student loan fundamentals
DESCRIPTION
STUDENT Loan FUNDAMENTALS. 2014 TASFAA NAOW Workshop May 12-14, 2014 – Arlington, Texas Tanya Vittitow Associate Director – UT Arlington. Student Loan Programs and Eligibility Student Loan Application Process Student Loan Repayment. Federal Student Loan Programs Direct Subsidized Loan - PowerPoint PPT PresentationTRANSCRIPT
STUDENT LOAN FUNDAMENTALS
2014 TASFAA NAOW Workshop
May 12-14, 2014 – Arlington, Texas
Tanya VittitowAssociate Director – UT Arlington
Student Loan Programs and Eligibility
Student Loan Application Process
Student Loan Repayment
Federal Student Loan Programs
Direct Subsidized Loan
Direct Unsubsidized Loan
Direct PLUS Loans
Direct Consolidation Loans – Student Loan Repayment
Perkins Loan Program
Alternative Loans
Direct Subsidized Loans
Need-based Loan for Undergraduate Students Enrolled at Least
Half Time
No In- School Accrued Interest – 6 Month Grace Period
150% Direct Subsidized Loan Limit Rule Applies
Fixed Interest Rate 3.86% – July 1 Annual Adjustment
Origination Fee 1.072% – Sequester Adjustment on October 1, 2014
150% Direct Subsidized Loan Limit
New Borrowers on/after July 1, 2013 – 0 Loan Balance
Ineligible for Additional Subsidized Loans Beyond 150% of the
Published Program Length
Replaced with Unsubsidized Loan
Additional Dependent Subsidized Loan – Parent PLUS Denial
Direct Unsubsidized Loans
Non-Need-based Loan for Undergraduate & Graduate
Students Enrolled at Least Half Time
In- School Accrued Interest – 6 Month Grace Period
Fixed Interest Rate 3.86% Undergrad &
5.41% Grad – July 1 Annual Adjustment
Origination Fee 1.072% – Sequester Adjustment on October 1, 2014
Direct PLUS Loans
Parent/Gaurdian of Dependent Undergraduate Students
Graduate Students
Non-Need-based Loan - Student Enrolled at Least Half Time
Borrow to Cost of Attendance – No Aggregate Limit
Credit Check Required – Adverse Credit = Additional Unsubsidized for Undergraduate Students
Fixed Interest Rate 6.41% – July 1 Annual Adjustment
Origination Fee 4.288%– Sequester Adjustment on October 1, 2014
Interest Accrues and Repayment Begins at 100% Loan Disbursement
Deferment Can be Requested at Application
Independent Undergraduate Student
Base Eligibility (Sub or Unsub)
Additional Unsubsidized Loan
Freshman $3,500 $6,000Sophomore $4,000 $6,000Junior/Senior $5,500 $7,000Maximum Total (Aggregate) Limit:
$57,500 ($23,000 can be subsidized)
Graduate/Professional StudentUnsubsidized Loan $20,500/academic yearMaximum Total (Aggregate) Limit:
$138,500 ($65,500 may be subsidized)
Dependent Undergraduate Student
Base Eligibility (Sub or Unsub)
Additional Unsubsidized Loan
Freshman $3,500 $2,000Sophomore $4,000 $2,000Junior/Senior $5,500 $2000Maximum Total (Aggregate) Limit:
$31,000 ($23,000 can be subsidized)
Direct Loan Application Process
Eligible Student in Eligible Program with Pell Eligibility Determination Complete
www.studentloans.gov
Entrance Counseling
First Time Subsidized/Unsubsidized and PLUS Student Borrowers
Completed Prior to First Disbursement
Master Promissory Note
Loan Note for All Programs Valid for 10 Years
Additional Direct Loan Requirements
Exit Counseling
www.nslds.ed.gov
Required when Student Ceases to Attend Half Time –
Includes Transfers
14 Day Disbursement Notification – Right to Cancel
Per Disbursement
Perkins Loan Program
Need-based Loan – Student Enrolled at Least Half Time
School with Funds – Lender and Servicer
Undergraduate and Graduate Students
Annual Limit – Undergraduate $5,500 and Graduate $8,000
Aggregate Limit - Undergraduate $27,500 and Graduate $60,000
Grace Period 9 Months - 10 Year Max Repayment
Alternative Loan Programs
Non-need Based External Loan
Interest Rates, Origination Fees and Repayment Terms Vary
Should Require School Certification - http://
ifap.ed.gov/dpcletters/attachments/GEN1001A-AppSelfCert.pdf
School Provided List – Consumer Disclosure Requirements
Student Loan Repayment
Single Source – www.nslds.ed.gov
Multiple Repayment Options Via ServicerStandard – Monthly payment remains consistent for up to10 years
Graduated – Monthly payments are lower at first but then increase every 2 years up to 10 years.
Income-sensitive – Monthly payments are based on your annual income and payments change as your income changes.
Extended – Payments may be fixed or graduated for up to 25 years. Income Contingent – payments based on annual
calculations and adjusted so as not to cause “undue hardship”; (25 year forgiveness)
Income Based- Monthly payments will not exceed 15% of the amount by which your adjusted gross income exceeds
150% of the poverty guideline for your family size. (25 year forgiveness)
Pay As You Earn – Monthly payments will not exceed 10% of the amount by which your adjusted gross income exceeds
150% of the poverty guideline for your family size. (20 year forgiveness)
Student Loan Repayment Continued
Grace Period – Period of time (generally 6 months) in witch a
student has to begin repayment.
Deferment – Period of time payments are postponed for an approved
set of reasons; no-accrued interest on Subsidized Loans.
Consolidation – Can be fix for default issues and/or way to combine
all loans into one with one servicer.
Student Loan Repayment Continued
Cohort Default RateIncludes DL loans, and loans underlying DL consolidation loans
CDR = % of borrowers who enter repayment in a given federal fiscal year who then
default within the next 3 fiscals years
High rate has consequences for schools
>15% = loss of 1 installment/semester
15% = 30 day hold on 1st time, 1st year borrowers
> 40% = loss of participation in Title IV funding
