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Repayment Loan Options

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Repayment Loan Options. Agenda. Income-Driven Repayment Plans Overview Pay As You Earn Plan Income-Based Repayment Plan Income-Contingent Repayment Plan Income Sensitive Repayment Plan Other Repayment Plans Standard Graduated Extended (fixed or graduated) Resources. - PowerPoint PPT Presentation

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Repayment Loan OptionsAgendaIncome-Driven Repayment Plans OverviewPay As You Earn PlanIncome-Based Repayment PlanIncome-Contingent Repayment PlanIncome Sensitive Repayment PlanOther Repayment PlansStandardGraduatedExtended (fixed or graduated)Resources

Income-Driven Plans OverviewPay As You EarnIBRICRPayment Calculation10% of discretionary income Discretionary income = The difference between the borrowers AGI and 150% of the poverty guideline for their family size and state. 15% of discretionary income Discretionary income = The difference between the borrowers AGI and 150% of the poverty guideline for their family size and state. 20% of discretionary incomeDiscretionary income = The difference between the borrowers AGI and 100% of the poverty guideline for their family size and state. Who QualifiesNew Borrowers as of 10/1/07; and, Obtains a new Direct Loan disbursement on/after 10/1/11. Partial Financial Hardship (PFH)Partial Financial Hardship (PFH)Direct Loan borrowersEligible LoansDirect Subsidized and Unsubsidized Loans Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans that did not repay a FFELP or Direct Parent PLUS Loan

Direct and FFELP Subsidized and Unsubsidized Loans Direct and FFELP PLUS Loans made to graduate or professional students, and Direct and FFELP Consolidation Loans that did not repay a FFELP or Direct Parent PLUS Loan

Direct Subsidized and Unsubsidized Loans Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans that repaid a FFELP or Direct Parent PLUS Loan (disbursed on/after 7/1/06 )Interest Subsidy BenefitIf the monthly Pay As You Earn payment amount does not cover the interest that accrues on the loans each month, the government will pay the unpaid accrued interest on the borrowers Direct Subsidized Stafford Loans for up to three consecutive years from the date they began repaying under Pay As You Earn.

If the monthly IBR payment amount does not cover the interest that accrues on the loans each month, the government will pay the unpaid accrued interest on the borrowers Subsidized Stafford Loans (either Direct Loan or FFEL Loans) for up to three consecutive years from the date they began repaying under IBR .The amount capitalized will not exceed 10% of original amount owed when the borrower entered repaymentForgiveness20 Years25 Years25 YearsFor more details on eligibility, go to www.studentloans.govPay as you earn newest payment plan Direct Loans only and new borrowers as of 10/1/07. Students who have previous loans or consolidation loans dont qualify.

Income Based Repayment Program Includes previous loans from different lenders in the (Federal Family Education Loan Program FFELP)Payments based on 15% discretionary income

Income Contingent Repayment plan 20% discretionary incomeNo Partial Financial Hardship requirementNo more than 10% capitalized

Go to www.studentloans.gov to see if you qualify.

Partial Financial Hardship is if the IBR or Pay as You Earn calculated payment amount is less then the 10 year standard payment amount. Go to page 2 of the IBR handout and go over the examples. 3Poverty Guidelines 2012-13The following chart contains information from the Department of Health and Human Services (HHS). To determine your family size, count your children if they receive more than half their support from you, and count other persons if they live with you as well as receive more than half their support from you currently and for the foreseeable future. Support includes money, gifts, loans, housing, food, clothes, car, medical and dental care, payment of college costs, and so on.Next, find the column that represents your place of residence. Read down to your family size. This is the poverty guideline for you.

