TAKE THE LEAD DON’T LET YOUR STUDENT LOANS UPSTAGE YOU — EXIT COUNSELING YOUR PROMISE  Know what you promised to do:  Read all forms and documents carefully. R t l t d f t SFS  e urn comp e e orms o .  Understand your rights and responsibilities.  Ask questions . 2 YOUR PROMISE  Master Promissory Note:  Legally binding document. S ifi i ht d ibiliti  pec es your r g s an respons es.  Must be signed in order to receive loan funds.  FFEL Loans:  Borrower’s Rights and Responsibilities.  Notice of Guarantee and Disclosure .  Campus Based Loans 3 YOUR PROMISE  MPN multi-year feature:  Sign once. A th i f t l f d t  u or zes u ure oan un s upon your reques .  Some schools do not use this feature.  You can “opt out” and sign a new MPN for each loan .  Expect a “Plain Language Disclosure” for any subsequent loans. 4 YOUR PROMISE  You promised to repay your loan, even if you:  Don’t complete your program of study. D ’t l t ithi th t d d  on comp e e your program w n e s an ar allotted timeframe.  Are unable to locate employment after completing your program.  Are dissatisfied with or don’t receive the services h d f h h l purc ase rom t e sc oo .  Don’t receive payment coupons or reminders from your lender. 5 YOUR PROMISE  Need specific information?  Master Promissory Note. N ti f G t d Di l  o ce o uaran ee an sc osure.  School records.  Lender guarantor and servicer , .  National Student Loan Data System: www.nslds.ed.gov.  U.S. Department of Education: www.FederalStudentAid.ed.gov. 6 YOUR PROMISE www nslds ed gov 7 . . . YOUR PROMISE www nslds ed gov 8 . . . CONSEQUENCES “Delinquency” results from making late loan payments.  Late charges and fines may be assessed.  Negative mark on your credit record.  Increased risk of default. 9 CONSEQUENCES “Default” results from making no loan payments for 270 consecutive days or more.  Lose eligibility for future federal financial aid.  Lose flexible loan repayment options.  Bad credit.  State-issued licenses can be withdrawn.  Income tax refunds can be withheld.  Wages can be garnished. I te e t ti e t l te  n r s con nu s o accumu a .  Ongoing collection activities, including fees and fines.  Legal action. 10 AFTER DEFAULT  Make on-time, voluntary monthly payments  3 payments – allows federal loans to be consolidated 6 t ll t t k t i t f f d l  paymen s – a ows you o a e cer a n ypes o e era financial aid  Stafford and Perkins loan rehabilitation  9 payments on-time monthly payments  Loan returned to lender Default removed from credit rating  11 SUCCESSFUL REPAYMENT 1. Know who your student loan partners are. 2. Understand the terms of your student loan:  Types of federal student loans.  Loan fees and interest rates. R t ti i d ti  epaymen m ng an op ons. 3. Keep copies of everything. 4 M . anage your money. 5. Ask for help. 12 YOUR PARTNERS  Partners in the process:  Borrower. S h l  c oo .  Lender.  Guarantor.  Servicer.  Secondary market.  U.S. Department of Education: www.FederalStudentAid.ed.gov. 13 YOUR LOAN TERMS  Subsidized Federal Stafford loans:  Undergraduate and graduate students. E ll d t l t h lf ti i d tifi t  nro e a eas a me n a egree or cer ca e program.  Government pays interest during in-school and grace periods.  Borrower responsible for interest payments during repayment. 14 YOUR LOAN TERMS  Unsubsidized Federal Stafford loans:  Undergraduate and graduate students. E ll d t l t h lf ti i d tifi t  nro e a eas a me n a egree or cer ca e program.  Borrower always responsible for interest payments. 15 YOUR LOAN TERMS  Perkins and Nursing Loans  Enrolled at least half time in a degree or certificate program.  Subsidized – Government pays interest during in- school and grace periods.  Borrower responsible for interest payments during repayment. L d i S l P ifi U i i  en er s eatt e ac c n vers ty  Nursing Loan In-school deferment only if enrolled at least half-time in a program leading to a degree in nursing or other advanced nursing training 16 YOUR LOAN TERMS  Grad PLUS Loans  Graduate students. E ll d t l t h lf ti i d t d  nro e a eas a me n a gra ua e egree or certificate program.  Unsubsidized - borrower always responsible for interest payments. 17 YOUR LOAN TERMS  SPU Institutional Loans  Private loan. E ll d t l t h lf ti t S ttl P ifi U i it  nro e a eas a me a ea e ac c n vers y  SPU pays interest during in-school and grace periods.  Borrower responsible for interest payments during repayment.  