Get Your Bearings. Loan Repayment. Keirsten Connors, Loan Office Manager. Get Your Bearings Brown Financial Literacy

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1 Loan Repayment Keirsten Connors, Loan Office Manager

2 Today s Topics Your Loans & Servicers Find your loans Where & when to repay Your Options Repayment Plans Postpone Repayment Cancellation & Forgiveness Consolidation Make a Plan Know your finances Match loan options to financial goals Tips & Resources

3 Your Loans & Servicers Find your loans Federal Loans During exit counseling StudentAid.gov (MyFederalStudentAid) NSLDS Loans Brown Banner Self Service Private Loans Credit Report

4 Your Servicers Where to repay Stafford & PLUS Many different federal servicers Find StudentAid.gov or during online exit counseling Will send you account info by mail & Keep your contact info current Servicers offer online account access Call them with questions

5 Your Servicers StudentAid.gov

6 Where to repay Perkins & Institutional Loans Your Loans & Servicers Repay to Brown Univ. Loan Office (servicer) Will send you account info by mail & Always give the Loan Office your current contact information All account questions & forms handled by Loan Office Brown Office Building (2 nd floor, above Bookstore) (401) or ECSI is our vendor; they provide online system & mail statements

7 Your Servicers

8 Your Loans & Servicers Grace Period Begins when you leave school Payments are not required, but are accepted (no pre payment penalty) Stafford, PLUS, Institutional Loans = 6 months Perkins loans = 9 months Repayment Begins Loans are repaid to a servicer Stafford & PLUS = pay federal servicer Perkins, Institutional = pay Brown Loan Office Interest Accrual Based on the unpaid principal balance Principal balance and accrued interest are tracked separately Simple Daily Interest formula Interest rate / days in year x principal balance = daily interest amount

9 Your Loans & Servicers Stafford & PLUS Unsubsidized & PLUS Loans: Interest began to accrue at disbursement Subsidized: Interest accrues when repayment begins Unpaid accrued interest is added to principal one time when repayment begins (capitalization) Accrued unpaid interest will be displayed during exit counseling Perkins & Institutional Interest accrues when repayment begins Any payments made before interest accrues will be fully applied toward principal

10 Today s Topics Your Loans & Servicers Your Options Repayment Plans Postpone Repayment Cancellation & Forgiveness Consolidation Make a Plan Tips & Resources

11 Repayment Plans Perkins & Institutional Loans Standard Stafford & PLUS Loans Standard Graduated Extended Pay As You Earn Income Based Income Contingent

12 Repayment Plans Standard Same amount each month, highest monthly payment Pro: Accrue/pay least amount of interest Con: May not be affordable Graduated Payments start out small & increase every 2 years Pro: More affordable at first Con: Accrue more interest compared to standard Extended Lengthens repayment from 10 years up to 25 years Can choose either Standard or Graduated Pro: Smaller monthly payments Con: Accrue more interest compared to standard & graduated

13 Repayment Plans Income Driven Plans (Pay As You Earn, Income Based, Income Contingent) Similarities Payments based on income & require annual documentation Payments calculated annually Remaining amounts forgiven after set number of years Forgiven amounts may be considered taxable income Differences Maximum payment amount Maximum length of repayment

14 Repayment Plans Income Driven Plans (Pay As You Earn, Income Based, Income Contingent) Pro Lowest possible monthly payment Loan forgiveness at the end of the repayment term Con In repayment for a longer period Accrue higher amount of interest over time Forgiven amount can be taxable Can be difficult to forecast since income changes

15 Repayment Plans Discretionary income: difference between adjusted gross income and 150% of the poverty guidelines for your family size and state of residence

16 Repayment Plans Compare Repayment Plans during Exit StudentLoans.gov

17 Repayment Plans Repayment Plan FinAid.org

18 Postponing Repayment View details by loan StudentAid.ed.gov or Brown.edu/loans Eligibility Monthly Payment Interest Accrues Deferment Specific situations per promissory note Vary based on loan type (in-school, unemployed, residency) Postponed Only on Unsubsidized Stafford Loans Forbearance Financial difficulty Reduced On all loans & must be paid during forbearance Extends Time to Repay? Yes No payments are recalculated when forbearance ends Automatic? Mandatory? No Must contact your servicer & submit application paperwork No Can handle each loan separately; request for all, some, or none

19 Postpone Repayment

20 Forgiveness & Cancellation Student loan debt can be discharged (cancelled) under certain specific circumstances & for certain programs: Options vary by loan type View details by loan StudentAid.ed.gov Performing qualifying service Teacher Loan Forgiveness for Stafford Public Service Loan Forgiveness for Stafford, PLUS, or Consolidation Perkins Loan Cancellation For teaching, early intervention services, law enforcement or corrections officer, nurse or medical technician, or child and family service. Upon death or total and permanent disability

