STUDENT LOAN MANAGEMENT & REPAYMENT STRATEGIES

UCSD Health Sciences Financial AidAna NastichFinancial Aid CounselorSTUDENT LOAN MANAGEMENT & REPAYMENT Strategies

Educational debt *Per American Association of Colleges of Pharmacy Pharmacy Graduating Student Survey 2011Please note: 2011 UCSD Average Indebtedness was $86kAverage Indebtedness - Class of 2012Pharmacist national wages

Top paying industriesTop paying statesIndustryAnnual averagePharmaceutical Manufacturing$125,480General Retail Stores$118,630Scientific Consulting$118,490Offices of Physicians$117,750Outpatient Care Centers$117,510StateAnnual AverageAlaska$125,330Maine$125,310California$122,800Vermont$122,490Alabama$119,810*Per U.S. Bureau of Labor Statistics - Occupational Employment StatisticsAverage Pharmacist salary is $112,160topicsKNOW YOUR LOAN PORTFOLIO

HOW TO POSTPONE PAYMENTS

REPAYMENT PLANS

OTHER CONSIDERATIONS

QUESTIONSKNOW YOUR LOAN PORTFOLIOFinding your Federal Loans

www.nslds.ed.govKnowing your servicerNamePhone numberWebsiteDirect Loan Servicing(800) 848-0979www.dl.ed.govGreat Lakes(800) 686-6919www.mygreatlakes.orgNelNet(888) 486-4722www.nelnet.comSallieMae(800) 722-1300www.saliemae.comPHEAA(800) 655-3813www.myfedloan.govACS**(800) 826-4470www.acs-education.com**For Perkins and HPSL Loans Only!Interest Rates Stafford & Direct Loans 6.8% 6.8%(disbursed on or after 7/1/06) Fixed FixedStafford Loans* 1.88% 2.48%(disbursed between 7/1/98 6/30/06) Variable VariableGrad PLUS Loans 8.5% 8.5% Fixed FixedDirect PLUS Loans 7.9% 7.9% Fixed Fixed Perkins Loan 5.0% 5.0% Fixed FixedHPSL 5.0% 5.0% Fixed FixedConsolidation Loans Fixed rate - based on weighted average interest rate Private Loans Typically Variable Check Prom Note

In school, Grace & DefermentForbearance & RepaymentRepayment StrategyPrioritize repayment efforts pay the most expensive debt FIRST!CapitalizationAddition of unpaid interest to the principal

$160,000$22,670Principal$182,670InterestLarger Principal+=Repayment StrategyPay the interest on unsubsidized loans PRIOR to capitalization!HOW TO POSTPONE PAYMENTSGrace Period- A period after graduation when payments are not required

Automatically granted on sub and unsub loans and Direct PLUS Loans disbursed on or after July 1, 2008

- Interest does not accrue on subsidized loans

- Sub and unsub loans 6 month period

- Perkins loan 9 month period

Deferment- A period when payments are not required

- Must apply and qualify

- Interest does not accrue on subsidized loans

- Unsubsidized loans continue to accrue interest

Forbearance- A period when payment are not required

- Must request from the lender/servicer

- Interest accrues on sub and unsub loans

- Many types (administrative, discretionary, mandatory)

REPAYMENT PLANSRepayment plansDetermines the payment amount and interest cost

Standard repayment planMonthly payment stays essentially the same throughout repayment10 year repayment periodAutomatically selected if you dont choose another plan

Advantages Typically yields the lowest overall loan costConsiderations Higher payment may be more difficult to manage if starting income is low BEST OPTION FOR: Borrowers whose primary goal is to minimize the repayment time period and the total interest cost of their loan debtExtended repayment planAllows up to 25-year repayment termLow monthly paymentTotal loans must be more then $30,000

Advantages Provides a lower monthly payment for the entire repayment termConsiderations Longer repayment term typically results in higher overall interest costsBEST OPTION FOR: Borrowers who need long-term repayment reliefGraduated repaymentMonthly payment adjusted at one or more predefined intervalsPayment must cover accruing interestNumber of intervals and frequency of adjustment can vary by lender