Family size48 Contiguous statesand D.C.AlaskaHawaii111,17013,97012,860215,13018,92017,410319,09023,87021,960423,05028,82026,510527,01033,77031,060630,97038,72035,610734,93043,67040,160838,89048,62044,710

For each additionalperson, add3,9604,9504,550Last updated February 22, 2013

An Example of Calculating Payments1 Person = $11,170 Poverty Guidelines

150% of $11,170 = $16,755

$60,000 Adjusted Gross Income - $16,755 = $43,245 (discretionary income)

$43,245 x 10% for Pay As You Earn Program (PAYE) divided by 12 months would be $360.38 payment in PAYE

$43,245 x15% for Income Based Repayment Program divided by 12 months would be $540.56 payment in IBR

Standard Payment for $100K Loan debt is around $1200 a month.Income-Driven Plan Payment ComparisonIncomeFamily Size123456$15,000IBR$0.00$0.00$0.00$0.00$0.00$0.00ICR$64.00$0.00$0.00$0.00$0.00$0.00Pay As You Earn$0.00$0.00$0.00$0.00$0.00$0.00$20,000IBR$41.00$0.00$0.00$0.00$0.00$0.00ICR$147.00$81.00$15.00$0.00$0.00$0.00Pay As You Earn$27.00$0.00$0.00$0.00$0.00$0.00$25,000IBR$103.00$29.00$0.00$0.00$0.00$0.00ICR$184.00$165.00$99.00$33.00$0.00$0.00Pay As You Earn$69.00$19.00$0.00$0.00$0.00$0.00$30,000IBR$166.00$91.00$17.00$0.00$0.00$0.00ICR$204.00$193.00$182.00$116.00$50.00$0.00Pay As You Earn$110.00$61.00$11.00$0.00$0.00$0.00$35,000IBR$228.00$154.00$80.00$10.00$0.00$0.00ICR$221.00$212.00$212.00$199.00$133.00$67.00Pay As You Earn$152.00$103.00$53.00$0.00$0.00$0.00$40,000IBR$291.00$216.00$142.00$68.00$0.00$0.00ICR$235.00$232.00$232.00$232.00$217.00$151.00Pay As You Earn$194.00$144.00$95.00$45.00$0.00$0.00$45,000IBRNo-PFH$279.00$205.00$130.00$56.00$0.00ICR$249.00$248.00$248.00$248.00$248.00$234.00Pay As You Earn$235.00$186.00$136.00$87.00$37.00$0.00$50,000IBRNo-PFHNo-PFH$267.00$193.00$119.00$44.00ICR$264.00$264.00$264.00$264.00$264.00$264.00Pay As You Earn$277.00$228.00$178.00$129.00$79.00$30.00This chart is based on the charts shown on pages 66117 and 66118 of the Federal Register issued on November 1, 2012 which published the final regulations. This chart assumes an loan debt of $26,000 and an interest rate of 6.80%.

Pay As You EarnUnder Pay As You Earn, borrowers pay the lesser of:10% of discretionary income or what they would have paid under the 10-year Standard repayment plan. Discretionary income for this plan is the difference between the borrowers AGI and 150 percent of the poverty guideline amount for his/her state of residence and family size. Interest subsidy benefitIf the monthly Pay As You Earn payment amount does not cover the interest that accrues on the loans each month, the government will pay the unpaid accrued interest on the borrowers Direct Subsidized Stafford Loans for up to three consecutive years from the date they began repaying under Pay As You Earn or IBR. The three years does not include periods of Economic Hardship DefermentBorrower must pay all interest on unsubsidized loansFor Pay As You Earn, the remaining balance is forgiven after 20 years of qualifying repayment

Pay As You Earn - CapitalizationNo longer qualifies for payments based on income (no longer has a partial financial hardship) orLeaves Pay As You Earn entirelyInterest capitalizes only until principal balance is 10% greater than original principal amount when borrower entered plan7Income-Based Repayment (IBR)Under IBR, borrowers pay the lesser of:15% of discretionary income or what they would have paid under the 10-year Standard repayment plan Discretionary income for this plan is the difference between the borrowers Adjusted Gross Income (AGI) and 150 percent of the poverty guideline amount for his/her state of residence and family size. Interest subsidy benefitIf the monthly IBR payment amount does not cover the interest that accrues on the loans each month, the government will pay the unpaid accrued interest on the borrowers Subsidized Stafford Loans (either Direct Loan or FFEL Loans) for up to three consecutive years from the date they began repaying under IBR or Pay As You Earn.The three years does not include periods of Economic Hardship DefermentBorrower must pay all interest on unsubsidized loans25 year loan forgivenessIf the borrower makes 25 years of qualifying payments and meets certain other requirements, any remaining balance will be cancelled

