Know Your Loan Portfolio

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1 Free Online Resource (PDF download) Agenda Student and Strategies Prepared f the Graduating Class of Nicole Knight, MBA AAMC Spring Education Debt Manager (EDM) Know Your Loan Ptfolio After Graduation Strategies Other Considerations Disclaimer: All infmation and estimates are based on AAMC interpretation of federal regulations as of January and are subject to change. These are estim ates only. Students should contact their servicer(s) to discuss exact loan balances and repaym ent options. Student Loan Management - Life Cycle Class of 2016 Indebtedness Refer to page 3 Median MD School Debt: $190,000 Know Your Loan Ptfolio by May Find loans and check f grace May Graduate Nov End of Dec Pay not Every Fall Re-up in chosen path Finally Pay in Full ess PUBLIC $180,000 PRIVATE $200,000 Source: AAMC 2016 Graduate Questionnaire (GQ) 76% of Got class Private rept having Loan educational Debt? debt 47% rept debt see of page $200, higher Source: 2016 Graduate Questionnaire (GQ). Class of 2016 Indebtedness Refer to page 3 Finding Your Federal Refer to page 6 University of Michigan Medical School Education Debt Education Debt (median)* $ 150,000 To access, provide your FSA ID, including : Username & Passwd Credit Card Debt* (median)* $5,000 Refer to page 61 Source(s): 2016 LCME I-B data, 77% w/ ed debt. *2016 Graduate Questionnaire (GQ) F questions, visit 1

2 Subsidized Versus Unsubsidized Fixed Rates f the Class of Refer to pages Refer to page 12 Subsidized Unsubsidized Direct Subsidized Direct Unsubsidized Perkins * Primary Care Direct PLUS Private 4444 Institutional 4444 f Disadvantaged Students* Consolidation (some) (underlyng subsidized loans) * s u b s id y a n d d e fe rm e n t rig h ts lo s t d u rin g c o n s o lid a tio n Browed + Association of American Medical Colleges. All rights reserved. ( balance) What You Owe $150,000 + Tip PERKINS* PERKINS* DIRECT UNSUBSIDIZED DIRECT UNSUBSIDIZED DIRECT UNSUBSIDIZED DIRECT UNSUBSIDIZED DIRECT PLUS DIRECT PLUS DIRECT PLUS DIRECT PLUS * P e rk in s, P C L a n d L D S L o a n s a re d is b u rs e d a t a fix e d ra te o f 5 %. A ll lo a n s s h o w n h a v e a fix e d in te re s t ra te. If Have the RIGHT to... Refer to page 15 $22,700 (larger principal balance) PERKINS* Capitalization = PERKINS* (underlyng unsubsidized loans) Consolidation Capitalization M M M (some) Institutional M = pay the interest befe it capitalizes. $172,700 Capitalization f the Class of Capitalization f the Class of Refer to page 15 When sending voluntary payments: 1) Send as a separate payment Instruct to APPLY NOW Specify WHERE to apply it (high interest rate loans are the priity) 2) Verify payment was applied as requested When possible, pay the interest on your loans befe they capitalize! /mo during Res. $140K $21K $161K ~$800/mo $140K $21K $161K ~$800/mo $180K $27K $207K ~$1,000/mo $180K $27K $207K ~$1,000/mo $200K $31K $231K ~$1,100/mo $200K $31K $231K ~$1,100/mo $0K $40K $290K ~$1,450/mo $0K $40K $290K ~$1,450/mo $300K $49K $349K ~$1,800/mo $300K $49K $349K ~$1,800/mo Browed /mo during Res. Browed 2

3 Capitalization f the Class of Capitalization f the Class of Capitalization f the Class of Browed /mo during Res. Browed /mo during Res. Browed /mo during Res. $140K $21K $161K ~$800/mo $180K $27K $207K ~$1,000/mo $200K $31K $231K ~$1,100/mo $0K $40K $290K ~$1,450/mo $300K $49K $349K ~$1,800/mo $140K $21K $161K ~$800/mo $180K $27K $207K ~$1,000/mo $200K $31K $231K ~$1,100/mo $0K $40K $290K ~$1,450/mo $300K $49K $349K ~$1,800/mo $140K $21K $161K ~$800/mo $180K $27K $207K ~$1,000/mo $200K $31K $231K ~$1,100/mo $0K $40K $290K ~$1,450/mo $300K $49K $349K ~$1,800/mo Capitalization f the Class of Student Loan Management - Life Cycle Browed /mo during Res. $140K $21K $161K ~$800/mo $180K $27K $207K ~$1,000/mo $200K $31K $231K ~$1,100/mo After Graduation by May Find loans and check f grace May Graduate Nov End of Dec Pay not Every Fall Re-up in chosen path Finally Pay in Full ess $0K $40K $290K ~$1,450/mo $300K $49K $349K ~$1,800/mo Periods Begin at Graduation Refer to page 16 When Are Your First s Due? Refer to page 17 Student Loan Management - Life Cycle The path f some loans by May Find loans and check f grace May Graduate Nov End of Dec Begin s Postpone Every Fall Re-up on chosen path Finally Pay in Full ess 3

