EXIT LOAN COUNSELING
description
Transcript of EXIT LOAN COUNSELING
![Page 1: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/1.jpg)
EXIT LOAN COUNSELING
![Page 2: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/2.jpg)
Things to Know Before you Go…..• Know your Loans • Repayment Options• Loan Consolidation• Deferment and Forbearance• Loan Forgiveness• Consequences of Default• Rights & Responsibilities• Tax Benefits
![Page 3: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/3.jpg)
KNOW YOUR LOANS
![Page 4: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/4.jpg)
Types of Loans
• Federal Direct Stafford Loan
• Federal Direct PLUS
![Page 5: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/5.jpg)
Loan TermsStafford PLUS
Interest Rate 6.8%, Fixed 7.9%, Fixed
Interest Accrual while in School
Sub- NoUnsub - Yes Yes
Grace Period after Graduation 6 mo. 6 mo.
(available upon request)
Lender Private orUS Govt.
Private orUS Govt.
![Page 6: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/6.jpg)
Where is my loan?
![Page 7: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/7.jpg)
National Student Loan Data System
Who is my servicer?
What is my interest rate?
When will I need to start making payments?
How much do I owe?
![Page 8: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/8.jpg)
www.NSLDS.ed.gov
![Page 9: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/9.jpg)
www.NSLDS.ed.gov
![Page 10: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/10.jpg)
Tracking Your Loans
![Page 11: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/11.jpg)
REPAYMENT OPTIONS
![Page 12: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/12.jpg)
Stafford and PLUS Repayment Plans• Standard
• Graduated
• Extended
• Income Based Repayment (IBR)
• Income Sensitive and Income Contingent
![Page 13: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/13.jpg)
Standard
• Available for all Federal Loans• 10 year repayment schedule• Fixed payment amount
Advantage: Pay lowest amount of interest over the life of the loan.
![Page 14: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/14.jpg)
Graduated• Available for all Direct, FFEL, and Federal Consolidation Loans
(w/out Parent PLUS)
• 10 year repayment
• Payment amount is lower in the earlier years of repayment and gradually increase over time.
• Payment amount is generally reset every two years.
• Minimum Payment = Interest.
Advantages: Loan payments increase as salary increases, and lower interest cost than Extended Repayment
![Page 15: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/15.jpg)
Extended• Available for all Direct, FFELP, and Federal Consolidation Loans
(w/out parent PLUS)• Must have more than $30,000 in outstanding Direct or FFEL
Loans.• Up to 25 year repayment • Payments are fixed or graduated, and are not based on
income.• Minimum Payment = Interest
Advantage: Allows for a more gradual increase in loan payments than the Graduated Repayment Plan
![Page 16: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/16.jpg)
Payment = $312
Interest = $48,000
Payment = $518
Interest = $17,000
Payment = $355 up to $767
Interest = $20,000
How my payment plan affects my payment and the interest I will pay….
Standard(10 Years)
Extended(25 Years)
Graduated(10 Years)
$45, 000 Loan @ 6.8% Interest
![Page 17: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/17.jpg)
Income Contingent (ICR)
• Available for Direct loans only • 25 year repayment• Payment amounts are based on annual income, total
loan debt, and family size.• Monthly payment may be less than interest charged.
Advantage: Loan payments increase as salary increases, and allows for loan forgiveness after 25 years.
![Page 18: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/18.jpg)
Income-Based Repayment (IBR)• Available for Direct Loans or Direct Consolidation Loans
(w/o PLUS)
• Loan payment limited to 15% of discretionary income
• After 25 years remaining balance is forgiven.
• Monthly payment maybe less than the interest charged.
• For subsidized Stafford loans, if your payment does not cover your monthly accrued interest, your interest will be subsidized for up to 3 years.
![Page 19: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/19.jpg)
IBR Comparison
10 Yr. Standard Monthly Payment = $518
IBR Monthly Payment = $288
Borrower has loan debt of $45,0006.8% interest rate
Salary is $40,000/yrSingle with no dependents
![Page 20: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/20.jpg)
Direct Loan Servicing
www.myedaccount.com
![Page 21: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/21.jpg)
LOAN CONSOLIDATION
![Page 22: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/22.jpg)
Federal Loan Consolidation
• Available for Stafford, Perkins and PLUS loans
• Pays off multiple loans with one new loan
• New loan carries new terms (interest rate is calculated using a weighted average)
• You may consolidate a defaulted loan
http://loanconsolidation.ed.gov
![Page 23: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/23.jpg)
loanconsolidation.ed.gov
![Page 24: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/24.jpg)
More on consolidation…
• May only consolidate once, allowed to add loans, but consolidation cannot be reversed
• Can be much more expensive due to longer repayment term
• ACS is the servicer for all Direct Consolidation loans
![Page 25: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/25.jpg)
DEFERMENT AND FORBEARANCE
![Page 26: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/26.jpg)
Deferment and Forbearance
What’s the same?Temporary suspension of regularly scheduled payment
What’s different?• Interest accrual • Forbearance is granted according to borrower’s
eligibility, and also at the lender’s discretion.• Deferment is granted according to borrower’s eligibility
as determined by federal regulation.
