loan entrance interview dental school class of 2018 responsible borrowing leads to responsible...

LOAN ENTRANCE INTERVIEWDENTAL SCHOOL CLASS OF 2018

Responsible Borrowing Leads to Responsible Repayment

Considerations

• Dental school graduates have great track record for repayment

• Multiple ways to effectively manage your student loan debt

• Constantly evaluate your borrowing and impact on repayment

• Work closely with your Financial Aid Office

Agenda items• Dental school debt and your

student loan portfolio• Common sense ways to reduce

cost, borrowing, and repayment amount

• What your colleagues are doing• Action items and resources to help

Agenda items• Dental school debt and your

student loan portfolio• Common sense ways to reduce

cost, borrowing, and repayment amount

• What your colleagues are doing• Action items and resources to help

Good news• You can fund entire COA with

federal loans• You may enter income stream

faster than other health sciences colleagues

• Aggressive repayment may be possible

• Easier than ever to track student loans

Educational debt*

• $241,097 mean debt all schools• $209,150 mean debt public schools• $283,978 mean debt private schools• 21.7% no debt or debt less than

$100,000• 27.9% debt in excess of $300,000

* Indebted graduates in the Class of 2013

Student loan portfolio

• Federal Direct Unsubsidized Stafford*

• Federal Direct Grad PLUS*• Campus-based (awarded by school)– Federal Perkins*, Health Professions

Student Loan (HPSL), Loans for Disadvantaged Students (LDS), Institutional

• Private loans• Federal Consolidation*

* Referenced on NSLDS at www.NSLDS.ed.gov

Federal Stafford Loans*

• Direct Unsubsidized Stafford• $40,500 per year**• Fixed interest rate• 6 month Grace period• Deferment and Forbearance options• Multiple repayment and forgiveness

options• Master Promissory Note (MPN)

* Referenced on NSLDS at www.NSLDS.ed.gov ** School may prorate depending on months in COA

Federal Grad PLUS*• Direct Grad PLUS• COA less other aid, including Stafford• Fixed interest rate• 6 month post-enrollment Deferment• Deferment and Forbearance options• Multiple repayment and forgiveness

options• Master Promissory Note (MPN)

* Referenced on NSLDS at www.NSLDS.ed.gov

Federal Perkins*• Subsidized• 5% fixed interest rate• 9 month Grace period• Deferment and Forbearance options• Standard 10 year repayment– Not eligible for income-driven repayment

plans, or Public Service Loan Forgiveness

• Eligible for consolidation

* Referenced on NSLDS at www.NSLDS.ed.gov

National Student Loan Data System (NSLDS)

• www.NSLDS.ed.gov• Federal database of all Stafford, Grad

PLUS, Federal Consolidation, Perkins• Information on Loan Servicer• Download NSLDS record into AAMC/ADEA

DLOC at www.AAMC.org/GoDental each time you borrow

• Download NSLDS into www.StudentLoans.gov

HPSL and LDS*• Subsidized• 5% fixed interest rate• 12 month Grace period• Deferment and Forbearance options• In general, Standard 10 year

repayment– Not eligible for income-driven

repayment plans, or Public Service Loan Forgiveness

• Eligible for consolidation* HPSL and LDS are NOT referenced on NSLDS

Institutional loans*

• Subsidized or unsubsidized• Terms and conditions vary by school– Check Grace, Deferment, and

Forbearance options, plus repayment options, with school

– Not eligible for income-driven repayment plans, or Public Service Loan Forgiveness

• Not eligible for federal consolidation* Institutional loans are NOT referenced on NSLDS

Private loans*• Unsubsidized• Borrowing limits vary by lender• Variable or fixed interest rate• Terms and conditions vary by lender– Check repayment and postponement

options with lender– Not eligible for income-driven repayment

plans, or Public Service Loan Forgiveness

• Not eligible for federal consolidation* Private loans are NOT referenced on NSLDS

