12 3.4 fixed 7/1/11-6/30/12 3.4 fixed 7/1/12- ? 6.8 fixed 7/1/12- ? 6.8 fixed

24. 24 Federal education loans that may be consolidated Federal education loans that may be consolidated * FISL * FFELP * Direct Loans * National Direct Student Loans * PLUS * Perkins * Nursing Student Loan * Health Education Assistance Loan (HEAL)

25. 25  Thirty-year repayment (maximum)  Interest rate will be a fixed interest rate, capped at 8.25%  A weighted average is used to figure the interest rate and then it is rounded up to the nearest 1/8 of a percent. * A consolidation loan can “cure” a defaulted federal student loan.

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27. 27 Stafford Stafford Begins at the end of grace period (6 months after the borrower drops below half-time enrollment) Begins at the end of grace period (6 months after the borrower drops below half-time enrollment) Parent PLUS loan Parent PLUS loan Enters repayment after the full disbursement for the year Enters repayment after the full disbursement for the year Optional-parent can request deferment while student is enrolled at least half-time and during six months following that – up to 25 years to repay) Optional-parent can request deferment while student is enrolled at least half-time and during six months following that – up to 25 years to repay) Grad PLUS loan Grad PLUS loan Six months after borrower falls below half-time enrollment Six months after borrower falls below half-time enrollment

28. 28 Single information source for all federal loans – loan holder info, amounts owed including interest accrual Single information source for all federal loans – loan holder info, amounts owed including interest accrualwww.nslds.ed.gov

29. 29 Standard – Monthly payment remains consistent for 10 years Graduated – Monthly payments are lower at first but then increase every 2 years over the 30 yr repayment term Income-sensitive – Monthly payments are based on your monthly gross income Extended – Monthly payments over a 25 year plan. Income Contingent – pymts based on annual calculations and adjusted so as not to cause “undue hardship”; (25 yr forgiveness) Income Based Plan - Monthly payments will not exceed 15% of the amount by which your adjusted gross income exceeds 150% of the poverty line for your family size. (25 yr forgiveness)

30. 30 Period of postponing payments Period of postponing payments Federal government will pay interest for the borrower on Subsidized DL Federal government will pay interest for the borrower on Subsidized DL Entitlement Entitlement Some possible deferments: Some possible deferments: - Education - Peace Corps/ Public Service/ Military

31. 31 Temporary cessation, reduction, or extension of payments Temporary cessation, reduction, or extension of payments Student is responsible for interest that accrues Student is responsible for interest that accrues Borrower is willing but temporarily unable to pay Borrower is willing but temporarily unable to pay

32. 32 Failure to meet the terms of the promissory note Failure to meet the terms of the promissory note Failure to repay Failure to repay Failure to attend Failure to attend Borrower is considered to be in default after being delinquent for 270 days Borrower is considered to be in default after being delinquent for 270 days Borrower is subject o wage garnishment, seizure of income tax refunds, lottery winnings, license non-renewal, sued by DOE Borrower is subject o wage garnishment, seizure of income tax refunds, lottery winnings, license non-renewal, sued by DOE Student not eligible for federal financial aid Student not eligible for federal financial aid Damage to the borrower’s consumer credit score Damage to the borrower’s consumer credit score

33. 33 Satisfactory Repayment Arrangements Satisfactory Repayment Arrangements Six on-time voluntary payments Six on-time voluntary payments Rehabilitation Rehabilitation Nine on-time voluntary payments Nine on-time voluntary payments Consolidation Consolidation

34. 34 Includes DL loans, and loans underlying DL consolidation loans Includes DL loans, and loans underlying DL consolidation loans CDR = % of borrowers who enter repayment in a given federal fiscal year who then default within the next 3 fiscals years CDR = % of borrowers who enter repayment in a given federal fiscal year who then default within the next 3 fiscals years High rate has consequences for schools High rate has consequences for schools >15% = loss of 1 installment/semester >15% = loss of 1 installment/semester >15% = 30 day hold on 1 st time, 1 st year borrowers >15% = 30 day hold on 1 st time, 1 st year borrowers > 40% = loss of participation in Title IV funding > 40% = loss of participation in Title IV funding

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36. 36 Interest rates are usually variable Interest rates are usually variable Origination and repayment fees vary Origination and repayment fees vary Co-borrower requirements (underwriting) Co-borrower requirements (underwriting) Most require school-certification Most require school-certification International students International students SAP ineligible SAP ineligible Non-degree students Non-degree students Reached federal aggregate maximum Reached federal aggregate maximum

37. 37 Bill Mack Bill.Mack@utdallas.edu 972-883-4795