Lender is Seattle Pacific University  In-school deferment only if enrolled half-time or more at SPU. 18 YOUR LOAN TERMS  Grace period:  Period during which no payment is expected following graduation withdrawal or drop to less than half time , - enrollment  Stafford, Grad PLUS & SPU Institutional: 6 months  Perkins and Nursing: 9 months  Interest subsidy applies.  First payment due 30-45 days after grace period ends.  No penalty for early repayment. 19 YOUR LOAN TERMS Federal Stafford Loan Fees . Origination Fee  One percent for loans first disbursed on or after July 1, 2008. Federal Default Fee  One percent for all loans. SPU Institutional Loan Fee. Origination Fee  Five percent; charged to your SPU student account. 20 YOUR LOAN TERMS Federal Stafford Loan Interest Rates . First Disbursement Undergraduate Graduate Subsidized Unsubsidized Sub/Unsub On or After Stafford Stafford Stafford 7/1/08-6/30/09 6.0% 6.8% 6.8% 7/1/06-6/30/08 6.8% 6.8% 6.8% Prior to 7/1/06 Variable rate not to exceed 8 25% Variable rate not to exceed 9% . . . Interest rate information is available at www.FederalStudentAid.ed.gov. 21 YOUR LOAN TERMS Other Loan Interest Rates. Perkins Nursing and SPU Institutional Loans 5% , Grad PLUS Loans Disbursed on or after July 1 2006 8.5% , 22 YOUR LOAN TERMS  Interest that accrues is capitalized at repayment.  Paying interest while in school saves money. Borrower 1 Borrower 2 $3,500 unsubsidized loan at 6.8% fixed. Paid interest during three-year period in school at $19.83 per month. $3,500 unsubsidized loan at 6.8 percent fixed. Paid no interest during three-year period in school. Interest capitalized at repayment. Total paid while enrolled $714 Total paid while enrolled $0 Amount capitalized $0 Amount capitalized $714 Monthly payment $50 Monthly payment $50 Length of repayment 7.5 years Length of repayment 9.6 years Total cost $4,450 Total cost $5,700 Interest until repaid $950 Interest charges $1 486 , 23 Source: Cost of Interest Capitalization Calculator at www.finaid.org. YOUR LOAN TERMS  Payment methods available:  Coupon books. O li t  n ne paymen s.  Auto-debit from bank account.  Your payment method could affect any borrower benefits your lender offered. 24 REPAYING YOUR LOANS 1. Minimum payments and repayment terms. 2. Repayment plans. 3. Manageable payments. 4. Forgiveness and cancellation. 5. Money management. 6. Debt management strategies. 7. Tax benefits for borrowers. 25 REPAYING YOUR LOANS  Minimum Payments  Stafford and Grad PLUS* Loans $50 *Or the interest due on the loan whichever is greater ,  Perkins and Nursing Loans $40  SPU Institutional Loan $50  Repayment Term:  At least five years  Maximum of ten years 26 REPAYING YOUR LOANS  Loan Repayment Stafford Loans (subsidized and unsubsidized) Standard Repayment, no fees, ten year repayment after 6 month grace period 6.80% 8.25% * Loan Amt No of Payments Minimum Monthly Payment Total Interest No of Payments Minimum Monthly Payment Total Interest $2 000 46 $50 $275 47 $50 $347 , $3,500 90 $50 $971 96 $50 $1,290 $5,500 120 $64 $2,095 120 $68 $2,595 $7,500 120 $87 $2,858 120 $92 $3,539 $10,000 120 $115 $3,810 120 $123 $4,719 $15,000 120 $173 $5,715 120 $184 $7,078 27 *Loans prior to 7/1/06 are variable, rates are adjusted annually July 1st, cap of 8.25%. Source: FinAid.org loan calculator REPAYING YOUR LOANS  Loan Repayment – Grad PLUS 8.50% Loan Amt No of Payments Minimum Monthly Payment Total Interest $2,000 48 $50 $360 $3,500 98 $50 $1,352 $5,500 120 $69 $2,684 $7 500 120 $93 $3 659 , , $10,000 120 $124 $4,878 $15,000 120 $186 $7,318 Source: FinAid.org loan calculator REPAYMENT PLANS  Stafford and Grad PLUS:  Standard repayment. G d t d t  ra ua e repaymen .  Income-sensitive repayment.  Extended repayment .  Income-based repayment (effective July 1, 2009).  Repayment calculators are available online. One resource is: www.finaid.org 29 REPAYMENT PLANS  Example: $15,000 at 6.8 percent fixed rate with $0 fees. Estimated Monthly Total Total Principal Repayment Option Payment Interest and Interest Standard $173 $5,715 $20,715 Graduated (15 years) $86 to $239 $11 263 $26 263 Source: www.finaid.org loan repayment calculators. * B d i $25 000 l l , , Income-sensitive* $83 to $186 $6,125 $21,125 ase on one-year except on at , annua sa ary. 30 REPAYMENT PLANS  Extended Repayment  Loan balance of $30,000 or more  Standard and Graduated Repayment Available  Maximum Repayment Term: 25 years  Example: $40,000 at 6.8% fixed rate with $0 fees. Repayment Option Estimated Monthly P t Total I t t Total Principal d I t t Source: www finaid org loan repayment calculators aymen n eres an n eres Extended* $278 $43,288 $83,288 31 . . . REPAYMENT PLANS  Income-based repayment (IBR).  