Loan Repayment Options

REPAYMENT PLANSStandardExtended GraduatedIncome Based Repayment (IBR)Pay As You Earn (PAYE)Income Contingent Repayment (ICR)Income Sensitive Deferment ForbearanceConsolidation (not a plan but option)

Active Direct Loan ServicersFedLoan Servicing (PHEAA) - Consolidation - PSFL

Granite State - GSMR

Sallie Mae - Consolidation

MOHELA

Nelnet - Consolidation

OSLA Servicing

Great Lakes Educational Loan Servicing - Consolidation

VSAC Federal Loans

Aspire Resources, Inc. CornerStone

ESA/Edfinancial

Studentloans.gov

Standard Repayment

• Traditional level pay, 120 payments• Direct and FFELP Loans – Subsidized,

Unsubsidized, all PLUS

Extended Repayment

• Repayment timeframe up to 25 years• Borrowers must have $30,000 outstanding loans• Payments may be fixed or graduated• Direct and FFELP Loans – Subsidized,

Unsubsidized and PLUS

Graduated Repayment

• Ten year repayment • Payments are lower first two – three years

then increase every two years• Direct and FFELP Loans – Subsidized,

Unsubsidized and all PLUS

Income Based Repayment (IBR)

• Direct and FFELP Subsidized, Unsubsidized PLUS made to students and consolidation

• 15% discretionary income guideline• Payments change with income, per calendar

year• Up to 25 years repayment• Forgiveness potential

Pay As You Earn (PAYE)

• Direct Subsidized, Unsubsidized, PLUS to students and Direct Consolidation

• Specific borrowing guidelines • 10% of discretionary income• Up to 20 years repayment• Forgiveness potential

Income Contingent Repayment Plan

• Direct Subsidized, Unsubsidized, PLUS to students and Consolidation

• Payments calculated based upon borrowers adjusted gross income, family size and Direct Loan debt

• Up to 25 years repayment• Forgiveness potential

Income Sensitive Repayment Plan

• FFELP Subsidized, Unsubsidized, PLUS and Consolidation loans

• Payments calculated based upon annual income

• Up to 10 year repayment• Each lenders’ formula differs

Comparing Income-Driven Plans PAYE IBR ICR

Eligibility

Eligible Loans Direct Loans Direct Loans & FFELP Loans Direct Loans

Must be a "New Borrower" Yes * No No

Payment Formula

Protected Income 150%of poverty guideline

150%of poverty guideline

100%of poverty guideline

Affordable Payment 10% of discretionary income 15% of discretionary income 20% of discretionary income

Benefits

Loan Forgiveness Balance after 20 years(240 qualifying payments)-10 years if PSLF

Balance after 25 years(300 qualifying payments)-10 years if PSLF

Balance after 25 years(300 qualifying payments)-10 years if PSLF

*New borrower: 1) No Direct or FFELP loans/balance as of 10/1/07 AND

2) Received Sub, Unsub, GradPlus disbursement on/after 10/1/2011 or Direct Consolidation based on application received on/after 10/1/11

TEMPORARY (PAYMENT) POSTPONEMENT OPTIONS

• DEFERMENT is a period when payments are NOT required• Borrower must apply, meet qualifications, and receive approval• Interest will continue to accrue on Unsubsidized and PLUS loans• Interest will NOT accrue on Subsidized loans• Very few real deferments still exist

• FORBEARANCE is a period when payments are NOT required• Borrower must apply, meet qualifications, and receive approval (usually, on a 6-12 month

basis)• Interest will continue to accrue on Unsubsidized and PLUS loans• AND• Interest WILL accrue on Subsidized loans• Types are: administrative, discretionary, etc.

• Interest can capitalize, again, at the granting of forbearance or any change in repayment plan type

Loan Consolidation

• January 2, 2014, new consolidation process• Four servicers:

– FedLoan Servicing (PHEAA) – PSLF servicer– Sallie Mae– Great Lake Educational Loan Services, Inc.– Nelnet

• Exception – defaulted loan(s) which is assigned to U.S. Dept. of Education

Loan Consolidation

• More streamlined process– NSLDS information pulled into application– Borrower selects servicer– PSLF assigned to FedLoan Servicing– Pulls in reference information if borrower has

previously completed loan application via studentloans.gov

– IRS data retrieval for income based repayment programs

“Word on the street?”

• Public Service Loan Forgiveness (PSLF)• President Obama’s budget • Burdensome educational loan debt• Navigating multiple servicers• Navigating multiple repayment options• Automatic income based repayment

References“Automatic For the Borrower: How Repayment Based on Income Can Reduce Loan Defaults and Manage Risk”

Federal Student Aid, www.studentloans.gov

Mary Fenton, UNM HSC Director of Student Financial Aid Services, mbfenton@salud.unm.edu

NASFAA, www.nasfaa.org

www.Askheatherjavaris.com

ReferencesNelnetSallie MaeGreat Lakes FedLoan ServicingNSLP - InceptiaFSANew Mexico Student Loans