4 Decision Time: Graduation Postponement Options Refer to pages Postponement Options Refer to page 18 Make s Postpone s Contact the loan servicer to apply Fbearance Subsidized loans are interest free accrues on unsubsidized loans Deferment Contact each loan servicer to apply Strict requirements to qualify Request 30- days befe needed NOTE: F me details, to request a deferment fbearance, contact each loan servicer. Postponement Options Postponement Options Fbearance Refer to page 19 Refer to page 19 Medical Fbearance Situation after a 4-year residency accrues on all loans will capitalize Contact each loan servicer to apply Request 30-days befe needed Postpones payments in annual increments Capitalization may occur at end of residency (if increments occur back-to-back throughout residency) An option f medical residents/interns Balance after Balance TOTAL $173K + $39K = $212K NOTE: F me details, to request a deferment fbearance, contact each loan servicer. NOTE: Request increments in a timely manner to avoid unnecessary and additional capitalization. Medical /Internship Fbearance Is it a Good Option f Medical Residents and Interns? Know Your Numbers Med Organizer and Calculat BEST f You, IF NOT f You, IF Seeking to REDUCE stress and financial obligations Seeking Public Service Loan ess (PSLF) s Desiring to INCREASE disposable income Seeking an Driven (IDR) plan fgiveness A free tool f MD students and graduates!! Have PRIVATE loans with higher interest rates Want to begin repayment immediately aamc.g/medloans Association of American Medical Colleges. All rights reserved. 4

5 Student Loan Management - Life Cycle s Refer to pages s Refer to pages Traditional Driven by May Find loans and check f grace May Graduate Nov End of Dec Begin s Postpone Every Fall Re-up in chosen path Finally Pay in Full ess Standard Monthly payments f the entire repayment term are calculated up-front Extended and disclosed to you. Graduated Based on 150k median medical school debt.. PGY1 stipend of $54,600 and a family size of one. $ 1,900/mo $ 1,100/mo $ 800/mo Based on a PGY1 stipend of $54,600 and a family size of one. * New Browers on after July 1, 2014 that select IBR will receive payment amounts equal to that of. $710/mo 20% Contingent (ICR) Based s are based (IBR)* on $460/mo 15% household income (AGI) and family size - $300/mo $300/mo 10% 10% Pay As recalculated You Earn () annually. Earn (RE) s - Terms Refer to pages $710/mo $460/mo $300/mo years years 20 years Driven Contingent (ICR) Based (IBR)* Earn () IDR s Eligibility: Refer to pages ICR IBR Perkins and LDS loans are not eligible unless included in a Direct Consolidation Loan IDR s Eligibility: Financial Need Refer to pages ICR IBR Must have a Partial Financial Hardship (PFH) Show Need Show Need $300/mo years Earn (RE) RE RE Based on a PGY1 stipend of $54,600 and a family size of one. * New Browers on after July 1, 2014 that select IBR will receive payment amounts equal to that of. The Test f a PFH Refer to page 24 Partial Financial Hardship (PFH) Standard $1,900 / mo > $460 (IBR) IBR $300 () Must have PFH to enter into IBR Can remain in IBR in subsequent years, even without a PFH Must submit annual documentation Max payment in IBR is the Standard amount (determined when entering the plan) Based on indebtedness of 150K with a PGY1 stipend of $54,600 and a family size of one. IDR s Eligibility: New Browers Only Refer to pages ICR IBR RE Show Need Show Need NEW Brower Must be a new brower New Brower Defined Refer to page 27 Two Requirements 1) No outstanding loans on October 1, 2007 paid-off all outstanding loans befe receiving a new loan on after 10/1/07 AND 2) Received a Direct Loan disbursement on/after October 1,

6 Pay As You Earn (RE) Driven (IDR) Refer to page 28 Are payments even possible during residency? IBR - - RE All Browers = 10% of Discretionary Income, Changes Yearly Based On 50% of interest Income and Family Size not covered by payment will be Capitalizes ess subsidized When You Leave of $0 f 12 Months Based on Previous Year s Household AGI No Cap on Subsidy Here s how it is possible IF you budget! Self Certify No Significant Change Tax Return of Zero is Accepted Association of American Medical Colleges. All rights reserved. Self Certify Zero Taxable Income Association of American Medical Colleges. All rights reserved. Me Resources aamc.g/first Med Financial Aid Organizer and Fact Sheets Calculat Videos and Podcasts saltmoney.g/aamc Association of American Medical Colleges. All rights reserved. #2) Do You to Pay? aamc.g/michigan The Best Strategies Questions? FIRST@aamc.g Develop Your Own Best Strategy It s not about the best one It s about what fits with your life and financial goals Three Fundamental Fces of Each WILL go depending on your decisions MONTHLY COST Choices in one area WILL impact the others Dr. Internal Medicine (General) Student Loan Debt: $190,000 Career: Internal Medicine Length: 3 years TOTAL COST FORCES TIME Debt: $190,000 Y- 1 Salary:$180,000 6