Partial financial hardship. A l li ti  nnua app ca on.  Gross income.  Family size.  Repayment period may exceed 10 years.  10% interest capitalization cap  May qualify for forgiveness after 25 years.  Tax consequences Available beginning July 1 2009 32  , . REPAYMENT PLANS  Income Based Repayment (IBR)  Payment based on percentage of income 150% of Current New Loan Amount AGI* Poverty Line Disposable Income Monthly Payment* Monthly Payment** $12,500 $25,000 $15,600 $9,400 $144 $117 $50,000 $25,000 $15,600 $9,400 $576 $117 *A subsidized Stafford loan repaid at 6.80 percent interest, assuming the standard repayment plan of 10 years. **A d AGI ith i th h h ld 33 ssume w one person n e ouse o . REPAYMENT PLANS  You have the right to:  Change Stafford and Grad PLUS repayment plans. Sh t t i d  or er repaymen per o .  Pre-pay your loan at any time without fees or penalty.  Assistance from your lender or loan servicer 34 MANAGEABLE PAYMENTS St ff d & P ki  Deferments:  Payments postponed under certain a or er ns Deferment Options  Enrolled at least half time conditions.  Interest subsidy applies. .  Unemployment.  Economic hardship.  Length of time varies by type of deferment. A li i i d  Graduate fellowship program.  Rehabilitation training  pp cat on requ re (not automatic).  Continue to make .  Serving on active duty. 35 payments until notified. MANAGEABLE PAYMENTS  Forbearance:  Temporarily postpone or reduce payments. E t d th t i d  x en s e repaymen per o .  Typically granted for a period up to 12 months, at the discretion of the lender or servicer.  Interest subsidy is not available.  Any unpaid interest that accrues will be capitalized, increasing the total balance due. 36 MANAGEABLE PAYMENTS  Federal Consolidation loans:  Borrowers of qualifying loans, who are in or entering repayment.  Repayment period from 10 to 30 years.  Retains interest subsidy on Stafford loans.  Fixed interest rate based on weighted average, not to exceed 8.25%.  Option to prepay or change repayment plans. 37 MANAGEABLE PAYMENTS Federal Loan Consolidation Pros Cons Combines several loans into one Only certain qualifying loans can be new loan. One lower monthly payment.  Interest rate may be lower included. Lose remainder of any grace period.  Interest rate may be higher .  Interest subsidy still applies, but only to Stafford. N f t lti .  Increases interest charges due to longer repayment period. R d d ti f ll ti  o ees or pre-paymen pena es.  e uce op ons or cance a on and forgiveness. May lose any lender benefits. 38 MANAGEABLE PAYMENTS Loan Amount Interest Rate Minimum Payment Repayment Term Interest Paid Total Paid Stafford $3,900 6.0 Stafford $10,600 6.8 Stafford $2,625 4.21 Total Stafford (1) $17,125 $192.00 120 $5,918.00 $23,043.00 Perkins $4,875 5.0 $51.71 120 $1,319.40 $6,194.40 Total Unconsolidated $22,000 $243.71 120 $7,237.40 $29,237.40 Direct Lending Consolidation (2) Standard Repayment $22,000 5.750 $154.46 240 $15,070.01 $37,070.01 Graduated Repayment $105.42 to $249 75 * $22,000 5.750 . 240 $18,639.18 $40,639.18 Increased Monthly Payments (3) $22,000 5.750 $200.00 157 $9,352.90 $31,352.90 39 (1) Source: Sallie Mae Loan Repayment Calculator. Assumes all Stafford loans serviced by one lender. (2) Source: Direct Consolidation Loan Calculator (3) www.bretwhissel.net/cgi-bin/amortize * Minimum monthly payments increase every two years FORGIVENESS and CANCELLATION  Special repayment and forgiveness options for some borrowers: Milit b fit  ary ene s.  National and community service jobs.  Service in areas of national need .  Teacher loan forgiveness.  New repayment program for civil legal assistance attorneys.  Public Service Loan Forgiveness program (Direct 40 Lending Stafford & Consolidation loans) FORGIVENESS and CANCELLATION  Full cancellation:  Death of borrower. S h l l  c oo c osure.  False certification by school.  Identity theft .  Full or partial discharge:  Total and permanent disability .  Some limited bankruptcy scenarios. 41 KEEP COPIES OF EVERYTHING  Start a file for your loan-related records:  Student loan records in one place. C i f itt d  op es o wr en correspon ence.  