8IBR Payment AmountsThe IBR Partial Financial Hardship (PFH) payment amount is determined by the AGI and family sizeIf the borrower is married and files a joint federal tax return, the AGI includes both spouses incomes togetherIf the spouse has eligible student loan debt, this debt may also be taken into consideration when determining whether the borrower has a PFHAnnual IBR repayment amount is 15% of the difference between the borrowers AGI and 150% of the Department of Health and Human Services Poverty Guideline for their family size and stateDivide this amount by 12 to get the monthly IBR payment amountThe IBR payment amount will be adjusted yearly based on income and family size but will never be more than what would be required to be paid under a 10-year Standard Plan based on the balance of the eligible loans when the borrower began repayment under the IBR plan

9Leaving IBRIf borrowers leave IBR and have unpaid interest, it will capitalize to principal, increasing principle balanceThe borrower is placed into the Standard Plan based on the term remaining for their loan typeFor example, Stafford/PLUS Loans will have 10 years minus the time in repayment. Consolidation Loans may have 10-30 years minus the time in repayment. Borrowers may request a reduced payment forbearance if they cannot afford the payment amount on the standard repayment plan.Borrowers who leave IBR can come back if they demonstrate "partial financial hardship".

10Income-Contingent Repayment (ICR)Each year the monthly payments are recalculated based on:AGI (includes spouses income if married) The spouses income will only be included if they file federal taxes jointly or are repaying under joint ICRFamily sizeTotal amount of the borrowers Direct LoansIf payments are not large enough to cover the interest that accrues monthly, the unpaid interest is capitalized once each yearThe amount capitalized will not exceed 10% of original amount owed when the borrower entered repaymentIf the borrowers payments are not enough to cover the accruing interest, it will continue to accrue but will not be capitalized if the borrower has reached the 10% limit After 25 years, the remaining balance will be discharged11Income-Driven Repayment ExamplesEligible Loan Debt - $31,000 (6.8% interest rate/unsubsidized)Starting AGI - $25,000(AGI increasing 4% annually, Poverty Level Change Rate 3%)Family Size = 1Pay As You Earn Repayment Plan(20 years)Income Based Repayment Plan(IBR)(25 years)Income Contingent Repayment Plan(ICR)(25 years)Standard Repayment Plan(10 years)First Monthly Payment$68.71$103.06$229.54$356.75Maximum Monthly Payment$194.09$356.75$256.84N/ATotal Interest Paid$29,080.78$41,593.20$26,348.39$11,809.83Total Principal Paid$343.11$22,723.65$26,348.39$31,000.00Total Amount Paid$29,423.88$64,316.85$57,348.39$42,809.83Remaining Principal Balance and Unpaid Interest$30,656.89$13,145.04$0.00$0.00Total Loan Forgiveness$43,718.25$13,145.04$0.00$0.00Examples from FinAid.org calculatorsMarried Filing Jointly ExampleFor the purposes of this example, the borrowers AGI = $25,000 and the spouses AGI =$30,000. The spouse has no loan debt. Examples from FinAid.org calculatorsEligible Loan Debt - $50,000 (6.8% interest rate/unsubsidized)Starting AGI - $55,000(AGI increasing 4% annually, Poverty Level Change Rate 3%)Family Size = 2/Married Filing JointlyPay As You Earn Repayment Plan(19.8 years)Income Based Repayment Plan(IBR)(12.5 years)Income Contingent Repayment Plan(ICR)(11.8 years)Standard Repayment Plan(10 Years)First Monthly Payment$269.21$403.81$510.86$575.40Maximum Monthly Payment$575.40$575.40$529.77$575.40Total Interest Paid$49,470.58$26,433.15$23,235.20$19,048.28Total Principal Paid$50,187.09$50,000.00$50,000.00$50,000.00Total Amount Paid$99,470.58$76,433.15$73,235.20$69,048.28Remaining Principal Balance and Unpaid Interest$0.00$0.00$0.00$0.00Total Loan Forgiveness$0.00$0.00 $0.00$0.00Pay as you earn will take longer therefore not the best choice hereNo loan forgiveness because your loans are paid off before the 20 or 25 years13Married Filing Separately ExampleFor the purposes of this example, the borrowers AGI = $25,000 and the spouses AGI =$30,000. The spouse has no loan debt.