More on private loans

• Can easily derail a repayment strategy

• Pay special attention to private loans from undergraduate and/or post-baccalaureate programs

• No national database• Speak with Financial Aid Office if

considering private loans in lieu of federal

Interest rates• Stafford at 6.21% fixed*• Grad PLUS at 7.21% fixed*• Rates change each July 1, then remain

fixed• Campus-based– Perkins, Health Professions Student Loans

(HPSL), Loans for Disadvantaged Students (LDS) at 5% fixed

• Check disclosures for rates on Institutional and Private Loans

* Loans disbursed on or after July 1, 2014

More on interest rates

• Rates change for new Stafford and Grad PLUS each July 1 then remain fixed

• Maximum rate on Stafford is 9.5%• Maximum rate on Grad PLUS is 10.5%• Be aware of capitalization– Accrued and unpaid interest is

added back to principal amount borrowed

– Usually occurs at repayment

Loan servicers• Organizations lenders contract

with to work with you in repayment• See www.NSLDS.ed.gov to find out

who services your loans*• Your federally owned loans should

all be serviced by one loan servicer• See www.StudentLoans.gov for

details*** Click on the number to the left of each loan on the Financial Aid Summary page ** See Managing Repayment for additional information on loan servicers

Repayment plans• Standard 10 year (level payments)• Extended 25 year (level payments)• Graduated 10 and 25 year (scheduled

increases)• Income-driven repayment (IBR and PAYE)*• Details at www.StudentLoans.gov • Use Dental Loan Organizer and Calculator

to run estimates (www.AAMC.org/GoDental)

* Income Based Repayment and Pay As You Earn

Repayment assumptions

• $162,000 Federal Unsubsidized Stafford• Remainder in Federal Grad PLUS• Interest rates– 6.21% on Stafford Loans all four years– 7.21% on Grad PLUS Loans all four years

• No prepayment under any repayment plan

• $184,140 starting salary, no residency*

* Source: American Dental Association (ADA)

AAMC/ADEA Dental Loan Organizer and Calculator (DLOC)

• Joint effort with Association of American Medical Colleges (AAMC)

• www.AAMC.org/GoDental• Easy to use debt management tool– Download NSLDS record into AAMC/ADEA DLOC– Estimate repayment under different plans– Estimate forgiveness amounts under 25 year

IBR, 20 year PAYE, Public Service Loan Forgiveness

– Customize based on your salary and career

$241,097

Repayment Estimates for $241,097MEAN ALL SCHOOLS

Indebted Students, Class of 2013

Repayment of $241,097

• Standard 10 year– $3,184 per month for 10 years– $382,091 total repayment

• Extended 25 year– $1,898 per month for 25 years– $569,357 total repayment

• Income Based Repayment (IBR)– $2,055 to $3,184 per month*

• Pay As You Earn (PAYE)– $1,370 to $2,475 per month** Payments change annually

$209,150

Repayment Estimates for $209,150MEAN ALL PUBLIC SCHOOLS

Indebted Students, Class of 2013

Repayment of $209,150

• Standard 10 year– $2,743 per month for 10 years– $329,201 total repayment

• Extended 25 year– $1,627 per month for 25 years– $488,089 total repayment

• Income Based Repayment (IBR)– $2,055 to $2,743 per month

• Pay As You Earn (PAYE)– $1,370 to $2,475 per month

$283,978

Repayment Estimates for $283,978MEAN ALL PRIVATE SCHOOLS

Indebted Students, Class of 2013

Repayment of $283,978

• Standard 10 year– $3,823 per month for 10 years– $458,616 total repayment

• Extended 25 year– $2,325 per month for 25 years– $696,939 total repayment

• Income Based Repayment (IBR)– $2,078 per month for 12 months only

• Pay As You Earn (PAYE)– $1,385 per month for 12 months only

Forgiveness programs• Income Based Repayment (IBR) after 25

years*• Pay As You Earn (PAYE) after 20 years*• Public Service Loan Forgiveness (PSLF)*– Borrower must make 120 eligible payments on

