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Entrance Counseling Slide 2 Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers. Slide 3 Understand Your Commitment Read all communication, forms and documents carefully. Understand the terms of your student loan. Manage your money. Ask for help. Slide 4 Understand Your Commitment Master Promissory Note: Must be signed in order to receive loan funds. Legally binding document. Specifies your rights and responsibilities. MPN multi-year feature: Sign once. You can opt out and sign a new MPN for each loan. Some schools do not use this feature. May expire in certain cases. Borrowers Rights and Responsibilities Statement. Expect a Plain Language Disclosure for any subsequent loans. Separate MPNs. Master Promissory Note Slide 5 Understand Your Commitment You promise to repay your loan, even if you: Dont complete your program of study at all or within the regular time frame for completion. Are unable to locate employment after completing your program. Are dissatisfied with or dont receive services purchased from the school. Dont receive payment coupons or notifications from your loan servicer. Master Promissory Note Slide 6 Understand Your Commitment Effect on Other Aid Monitor award notifications for updates. Contact financial aid office with questions. Borrowing loans may affect your other aid, and other aid may affect your loans. Slide 7 Understand Your Commitment Enrollment Status and Withdrawal Half-time Enrollment Required to receive: Direct Loan disbursements. In-school deferment. Definition: Undergraduates: school- defined, within federal requirements. Graduates: school-defined. Drop below half-time: Begin using grace period. May enter repayment. Withdrawal No longer attending scheduled classes. Contact us if you withdraw. Exit counseling materials. Drop below half-time: Begin using grace period. May enter repayment. Slide 8 Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers. Slide 9 Your Loan Terms Availability of Loan Types Loan Type Undergraduate Students Graduate and Professional Students Direct Subsidized Loan Direct Unsubsidized Loan Grad PLUS Loan X X X X Slide 10 Your Loan Terms Interest Rates First Disbursement Undergraduate BorrowersGraduate Borrowers SubsidizedUnsubsidized Grad PLUS 7/1/14-6/30/154.66%6.21% 7.21% 7/1/13-6/30/143.86%5.41% 6.41% 7/1/12-6/30/133.4%6.8% 7.9% 0.25 percent rate deduction with automatic payments. Maximum Rates 8.25% 9.0% Slide 11 Your Loan Terms Interest that accrues will be capitalized. Payment of interest while in school saves money. Interest Capitalization Borrower 2 $3,500 unsubsidized loan at 6.8 percent fixed. Pays no interest during in school or grace period. Interest capitalized at repayment. Total paid while enrolled$0 Amount capitalized$833 Monthly payment$51.07 Length of repayment10 years Total cost$6,128 Interest in repayment$2,629 Source: www.finaid.org Cost of Interest Capitalization Calculator. Borrower 1 $3,500 unsubsidized loan at 6.8 percent fixed. Pays interest during in school and grace period at $19.83 per month. Total paid while enrolled$833 Amount capitalized$0 Monthly payment$50 Length of repayment7.4 years Total cost$4,450 Interest in repayment$950 Slide 12 Your Loan Terms Fees Origination Fees First Disbursement Subsidized and Unsubsidized Loans PLUS Loans 10/1/14 to 9/30/151.073%4.292% 12/1/13 to 9/30/141.072%4.288% 7/1/13 to 6/30/141.051%4.204% 3/1/13 to 6/30/141%4% Slide 13 Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers. Slide 14 150 Percent Subsidized Loan Limit Limits Direct Subsidized loans for first-time borrowers. Limited to 150 percent of published length of students current educational program. Definition of first-time borrower: No outstanding principal balance as of July 1, 2013. Repaid all prior loans before July 1, 2013 before borrowing again. Slide 15 150 Percent Subsidized Loan Limit Effect on Borrowers They no longer qualify for Direct Subsidized loans beyond 150 percent of the program length, unless entering a longer program. They no longer qualify for interest subsidy on previously obtained loans as of the date attendance begins after reaching the limit. Once interest subsidy is lost, it cannot be regained. Borrower becomes responsible for interest that accrues. Unpaid interest is capitalized. Loss of subsidy on future loans Loss of subsidy on prior loans Affected borrowers who reach or exceed the 150 percent limit may experience: Slide 16 Remaining Eligibility Period Maximum Eligibility Period Subsidized Loan Eligibility Used = Remaining Eligibility Period 150 Percent Subsidized Loan Limit Definitions 3 Maximum Eligibility Period Subsidized Usage Period Department of Education calculates periods using information reported by schools. Days in loan period Days in academic year Program length x 150 percent = Maximum Eligibility Period Slide 17 Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers. Slide 18 Repayment Repayment begins: After a six-month grace period that starts once no longer enrolled at least half time. Immediately, if grace period expired previously. Interest subsidy applies. Eliminated for loans first disbursed July 1, 2012 June 30, 2014. No penalty for early