Examples from FinAid.org calculatorsEligible Loan Debt - $50,000 (6.8% interest rate/unsubsidized)Starting AGI - $25,000(AGI increasing 4% annually, Poverty Level Change Rate 3%)Family Size = 2/Married Filing SeparatelyPay As You Earn Repayment Plan( 20 years)Income Based Repayment Plan(IBR)(25 years)Income Contingent Repayment Plan(ICR)(25 years)Standard Repayment Plan(10 Years)First Monthly Payment$19.21$28.81$173.83$575.40Maximum Monthly Payment$107.30$224.35$402.48$575.40Total Interest Paid$13,462.88$32,055.71$$82,332.03$19,048.28Total Principal Paid$0.00$0.00$10,446.97$50,000.00Total Amount Paid$13,462.88$32,055.71$$92,779.00$69,048.28Remaining Principal Balance and Unpaid Interest$104,537.12$102,944.29$56,109.37$0.00Total Loan Forgiveness$104,537.12$102,944.29 $56,109.37$0.00Makes sense if your spouse doesnt have loan debt it might save money to file separately and do one of these programs.14Electronic Application IRS Interface

Launched in SeptemberThe eApplication is now available for IBR, ICR, Pay As You Earn or Lowest paymentCan be used by borrowers with Direct Loans or FFEL LoansHosted on StudentLoans.gov. Borrowers can access application directly or through loan servicers websitesUses IRS Data Retrieval Tool that is used on the FAFSARetrieves the most recent tax information from two most recently completed tax yearsElectronically transmits application to loan servicerno follow-up necessary unless AGI is unavailable or borrower wants to submit alternative documentation of incomeCan be used for initial applications or annual recertification

Electronic Application Review

Electronic Application - Confirmation

Income-Driven Repayment Application

Apply on loan servicers websiteEligible to apply 60 days prior to repayment start dateBorrower is notified by servicer 90 days prior to renewal dateA lowest eligible repayment option is available to borrowers unsure of which plan to select. If using alternative documentation of income, supporting documents, such as pay stubs, must clearly show how often (and how much) income is received.Documentation of income and family size must be submitted annuallyOption to complete application electronically and transfer prior year tax data from the Internal Revenue Service (IRS)Apply for one of these programs 60 days before repayment starts. Two months before your grace period is overRepayment Options Income Sensitive FFEL loans onlyMonthly payment is based on monthly gross incomeMust re-apply annuallyAvailable for 5 years (The borrower will repay remaining balance under a Standard repayment plan unless another plan is selected.)

Loans serviced by FedLoan Servicing:Complete the Income Sensitive Repayment Request Form on the Payment-Related Forms section at MyFedLoan.org/forms.Submit documentation of your most recent total gross income from all sources (pay stubs, etc.)Mail or fax all required forms / documentation:FedLoan ServicingP.O. Box 69184Harrisburg, PA 17106-9184Fax: (717) 720-1628Contact the appropriate servicer for loans not serviced by FedLoan Servicing

How to Apply19Standard Repayment Example

Eligible Loan Debt - $31,000 (6.8% interest rate)Standard RepaymentMonths in Repayment120Monthly Payment$356.75Total Interest Payment$11,809.83Total Loan Payment$42,809.83Eligible Loan Debt - $75,000 (6.8% interest rate)Standard RepaymentMonths in Repayment120Monthly Payment$863.10Total Interest Payment$28,572.43Total Loan Payment$103,572.43Examples from FinAid.org calculatorsThis is the plan the borrower will have when entering repayment, unless the borrower requests otherwise The payment will be a fixed (equal) amount each month, although it could vary due to interest rate changes on a variable rate loanMonthly payments will be at least $5010-year repayment term (Standard plan for Consolidation Loans is 10 to 30 years based on balance)