![Page 27: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/27.jpg)
To Qualify….. Deferment
Military Service
In School (at least half-time)
Economic Hardship (3 yr. max)
Unemployment (3 yr. max)
Forbearance
Serving in AmeriCorps (receiving an education award)
During medical and dental internship or residency programs
Monthly student loan payments are 20 % or more than your total monthly gross income.
Discretionary
![Page 28: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/28.jpg)
Unemployment Deferment
…be unemployed or working less than full-time
AND
Seeking, but unable to find, full-time employment in any field or at any salary or responsibility level, and registered with a public or
private employment agency (school placement offices and “temporary agencies do not qualify)
...be eligible for unemployment benefits
OR
To be eligible the borrower must…
![Page 29: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/29.jpg)
Economic Hardship Deferment
To qualify, the borrower must meet one of the following criteria…
• Receiving an economic hardship deferment in the Federal Direct Loan or Federal Perkins Loan Program
• Receiving/received payments under a federal or state public assistance program
• Peace Corps volunteer• Working full-time and monthly income does not exceed
the larger of the federal minimum wage rate or 150% of the poverty guideline.
![Page 30: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/30.jpg)
LOAN FORGIVENESS
![Page 31: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/31.jpg)
Public Service Forgiveness - Direct Loans
• Available for Direct Loans only (Not FFELP)
• Work full time (at least 30 hours) for the government or a qualifying non-profit organization - 501(c) (3)
• Make 120 on time payments (does not need to be consecutive)
• Payments must be made under the IBR, ICR or 10 Yr. Standard repayment plans.
• Balance is forgiven
• Submit forms annually to the Department of Ed
![Page 32: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/32.jpg)
Stafford & Plus - Additional Forgiveness
• Remaining balance after 25 years of qualifying payments.
• Taxable income to the borrower in the year the loan forgiveness occurs
![Page 33: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/33.jpg)
Discharge• Total and Permanent Disability Discharge• Death
Student loans are usually not
dischargeable due to bankruptcy
![Page 34: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/34.jpg)
CONSEQUENCES OF DEFAULT
![Page 35: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/35.jpg)
The Perils of Default• 270 Days Past Due = Default
• You can’t walk away from making your payments.
• Consequences:• Wages and Federal and State tax refunds garnished• Additional costs to you (collection charges, late fees, etc.)• Professional licenses withheld• Loss of eligibility for future federal financial aid and loan
deferments• Full amount of loan comes due
![Page 36: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/36.jpg)
Avoiding DefaultKeep good recordsOpen and Read your mail.Notify lenders/servicers of name/address
changesPrioritize your debts: pay off most expensive debt
firstTake advantage of deferment options if you qualify
![Page 37: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/37.jpg)
YOUR RIGHTS & RESPONSIBILITIES
![Page 38: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/38.jpg)
Your Rights A copy of your Promissory Note.
Repayment Disclosure Statement with detailed information about interest rates, fees, your balance, and repayment options.
Grace period and deferments (if you qualify)
Loan forgiveness under certain circumstances
Graduated or income-based repayment plan (if you qualify)
Prepayment without penalty
Notice if lender assigns or sells your loan
Questions answered
![Page 39: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/39.jpg)
Your Responsibilities Repay your loan.
Make your payments on time even if you don’t receive a bill.
Notify your loan holder or servicer immediately of any change to your name, address, and other personal identification information.
Notify your lender if enrollment status changes.
Complete exit and entrance interviews.
Read and understand your loan documents.
Ask for help if you need it.
![Page 40: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/40.jpg)
Resolving Disputes – Federal LoansFederal Student Aid Ombudsman’s Office
U.S. Department of EducationFSA Ombudsman
830 First Street, NE, Fourth FloorWashington, DC 20202-5144
[email protected]: 877-557-2575 (toll free)
![Page 41: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/41.jpg)
What the Ombudsman Office can do:
Research your problem in an impartial and objective manner and will try to develop a fair solution
What the Ombudsman Office cannot do:
x Does not have the authority to impose a solution
![Page 42: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/42.jpg)
TAX BENEFITS
![Page 43: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/43.jpg)
Student Loans and Your Taxes
American Opportunity Credit
Lifetime Learning Credit
Student Loan Interest Deduction
Tuition & Fees Deduction
![Page 45: EXIT LOAN COUNSELING](https://reader035.fdocuments.in/reader035/viewer/2022062410/568163c1550346895dd4e403/html5/thumbnails/45.jpg)
Questions