Advantages Provides a low initial monthly payment Offers predictable payment increasesConsiderations Lower up-front payment may cause higher interest costs Review payment amounts for later tiers to ensure the payments will be affordable BEST OPTION FOR: Borrowers seeking short-term repayment relief from high loan payments but expect an increase in their income in the next few yearsRepayment FactThe lower the monthly payment, the higher the total interest cost!Income-based repayment planMonthly payments are based on household AGI and family sizePartial interest subsidy during the first 3 yearsUnpaid interest does not capitalize when annual paperwork is filed timely and borrower demonstrates a PFH (partial financial hardship)

Advantages Provides a flexible monthly payment associated with your incomeConsiderations longer repayment term typically results in higher overall interest costsBEST OPTION FOR: Borrowers that have a lower income or are experiencing a financial hardship and need assistance making their monthly paymentMore on IBRAfter 25 years of qualifying payments, any remaining debt will be forgivenYou may choose IBR if your federal student debt is high relative to your AGIHow to apply:Contact your lender to requestInform lenders, annually, of family sizeGive lenders permission to access tax returnsDemonstrate a Partial Financial HardshipIBR FormulaPayment based on the 15% of income that exceeds 150% of the poverty line for a borrowers family size

Example:

Family size: 1 (single)

150% of 2010 Poverty Guideline: $1354

Income: $47,716 ($3976 monthly)

IBR FormulaMonthly Income150% of poverty lineAvailable incomeMonthly Payment-xIBR Monthly Payment Amounts as of January 2012

http://studentaid.govIBR calculators

www.finaid.orgwww.IBRinfo.orgIncome-contingent repayment planMonthly payments are based on household AGI, family size and your total Direct Loan debt

You do not have to demonstrate partial financial hardship

Monthly payment must cover at least the interest due

Payment generally higher than under IBR

BEST OPTION FOR: Borrowers with income too low to afford payments under other repayment plansRepayment plansBased on the original principal balance of $160k entering repayment after 4 years of Pharm school and 6 months grace

$2,210/mo$1,300/mo$1000/mo$610/mo$390/moRepayment StrategyTo reduce the cost of student loans make extra payments!OTHER CONSIDERATIONSConsolidationConsolidationSpecial ConsolidationLoan Forgiveness

Public Service Loan ForgivenessEligible Loans

- Federal Direct Sub and Unsubsidized Stafford

- Federal Direct Consolidation

- Federal Direct Grad PLUS

- Federal Perkins

Public Service Loan ForgivenessQualifying payments

120 payments to Direct Loans made under

- Income-Based Repayment (IBR)- Income Contingent Repayment (ICR)- Standard 10-year Repayment

While simultaneously working in public service

Public Service Loan ForgivenessQualifying work: Full-time (30+hours/week)

- Non-profit, tax exempt, 501(c)(3) organization*

- Federal, state, local or tribal government

- Military Service

- Private organization providing public service

*Includes most medical schools and teaching hospitalsPrivate LoansKeep an Eye on your Credit ReportLate payments, going over credit limits and having too many open accounts will lower your credit scoreCredit score affects your ability to borrow more, get housing or a jobProtect your credit

Free Credit Reportwww.annualcreditreport.com

Avoid Delinquency & DefaultCall your lender as soon as you know you are in troubleFederal Student Loans DO NOT qualify for bankruptcyFederal Student Loans are forgiven only in the case of death or permanent disability

Useful WebsitesLoan Consolidation

www.loanconsolidation.ed.gov

Your Loan Portfolio

www.nslds.ed.gov

IBR Calculators

www.finaid.orgwww.ibrinfo.orgPublic Service Loan Forgivenesshttp://studentaid.ed.govStudent Loan Interest Deductionhttp://www.irs.gov/publications/p970/Loan Repayment Calculatorshttps://apps.usafunds.org/tools/calculators/repaymentFree Credit Reportwww.annualcreditreport.com