Direct Loans while working for eligible employer

• Details at www.StudentLoans.gov• Estimate forgiveness amounts with

AAMC/ADEA Dental Loan Organizer and Calculator

* Forgiveness amount taxable under current law for IBR and PAYE, NOT for PSLF

Public Service Loan Forgiveness

• Forgiveness program designed to encourage borrowers to enter and remain in public service for at least 10 years

• May be of interest to highly indebted dental school graduates interested in academia or other non-profit sector career employment

• See www.StudentLoans.gov for details

Loan repayment programs

• Help repaying loans in exchange for service commitment

• National Health Service Corps, Indian Health Service, National Institutes of Health, armed forces, some states

• See Chapter 4 of ADEA Official Guide to Dental Schools for listing

• Different from forgiveness programs

Borrower rights

• Written explanation of loan obligations• Explanation of default and consequences• Copy of MPN and return when loan paid in full• Disclosure prior to repayment• Be notified when your loan is sold • Federal subsidy, if eligible• Forgiveness and discharge, if eligible• May request Forbearance, if needed• Prepay without penalty

Borrower responsibilities

• Attend Senior Loan Exit Interview before you graduate

• Repay loan according to schedule• Notify loan servicer regarding:– Anything impacting your ability to repay– Change in status, including graduation

date– Change in name and contact information– Change in enrollment

Important reminders• Loans are a serious obligation

and must be repaid regardless of status of your degree program, length of time required to complete program, satisfaction with program, and future employment

• Serious consequences for delinquency and default

Agenda items• Dental school debt and your

student loan portfolio• Common sense ways to reduce

cost, borrowing, and repayment amount

• What your colleagues are doing• Action items and resources to help

• Tuition and fees• Books and supplies• Loan fees• Living and personal• Computer• TOTAL

• $29,000• $ 5,500• $ 900• $28,000• $ 2,500• $66,800

Sample COA

Ways to reduce cost, borrowing, and repayment

• Control what you can control in your COA• Set a realistic monthly budget, stick to it,

and constantly reevaluate it• Never borrow more than you really need• Ask family to pay interest as it accrues• Don’t live like a dentist while you are in

school

Agenda items• Dental school debt and your

student loan portfolio• Common sense ways to reduce

cost, borrowing, and repayment amount

• What your colleagues are doing• Action items and resources to help

Sample repayment strategies for dental school graduates

• Using Standard 10 year or Extended 25 year and accelerating payments

• Using income-driven repayment and accelerating payments

• Using income-driven repayment to help with cash flow and with goal of PSLF*

• Using service commitment programs* Public Service Loan Forgiveness

Agenda items• Dental school debt and your

student loan portfolio• Common sense ways to reduce

cost, borrowing, and repayment amount

• What your colleagues are doing• Action items and resources to help

Your action items

• Compare your monthly budget with monthly financial aid budget in COA*

• Use and update AAMC/ADEA DLOC** each time you borrow and at least once a year

• Keep in touch with Financial Aid Office regarding filing deadlines and changes

* Cost of Attendance ** Dental Loan Organizer and Calculator

Resources• Financial Aid Office• www.ADEA.org – See Information For Currently Enrolled

Students and Residents

• www.AAMC.org/GoDental – Dental Loan Organizer and Calculator (DLOC)

• www.StudentLoans.gov – See Managing Repayment

• www.NSLDS.ed.gov – Database of federal student loans

Takeaways• Responsible borrowing now helps

preserve repayment options later• Never borrow more than you need• Plan to repay what you borrow and don’t

lean solely on federal government for help

• Keep your radar up regarding changes• Work closely with Financial Aid Office• Talk with family regarding help

GOOD LUCK!

Congratulations and Best Wishes from the American Dental Education

Association!