7 Dr. Internal Medicine Dr. Internal Medicine Dr. Internal Medicine Earn () 20 (RE) 21 Based (IBR) 15 Student Loan Debt: $190,000 2,200 2,200 $377k $40k* $2,200 $346k $0 X 2,400 $395k $0 X Earn () 20 (RE) Based (IBR) 20 Student Loan Debt: $0,000 2,200 2,400 $377k $6k* X $516k $145k* $2,200 $533k $0 X 3,200 Student Loan Debt: $3,000 Earn () 20 (RE) Based (IBR) 2,200 2,400 $377k $468k* X $516k $395k* $2,200 $774k $82k* X 3,700 Dr. ObGyn Dr. ObGyn Dr. ObGyn Student Loan Debt: $190,000 Career: Obstetrics & Gynecology Length: 4 years Debt: $190,000 Salary:$230,000 Earn () 18 (RE) Student Loan Debt: $190, ,400 2,600 $385k $0 X $352k $0 X Based (IBR) 16 $2,400 $363k $0 Student Loan Debt: $0,000 Earn () 20 (RE) 23 Based (IBR) 17 2,800 3,000 $3,000 $497k $0 3,200 $470k $131k* X $557k $0 X Dr. ObGyn Dr. Cardiology Dr. Cardiology Student Loan Debt: $3,000 Earn () 20 (RE) Based (IBR) 21 2,800 3,200 $470k $373k* X $652k $232k* $3,000 $745k $0 X 4,200 Student Loan Debt: $190,000 Career: Cardiology Length: 6 years Debt: $190,000 Salary:$330,000 Student Loan Debt: $190,000 Earn () 20 $2,400 $410k $0 X (RE) 14 $3,100 3,600 $330k $0 X Based (IBR) 19 $2,400 $399k $0 7

8 Dr. Cardiology Earn () 20 (RE) 18 Student Loan Debt: $0,000 $3,100 3,200 $3,100 3,900 $558k $0 X $481k $0 X Based (IBR) 20 $3,200 $558k $0 X Dr. Cardiology Earn () 20 (RE) 22 Student Loan Debt: $3,000 $3,100 4,100 $3,100 4,300 $622k $186k* X $719k $0 Based (IBR) 21 $4,200 $760k $0 X The FIRST Stop Refer to page 5 A tool f graduates!! Med Organizer and Calculat Loan ess (PSLF) Public Service Loan ess Other Considerations Refer to pages Qualifying s + Qualifying Wk Public Service Loan ess Direct Only Standard RE Qualifying s Qualifying Employment Public Service Public Service Loan ess Pediatrics Public Service Loan ess Pediatrics Loan ess Taxable? Dr. Debt: Pediatrician $183,000 - Debt: $190,000, starting salary $145,000 Dr. Debt: Pediatrician $183,000 - Debt: $300,000, starting salary $145,000 Including Earn () 10 (RE) 10 $1,200 $1,300 $1,200 $1,300 $116K $116K $229K $216K Including Earn () 10 (RE) 10 $1,200 $1,300 $1,200 $1,300 $116K $116K $446K $397K Yes Income Driven s No Public Service Loan ess But This this amount one does does higher NOT the debt, change higher with the HIGHER fgiveness debt 8

9 Loan ess (PSLF) Loan ess and Assist. Consolidation vs. Refinancing Refer to pages Want to know me? federal private Should I consolidate refinance? aamc.g/repayasst aamc.g/stloan aamc.g/stloan Reasons to Consolidate Should You Consolidate? Refer to pages Refer to pages Should I Refinance? Refer to pages Reduce # of Servicers Eligibility f RE Eligibility f PSLF aamc.g/first/shouldirefinance aamc.g/first/consolidatequiz Eligibility f IBR The Next Steps Taxpayer Relief Act of 1997* Refer to page 60 Suppt Along The Way Refer to page 62 feedback.studentaid.ed.gov Single $65,000 less Partial Deduction $65,001 to $79,999 Married filing Jointly $130,000 less $130,001 to $159,999 Full Deduction NO Deduction $160,000 me $80,000 me aam c.g/advocacy/m eded Financial Aid Office & Program s Max student loan interest deduction: $2,500/year May be eligible: Voluntary payments & capitalization aamc.g/nextsteps aam c.g/first * S tu d e n t L o a n In te re s t D e d u c tio n fo r 1 / Med Organizer & Calculat aam c.g/m edloans studentloans.gov saltm oney.g/aamc 9

10 An investment in knowledge always pays the best interest Presentation Feedback: aamc.g/michigan Questions? 10