Federal Loan Borrowers REPAYMENT INFORMATION & STRATEGIES

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1 Federal Loan Borrowers REPAYMENT INFORMATION & STRATEGIES

2 Types of federal loans Direct Unsubsidized Loan (Direct Stafford Unsubsidized, William D. Ford Federal Direct Loan) Direct GradPLUS Loan (Direct PLUS Loan, Direct Plus Graduate) interest has been accruing on these loans while you were in school interest rates are fixed over the life of the loan, but vary based on loan type and year borrowed both have 6 month grace periods (period between last date of attendance and when you must start repaying the loan) any accrued interest will capitalize at the end of the grace period both qualify for Income- Driven Repayment and Public Service Loan Forgiveness Other types of federal loans: Perkins loan (Federal Perkins Loan) Direct Subsidized Loan (Direct Stafford Subsidized) FFEL loan (FFEL Stafford)

3 What types of loans do I have? If you aren t sure what types of loans you borrowed while in attendance at Harvard Chan or at a prior institution, log in to NSLDS to review: 1. types of loans 2. individual loan interest rates 3. loan servicer information will not contain information about private or institutional loans

4 Repayment Options & Standard Plans (no forgiveness) Deferment 1. An approved period of time when a student is not required to make payments on their loans Subsidized loans will not accrue interest Interest will capitalize on unsubsidized loans if not paid 2. Requires documentation Graduate fellowships Economic hardship Military duty Forbearance 1. Temporarily cannot meet repayment schedule At the discretion of the loan servicer Interest will accrue on all loans during this period Interest will capitalize if not paid Standard Repayment Plan (10 years) o Fixed amount each month; minimum $50 Graduated Repayment Plan (10 years) o Payments start out low, then increase every two years Extended Repayment Plan (25 years) o o Minimum $30,000 debt Fixed amount per month or Graduated monthly payments that will increase every two years There is no prepayment penalty for federal loans so you can be on any one of these plans and make higher than required monthly payments or make a large lump sum payment at any point to pay off your loans earlier than the stated repayment period

5 Income-Driven Repayment Plans If you need a lower monthly payment than the standard plan, you should always consider an IDR before the graduated or extended plan options No eligibility criteria (besides Direct loans): 1. Income-Contingent Repayment (ICR) 20% of discretionary income Forgiveness after 25 years 2. REPAYE 10% of discretionary income Forgiveness after 25 years for grad/professional loans Payment can be greater than 10 year standard plan Partial Financial Hardships: 3. Income-Based Repayment (IBR) 10% of discretionary income & forgiveness after 20 years for new borrowers as of July % of discretionary income & forgiveness after 25 years for borrowers with existing loan balances prior to July PAYE New borrower as of October % of discretionary income Forgiveness after 20 years Consider loan consolidation if not all of your federal loans are direct loans You have a partial financial hardship if your payments under the standard plan would be more than under IBR or PAYE Resubmit income-driven repayment form annually Current tax law says that the forgiven loan balance after years is taxable

6 Public Service Loan Forgiveness You want to be on an income-driven repayment plan if you are pursuing PSLF If you think you are going to pursue a career in public service and have a high loan balance, PSLF may be a good option for you. You can use the Repayment Estimator on studentloans.gov to determine if your loan balance is high enough You will need to make 120 qualifying payments (10 years of payments) While employed full-time by a non-profit that is tax-exempt under 501(c)(3) of the Internal Revenue Code or a government agency (federal, state, local, tribal) On the right type of loan Direct loans only (any loan you borrowed while at Harvard Chan would qualify, unless you have a Perkins loan) On the right repayment plan Income-Driven plans all qualify, payments made under the Standard Repayment Plan (10 years, non-graduated) also qualify but you will need to be on income-driven at some point On time payments for the full amount due (but not more!) Other considerations The 120 qualifying payments do not have to be consecutive Consolidation resets Public Service Loan Forgiveness Don t pay ahead! If you get in paid ahead status on your loans, subsequent payments will not count

7 Loan Servicers the Federal Government owns your loan, but they outsource who collects the payments to private companies. If you have issues with your loan servicer, you can reach out to Federal Student Aid Check Federal Student Aid for most up-to-date list of loan servicers. Never ignore communication from your loan servicer! There are options if you aren t able to make your monthly payment. You can check NSLDS if you are not sure who your loan servicer is. Our office can also look this up for you. If you took out federal loans for undergrad or another graduate degree, you likely have the same servicer for your Harvard Chan debt If you pursue Public Service Loan Forgiveness, you will be moved to FedLoan Servicing if they are not already your loan servicer

8 Default The consequences for defaulting on federal loans are more severe than on other types of debt making it extra important to avoid. Default occurs when you are more than 270 days (9 months) overdue on your loan payments (delinquent) Entire unpaid balance becomes due & payable Reported to national credit agencies Garnish wages; take all/part of federal tax refund May be sued; pay collection fees and penalties, court costs, attorney fees No longer eligible for other federal student aid or federal benefit programs No longer eligible for loan deferments If you can t make your monthly payment amount: Are you on the lowest repayment plan option? Get on an income-driven plan if you are not already Are you eligible for deferment? Review the eligibility criteria for deferment, which includes economic hardship You do not have to meet eligibility criteria to request forbearance, but it is up to the discretion of your loan servicer Review your budget. Are you focusing on other debt over your student loans?

9 Requirements Loan exit counseling through Federal Student Aid: 1. navigate to studentloans.gov 2. log in using your FSA ID (same as FAFSA, entrance counseling, etc.) 3. be sure to select Harvard School of Public Health from the list of schools (not Harvard University)

10 Additional Resources Equal Justice Works aimed at law students, but resources around student debt & PSLF (also does advocacy work) TISLA free student loan advice, started by a former financial aid administrator Offers support if you are having an issue with your loan servicer or an issue around PSLF The Office of Financial Aid we continue to provide counseling to alumni. Feel free to call, or stop by! You can also follow us on or like our Facebook Page. Keep in touch Federal Resources Studentaid.ed.gov information on PSLF (including Employment Certification Form), other information like interest rates, differences between repayment plans Studentloans.gov exit counseling, repayment estimator, income-driven repayment plan application form (can be completed online) nslds.ed.gov review all your federal loans, check interest rates, find loan servicer Information on other forgiveness programs (non-federal): hsph.me/forgive & hsph.me/223