Notes of conversations with lender or servicer.  Contact information .  Copies of your MPN.  Copies of repayment schedules.  Copies of deferment forms. 42 TAX BENEFITS FOR BORROWERS  You may be eligible for a federal tax deduction up to $2,500 based on student loan interest you paid. I li it l t thi t b fit  ncome m s app y o s ax ene .  Find out more at www.irs.gov. 43 MANAGE YOUR MONEY  Identify your financial goals.  Develop a realistic monthly budget.  Pay your bills prior to the due date. R d l f l i h  e uce tota cost o oans w t repayment strategies  Keep accurate and well-organized records.  Save for the future. 44 MANAGE YOUR MONEY  Find your spending leaks:  Eating out. E t t i t d ti  n er a nmen an vaca ons.  Gifts and holidays.  Retail therapy $3 lunch X 5 days .  Invisible cash: $15per week X 50 weeks = $750 per year! 45 MANAGE YOUR MONEY  Use spending stoppers:  Leave credit cards at home. W it d h h b k f ATM i t  r e own cas purc ases on ac o rece p .  Resist easy credit.  Eat out less . 46 MANAGE YOUR DEBT  Debt should work for you, not the other way around. D ’ k d b  on t ta e on unnecessary e t.  Know what you owe.  Develop a plan to get out of debt. 47 MANAGE YOUR DEBT Hi h i t t dit d  Understand the debt pyramid: High Cost/Stress g n eres cre car s. Payday loans. Debt past due or in collections. Medium Cost/Stress Affordable car loans. Manageable credit card balances. Home mortgages. Low Cost/Stress Student loans. 48 MANAGE YOUR DEBT  Determine highest priority debt.  Once paid, increase payments on next highest i i pr or ty.  Avoid the minimum payment trap.  Resolve to stay out of debt. 49 MANAGE YOUR DEBT  Review your credit report for accuracy.  Request a free credit report every 12 months:  www.annualcreditreport.com or 877.322.8228.  Credit information is supplied by the three major reporting bureaus: Equifax Experian TransUnion www.equifax.com www.experian.com www.transunion.com (800) 685-1111 P.O. Box 740241 Atlanta GA 30348 (888) EXPERIAN P.O. Box 2002 Allen TX 75013 (800) 888-4213 P.O. Box 1000 Chester PA 19022 50 , , , WHAT IF YOU NEED HELP?  If you run into financial difficulty and can’t make a student loan payment, contact: Y l d  our en er.  Your servicer.  Your guarantor .  Your school. 51 WHAT IF YOU NEED HELP? U S D f Ed i S d L  . . epartment o ucat on tu ent oan Ombudsman: FSA Ombudsman 830 First Street, NE Fourth Floor Washington, DC 20202-5144 Phone: 877.557.2575 Fax: 202.275.0549 fsaombudsmanoffice@ed.gov www.ombudsman.ed.gov 52 WHAT IF YOU NEED HELP? O li  www.FederalStudentAid.ed.gov. b d d  n ne resources:  www.om u sman.e .gov.  www.nslds.ed.gov.  www nela net . .  www.salary.com.  www.truecareers.com.  www.interviewcoach.com.  www.annualcreditreport.com www spu edu/sfs 53  . . REVIEW Q: What legally binding document defines the terms of your loan? A: The Master Promissory Note. 54 REVIEW Q: Do you have to repay your loan if you don’t finish your program of study? A: Yes. By signing a Master Promissory Note, you i i t t d t l if are prom s ng o repay your s u en oan even you don’t finish your program, you are dissatis- fied with your educational experience or you , cannot find a job. 55 REVIEW Q: When will repayment begin on your Federal Stafford loan? A: After you are no longer enrolled at least half time i d ill h i th n a egree program, you w ave one s x-mon grace period before repayment begins. The first payment is due within 30-45 days after the repayment period starts. 56 REVIEW Q: Which of the following statements about defaulting on your student loan is NOT true? D f lt t d f 270 d a. e au means no paymen was ma e or ays. b. Default usually results in additional fees and fines. c Defaulted loans are not reported to credit bureaus . . d. Defaulted loans must be returned to good standing in order to get future federal financial aid. A: (c) Defaulted student loans are reported to credit bureaus resulting in a damaged credit record 57 , . REVIEW Q: List at least three ways to get help if you need it. A: Your resources include:  Your lender.  Your servicer.  Your guarantor. Your school  .  U.S. Department of Education Web site.  U.S. Department of Education Ombudsman. 58 QUESTIONS? Northwest Education Loan Association® 190 Queen Anne Ave N, Suite 300 Seattle WA 98109 , 800.562.3001 www.nela.net Seattle Pacific University Student Financial Services Demaray Hall 10 206-281-2061 / 800-737-8826 www.spu.edu/sfs 59