FFELP - Federal Family Education Loan20Graduated Repayment ExampleEligible Loan Debt - $31,000 (6.8% interest rate)GraduatedMonths in Repayment120Monthly PaymentYearsMonthly Payment1-23-45-67-89-10$244.95$297.80$362.04$440.15$535.11Total Interest Payment$14,122.23Total Loan Payment$45,122.23Eligible Loan Debt - $75,000 (6.8% interest rate)GraduatedMonths in Repayment120Monthly PaymentYearsMonthly Payment1-23-45-67-99-10$592.63$720.49$875.93$1064.90$1,294.65Total Interest Payment$34,166.68Total Loan Payment$109,166.68Examples from FinAid.org calculatorsPayments start low and generally increase every two years10-year repayment term (Consolidation Loans may have a term of 10 to 30 years based on balance)Monthly payment is never less than the amount of interest that accrues each monthNo single payment will be more than three times greater than any other payment21Extended Repayment ExampleEligible Loan Debt - $75,000 (6.8% interest rate)Extended FixedExtended GraduatedMonths in Repayment300300Monthly Payment$520.55YearsMonthly Payment1-23-45-67-89-1011-1212-1415-1617-1819-2021-2223-2425$425.00$445.28$466.53$512.13$536.57$562.17$589.00$617.11$677.42$646.56$677.56$709.75$743.62Total Interest Payment$81,165$94,155.34Total Loan Payment$156,165$169,155.34Examples from FinAid.org calculatorsWill pay a fixed or graduated payment amountRepayment term not to exceed 25 yearsFFEL borrowers must have more than $30,000 in outstanding FFEL Program loans (for new borrowers as of 10/07/1998)Direct borrower must have more than $30,000 in outstanding Direct Loans (for new borrowers as of 10/07/1998)22Public Service Loan Forgiveness (PSLF) 10 yearsThe borrower may qualify for loan forgiveness earlier than 25 years (20 years if under Pay As You Earn) if they work full-time for a qualifying public service organization and make on-time full monthly payments under the repayment plans listed below. Payments made under these plans will count toward the 120 monthly payments that are required to receive loan forgiveness through PSLF.10-year Standard Repayment PlanIncome Based Repayment (IBR) PlanIncome-Contingent Repayment (ICR) PlanPay As You Earn PlanAny other repayment plan if the monthly payment amount is paid is not less than what would have been paid under the 10-year Standard repayment planFor more information on PSLF, please refer to the PSLF Fact Sheet and Q&As: www.studentaid.ed.gov/publicservice

Repayment Schedule Estimator

Repayment Schedule Estimator Fedloan Servicing - google24Additional ResourcesRepayment Schedule Estimatorwww.myfedloan.org/billing-payment/payment-plans/repayment-schedule-estimator.shtmlRepayment optionswww.myfedloan.org/billing-payment/payment-plans/index.shtmlRepayment Calculatorshttp://studentaid.ed.gov/repay-loans/understand/planshttp://www.finaid.org/calculators/http://www.myfedloan.org/make-a-payment/calculators/index.shtml

Federal Student Aid (FSA) Repayment Informationwww.studentaid.ed.gov/PORTALSWebApp/students/english/repaying.jsp

25Servicing ResourcesServicerContact Information for BorrowersContact Information for SchoolsPhoneWebsitePhoneWebsiteDirect Loan Servicing Center (ACS)1-800-848-0979myedaccount.com1-888-877-7658myedaccount.comFedLoan Servicing1-800-699-2908MyFedLoan.org1-800-655-3813MyFedLoan.org/schoolsGreat Lakes1-800-236-4300mygreatlakes.org1-888-686-6919mygreatlakes.orgNelnet1-888-486-4722nelnet.com1-866-463-5638nelnet.comSallie Mae1-800-722-1300salliemae.com1-888-272-4665SallieMae.com/EDServicing26