Allied Health Sciences Lunch, Learn, and Loans:

Understanding Student Loans and Repayment

Kristin Anthony – Assistant Director of Financial Aid, Office of Scholarships and Student Aid

Perry Studevent – Assistant Director of Student Services and Financial Aid, Allied Health Sciences

Overview

• The Basics of Student Loans• Differences in Loan Types• When Does repayment begin?• Loan Servicers• Repayment Options• Consolidation• Assistance• Topics • Conclusion

The Basics of Student Loans

• National Student Loan Database System – www.nslds.ed.gov – www.pin.ed.gov

• Federal Loans– Subsidized Stafford/Direct Loans– Unsubsidized Stafford/Direct Private Loans– Graduate Plus Loans– Perkins Loans

• Private Loans

Differences in Loans

• Subsidized Loans: No interest accrues while student is enrolled at least half-time. Guaranteed by the Federal Government.

• Unsubsidized: Interest accrues but student not required to make payments until they leave school. Guaranteed by Federal Government.– Begins accruing interest from the time the loan is

disbursed. • Private Loans: Can have “fixed” or variable interest

rates. Not guaranteed by the Federal Government.

When Repayment Begins

• Private Loans– Depends Upon Your Lender

• Federal Perkins Loans– 9 months after last date of half-time enrollment

• Direct/Stafford and Graduate Plus Loans:– 6 months after last date of half-time enrollment

Loan Servicers

• A loan servicer is a company that handles the billing and other services on your federal student loan. The loan servicer will work with you on repayment plans and loan consolidation and will assist you with other tasks related to your federal student loan. It is important to maintain contact with your loan servicer.

Repayment Options

• Consolidation• Standard/Graduated• Income-based• Pay as You Earn• Income-Contingent• Forgiveness, Cancellation, and Discharge• Know your loan history:

www.nslds.ed.gov

Definitions: Consolidation

• Simply combining several loans into one:

• Review your current federal student loans– Check your student loan account online, review your loan documents or contact your lender

or loan servicer. If you don’t know who your loan servicer is, you can find out at www.nslds.ed.gov.

– Once you consolidate, that loan is locked. You can add other loans to it later, but it cannot be changed.

– Most loan repayment incentive programs require consolidation of you loan.

Types of Payment Plans

• Standard/Graduated• Extended• Income Based Repayment • Pay As You Earn• Income-Contingent Repayment• Income Sensitive Repayment

Standard/Graduated

• Standard: Payments are fixed amount of at least $50 per month

• Graduated: Payments start low and increase over time.

• Standard: Pay the least amount of interest over time.

• Graduated: Pay more in interest than a standard repayment, but less than an extended plan.

Extended Repayment Plan

• Payments fixed or graduated• Lower monthly payments• Have up to 25 years to repay loans• Must have more than $30,000 for each “type”

of loan to be eligible for the extended repayment plan.– If you have $10,00 in Graduate Plus and $35,000 in

Direct Unsubsidized, only the unsubsidized loan qualifies for extended repayment plans.

Income Based Repayment Plan

• Consolidation loans included.• Must have a financial hardship.• Maximum monthly payment will be 15% of your

discretionary income (gross income – 150% of the poverty level).

• Payments may change as income changes.• After 25 years any outstanding balance will be

forgiven…..BUT…..• It is considered taxable income.

Pay as Your Earn

• Consolidation loans included.• Must have a financial hardship.• Maximum monthly payment will be 10% of your

discretionary income (gross income – 150% of the poverty level for your family size and state).

• Payments change as income changes.• After 20 years any outstanding balance will be

forgiven…..BUT…..• It is considered taxable income.

Income-Contingent Repayment Plan

• Payments calculated each year and based on your adjusted gross income, family size, and total amount of your direct loans.

• After 25 years remaining balance is forgiven.• May be considered taxable income.

Income-Sensitive Repayment Plan

• Payments calculated each year and based on your annual income (without consideration for family size or total amount of your loans.

• Each lender’s formula for determining monthly payment amounts may vary.

Loan Forgiveness, Cancellation and Discharge

• Total and permanent disability (TPD).• Death.• Teacher Loan Forgiveness• Public Service Forgiveness• Perkins Loan Cancellation and Discharge

Teacher Loan Forgiveness

• Teach full-time for five complete and consecutive academic years.

• In certain elementary, secondary, and educational service agencies that serve low income families,

• Other qualifications• Forgiveness of up to $17,500 on Direct/FFEL

subsidized and unsubsidized loans.– Link for Information

Public Service Loan Forgiveness• You must be employed full time (in any position) by a public service

organization, or serving in a full-time AmeriCorps or Peace Corps position.

• For Direct Loans given after October 1st, 2007.– Previous loans can be consolidated into a direct loan which would then qualify.

• In general, must be on the IBR, Pay As Your Earn, or ICR repayment plans to qualify and make 120 payments on a qualified loan.

• A government organization (including a federal, state, local, or tribal organization, agency, or entity; a public child or family service agency; or a tribal college or university).

• A not-for-profit, tax-exempt organization under section 501(c)(3) of the Internal Revenue Code.

• A private, not-for-profit organization (that is not a labor union or a partisan political organization) that provides services such as:

• Link for Information

Reminders:

• We are providing basic information, for more detailed information please discuss with your loan servicer. If you don’t know your loan servicer, look them up at www.nslds.ed.gov with your federal PIN.

• Link for Loan Repayment Information:– http://studentaid.ed.gov/repay-loans/

Topics You Provided:Repaying student loans (minimally) while in school.

Best loans to accept or where to find more scholarship opportunities. APTA Scholarship Information

Negotiating with potential employers for increased pay for loan repayment, or employer assisting with repayment of loans as an added bonus.

Can you take out more at a later time in the year if you decide you need more, and if so how? / Does the interest accrue the entire time you're in school for every single loan you take out, or just for that current year that it's for?

FELS repayment, how they consider the "get a job within 6 months" aspect of forgiveness (such as, what happens if you go on maternity leave within the first year on the job, or what happens if the job is not a good fit and you leave within a year?) I realize neither of these are ideal situations but they are not uncommon.

Are there any loans that we are eligible for that are forgivable? How can we find out about those?

how to pay off part of the principle in addition to your monthly payment (rather than have the extra applied to subsequent payments)

working for state programs ( UNC hospital ) that will repay loans after a certain amount of time

Loan Consolidation

Preparing as an out of state student (higher costs)

compounded interest

Main Points• Don’t freak out! Loans are investments in your education.• Apply for residency.

– Spring 2014: January 22nd, 2014– Summer I, 2014: May 27th, 2014 – Summer II: July 2nd, 2014 – Fall 2014: September 2nd, 2014

• Contact your loan servicer if you have ANY problems or hardships.

• You can pay early without any penalties.• If you have extra money (after expenses and saving) apply

that toward your highest interest rate item (credit cards, student loans, car – etc.).