repayment. Subsidized and Unsubsidized Direct Loans Unless delayed or deferred, the borrowers first payment usually is due within 60 days of entering repayment. Slide 19 Repayment Repayment begins when the loan is finally and fully disbursed. No grace period. May qualify for a post-enrollment deferment period. Payment of principal begins six months after borrower ceases to be enrolled at least half time. Renewable. No penalty for early repayment. PLUS Loans Unless delayed or deferred, the borrowers first payment usually is due within 60 days of entering repayment. Slide 20 Repayment Default repayment plan. Generally results in lowest interest cost. Minimum payment: $50/month. Standard Payments increase over time. No payment will exceed three times any other payment. Graduated Borrowers with $30,000 or more in FFEL or DL student loans. Longer repayment period. Extended Slide 21 Repayment Income-Driven Plans Must have a partial financial hardship. Minimum payment: $0/month. Forgiveness available after 25 years. Income-based Payment amount based on annual income. Must re-apply each year. Income-sensitive (FFELP) Payment amount based on annual income. Minimum payment: $5/month. Must re-apply each year. Income-contingent (DL) Must have a partial financial hardship. Minimum payment: $0/month. Must re-apply each year.. Pay as You Earn (DL) Slide 22 Repayment Example of a standard repayment schedule: Standard Repayment Direct Unsubsidized Loan (6.8 percent) Loan AmountPayment AmountNumber of Months $10,000$115120 $50,000$575120 Grad PLUS Loan (7.9 percent) Loan AmountPayment AmountNumber of Months $10,000$121120 $50,000$604120 Source: http://calculator.usafunds.org/. Slide 23 Repayment Relief Options Consolidation. Deferment. Forbearance. Discharge and forgiveness. Slide 24 Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers. Slide 25 Consequences Delinque ncy Lender has not received payment by the stated due date. Late charges may be assessed. Negative mark on your credit record. Slide 26 Consequences Lose eligibility for future federal financial aid. Lose eligibility for flexible loan repayment options. Adverse credit reports. State-issued licenses can be withdrawn or denied. Income tax refunds can be withheld. Wages can be garnished. Federal benefit payments can be confiscated. Interest continues to accumulate. Federal debt collection procedures, including fees and fines. Legal action. Default No loan payments for 270 consecutive days or more Slide 27 Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers. Slide 28 Affordability Analysis How much income will you have? How much of your income are you willing to spend on your loans? How much can you borrower before your loans are no longer affordable? www.usafunds.org: Search for Student Loan Affordability Analysis Slide 29 Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers. Slide 30 Getting Help National Student Loan Data System www.nslds.ed.gov. Slide 31 Getting Help If you cannot make a student loan payment: Your loan holder. Your school. Department of Education. If you have an unresolved issue: Department of Education Ombudsman: Phone: (877) 557-2575 E-mail: [email protected] www.ombudsman.ed.gov. Difficult Situations Slide 32 Agenda Understand Your Commitment. Your Loan Terms. 150 Percent Subsidized Direct Loan Limit. Repayment. Consequences. Affordability Analysis. Getting Help. Questions and Answers. Slide 33 Review Q: What legally binding document must you sign before you can receive your subsidized, unsubsidized or Grad PLUS loan funds? A: A Federal Master Promissory Note. Slide 34 Review Q: Do you have to repay your Direct Loans if you dont finish your program of study? A: Yes. By signing a Master Promissory Note, you are promising to repay your student loan even if you dont finish your program, you are dissatisfied with your educational experience, or you cannot find a job. Slide 35 Review Q: When will repayment begin on your subsidized, unsubsidized loan or Grad PLUS loan? A: After you no longer are enrolled at least half time in a degree or certificate program, you will have one six-month grace period (or post-enrollment deferment period for Grad PLUS loans) before repayment begins. The first payment is due within 30-45 days after the repayment period starts. Slide 36 Review Q: Which of the following statements about defaulting on your student loan is false? a. Default means no payment was made for 270 days. b. Default usually results in additional fees and collection costs. c. Defaulted loans are not reported to consumer reporting agencies. d. Defaulted loans must be returned to good standing in order to get future federal financial aid. Slide 37 Review Q: List at least one way to get help regarding your student loan if you need it. A: Your resources include: Your loan servicer. Your school. U.S. Department of Education. U.S. Department of Education Ombudsman. Slide 38 Questions and Answers Slide 39 Resources www.usafunds.org. www.nslds.ed.gov. www.studentaid.ed.gov. www.ombudsman.ed.gov. Slide 40 A nonprofit corporation, USA Funds works to enhance postsecondary education preparedness, access and success by providing and supporting financial and other valued services.