21 Public Service Loan Forgiveness If you work in public service, you may be eligible to have your federal loans discharged after 10 yrs. Eligibility Qualifying employment employed full-time for 10 yrs in public service position Qualifying payments make 120 on-time payments under PAYE, IBR, or ICR Eligible loans Direct Loans (Stafford, Grad/Professional PLUS, Consolidation) Learn MyFedLoan.org/PSLF

22 Consolidation Combine federal loans into 1 NEW loan Perkins, Stafford, Grad PLUS, LDS Fixed Interest rate (weighted avg. of existing loans) Eligible for income driven repayment plans and/or PSLF Extends repayment Apply at StudentLoans.gov Pros Combines existing loans into 1 NEW loan with 1 Servicer Way to make Perkins eligible for income driven plans or PSLF Lower monthly payment Cons Lose borrower benefits on existing loans (Perkins teacher cancellation, etc) Can t include Private or Institutional Loans Pay more in interest over time

23 Today s Topics Your Loans & Servicers Your Options Make a Plan Know your finances Match loan options to financial goals Tips & Resources

24 Know Your Finances Know Your Finances How far will my salary go in another city? Cost of living by Money.CNN.com

25 Know Your Finances Know Your Finances Budget helps track your income & expenses Estimate income, deductions & take home StudentLoans.gov or SurePayroll.com Cost of living by state@ Money.CNN.com

26 Match Options & Goals Match your loan options to your financial goals Financial Goal: Pay Off Debt Quickly/Pay Least Interest Loan Options: Choose Standard repayment plan Pre-payment: make payments when they aren t required (in-school, grace, deferment) Avoid interest capitalization, pay accrued interest on Unsubsidized & PLUS during grace Pay extra each month Pay off high interest loans first

27 Match Options & Goals Financial Goal: Lowest Monthly Payment Loan Options: Consolidate to combine Stafford & Perkins Allows you to repay Perkins amount using income-driven plan Choose an Income-driven repayment plan (PAYE, IBR, ICR) Apply online at StudentLoans.gov Notify your federal servicer Submit income documentation each year Review Deferment or Forbearance options (vary by loan type) Institutional or private loans (not eligible for federal consolidation or federal repayment plans)

28 Match Options & Goals Financial Goal: Postpone Repayment Loan Options: Deferment & forbearance options vary by loan type Return to school (must be at least ½ time enrollment) Unlimited in-school deferment If original grace period is fully used, repayment will begin immediately after enrollment ends Unemployed or under-employed Americorp has own process online

29 Match Options & Goals Financial Goal: Receive Public Service Loan Forgiveness Loan Options: Consolidate now Choose income-driven repayment plans Do not make extra or early payments Notify your servicer Visit MyFedLoan & begin tracking qualifying payments & employment Institutional or private loans aren t eligible

30 Today s Topics Understand Your Loans Understand Your Options Make a Plan Tips & Resources

31 Tips & Resources Having Trouble Making Payments? Consolidation can lower monthly payments Switch repayment plan Review deferment / forbearance options Contact your servicer(s) for guidance! Loan Office: loans@brown.edu or (401) What s the big deal? Loan status reported to credit bureaus every month Building credit history for better or worse Annualcreditreport.com Consequences of default Late fees Hold on diploma & transcripts Turned over to collection agency

32 Mandatory Loan Exit Counseling Must complete online between April 15 th May 4 th Incomplete = hold on diploma Tips & Resources More than one requirement! Perkins & Institutional: Stafford & Grad/Med PLUS:

33 Tips & Resources To Do List Complete exit counseling (April 15 th May 4 th ) Pay attention to the estimated repayment amounts for each plan Set up online account access with your servicers Update your address, , & phone Select a repayment plan Complete applications to postpone repayment if needed Must apply with each servicer separately Submit residency deferment and forbearance paperwork Mark calendar to submit again in 11 months

34 Tips & Resources Servicer Contacts Brown Univ. Loan Office: or Locate federal servicers: & Loan Details Exit Counseling: & Loan basics & DL repayment plans: & Brown.edu/loanoffice Public Service Loan Forgiveness: Consolidation: Calculators Repayment Estimator: Repayment plan calculators: StudentAid.ed.gov or FinAid.org Interest Capitalization Calculator: Pre-payment calculator:

35 Tips & Resources Personal finance topics CNN Money 101 MyFico.com Income & Expenses Estimate payroll deductions: Cost of living by state: Credit Related Free copy of credit report: Credit score: Budgeting Resources Apps, Calculators & Worksheets (mobile) (mobile) YouCanDealWithIt.com MappingYourFuture.org MoneyUnder30

36 Questions Loan Office or (401)