Understanding Student Loans

Transcription

1 Understanding Student Loans 2018

2 Student Loan Headlines Has Student Loan Debt Reached A Crisis Point? Beyond the Headlines: Is Student Debt Strangling Millennials' Chances for Success? Student Loan Debt In 2017: A $1.3 Trillion Crisis Student debt isn't just annoying it can impact your health in truly terrifying ways Mike Meru Has $1 Million in Student Loans. How Did That Happen?

3 Student Loan Stats Have the 2 nd highest student loan delinquency rate in the nation at 16.38% - Dec 2017 Last year have the highest student loan default rate in the nation at 18.3%

4 Student Loan Stats 2017 graduates nationwide had average student loan debt of $39,400 * 2016 graduates in WV had an average student loan debt of $27,872** * Student Loan Hero **lendedu

5 Things you need to Know What loans do I have? Who has my loans? How much do I owe? When will I begin repayment? What are my options for repaying my loans?

6 Types of Loans Direct Stafford Loans (Subsidized/Unsubsidized) Perkins Loan Nursing Student Loan Private Student Loan Loan Consolidation

7 General Information on Loans Interest rates (variable-fixed) Subsidized vs. Unsubsidized Loan fees Grace period

8 Grace Period Enrolled Repayment Grace

9 Direct Loan & FFEL Repayment Plans Standard Graduated Extended Income-Based

10 Repayment Plans Standard up to 10 years Graduated up to 10 years Extended up to 25 years Income Based years (IBR, PAYE, REPAYE, ICR, ISR) Loan Consolidation up to 30 years

11 Repayment Plan Summary John Smith has $35,000 in Direct Loan debt at an interest rate of 4.66%. His income is $30,000, he is single, and he lives in Indiana. His income increases at a rate of 5% per year. Repayment Plan Initial Payment Final Payment Total Paid Total Paid in Interest Total Time in Repayment Forgiveness 10-Year Standard $366 $366 $43,934 $8, years - Graduated $206 $619 $46,212 $11, years - Extended $199 $199 $59,561 $24, years - Extended Graduated Income- Based Pay As You Earn Income- Contingent $137 $332 $65,102 $30, years - $156 $366 $53,706 $18, yr., 5. mo. $0 $104 $361 $50,699 $28, years $12,920 $240 $315 $49,347 $14, yr., 5. mo. $0

12 Deferments In-school Graduate Fellowship Disability Rehabilitation Unemployment Economic Hardship Military Service Post-Active Duty Student Deferred Interest Accrual

13 Forbearance Stop or reduce payment for up to 12 months Financial hardship Illness Interest will continue to accrue

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16 Loan Forgiveness Teacher Loan Forgiveness Program Public Service Loan Forgiveness Program Civil Legal Assistance Attorney Student Loan Repayment Program Service in Areas of National Need Loan Forgiveness Program

17 Teacher Loan Forgiveness Teach full-time for 5 complete and consecutive years in a Title I school More than 30% of the total enrollment qualify for services under Title I Listed in the annual directory of lowincome schools

18 Teacher Loan Forgiveness Receive up to $5,000 if a highly qualified full-time elementary or secondary teacher Receive up to $17,500 if highly qualified math or science teacher in a secondary school or highly qualified special education teacher

19 Public Service Loan Forgiveness 120 qualifying payments On Direct Loans On qualifying repayment plans While working full-time at qualifying employer Borrower must also be employed by a qualifying organization at the time that the borrower applies for and receives PSLF According to the IRS, the forgiven amount is not treated as taxable income Details about the program: StudentAid.gov/public service

20 Public Service Loan Forgiveness $350 million set aside for those who were in the wrong repayment plan Submitted the Public Service Loan Forgiveness: Application for Forgiveness and had that application denied because some or all of the payments were not made under a qualifying repayment plan for PSLF Worked at least 10 years of full-time employment with a qualifying employer, certified by the employer, and approved by the Department Made 120 qualifying monthly payments under the new requirements for the TEPSLF opportunity while working fulltime for a qualifying employer or employers

21 Public Service Loan Forgiveness Complete the Employment Certification form as soon as possible and every year and every time you switch employers to ensure you are on track to receive forgiveness After 120 qualifying payments, you need to submit the PSLF application to receive the forgiveness

22 Public Service Loan Forgiveness If you consolidate your federal loans, you have to start over on your 120 payments Defaulted loans are not eligible for forgiveness

23 Loan Forgiveness Check with employer if they offer assistance toward student loans Nurse Corps Loan Repayment Program Perkins Loan

24 Taxpayer Relief There is a tax deduction for any interest that you pay on student loans on your federal tax return

25 Delinquency and Default Delinquency begins on the day after due date when full payment not made Loan servicers will begin activities to try to prevent default, including contacting references and sending notices Loan servicers always try to keep the borrower making payments because it will save the borrower time and interest payments in the long run Servicers will provide deferment and forbearance options if needed Default occurs after 270 days of delinquency

26 Consequences of Default Reported to credit bureaus No more eligibility for federal student aid Loan immediately due and payable in full Lose eligibility for repayment plans and deferment or forbearance options Collection agencies will contact borrower Administrative wage garnishment Garnishment of tax refunds

27 Resolving a Default Pay the loan off in full Six consecutive, full, voluntary payments on time Becomes eligible for FSA funds but still in default Nine full, voluntary payments on time within 10 consecutive months Loan Consolidation

28 Loan Servicer Fed Loan Servicing Great Lakes Navient Nelnet Cornerstone Granite State HESC/Edfinancial MOHELA OSLA Servicing

29 Loan Servicer Contact them: If you have questions If your address or telephone changes If you cannot make a payment

30 Be Careful There are companies that prey on people with student loans You should not pay for the benefits that come with federal student loans

31 Discharge Death Total and Permanent Disability Bankruptcy School Closure False Certification or Unauthorized Disbursement by School False Certification Due to Identity Theft Unpaid Refunds by School to Loan Holder

32 What are some of the keys to successful repayment of student loans? Early Intervention Stay in touch with servicer Create an online account on servicer s website Sign up for automatic-debit Understanding temporary solutions vs. long term solutions Choosing the right option and using the assistance appropriately #1 NOT BEING AFRAID TO CONTACT YOUR SERVICER IF YOU NEED ASSISTANCE!

33 Contact Information Federal State

34 Contact Information Brian Weingart, Senior Director of Financial Aid Division of Financial Aid West Virginia Higher Education Policy Commission 1018 Kanawha Boulevard East, Suite 700, Charleston, WV (304)