Repayment Plans. October Kim Wells U.S. Department of Education 1. Agenda. Standard Plan. Default repayment plan Loans eligible for inclusion

Transcription

1 Repayment Plans U.S. Department of Education Agenda Standard Plan Extended Plan Graduated Plan Income-Driven Plans Resources 2 Standard Plan Default repayment plan Loans eligible for inclusion Direct Subsidized Loans Direct PLUS Loans Subsidized Federal Stafford Loans FFEL PLUS Loans Direct Unsubsidized Loans Direct Consolidation Loans Unsubsidized Federal Stafford Loans FFEL Consolidation Loans 3 U.S. Department of Education 1

2 Standard Plan Repayment term = 10 years (except Consolidation) Minimum monthly payment = $50 Monthly payments may be slightly higher but generally pay least over life of loan 4 Standard Plan Consolidation repayment terms If your Total Education Loan Indebtedness is At Least Less Than your Repayment Period will be $7, years $ 7,500 $10, years $10,000 $20, years $20,000 $40, years $40,000 $60, years $60, years 5 Extended Plan Eligibility criteria for DL borrowers No outstanding DL balance as of 10/07/98 or on date obtained DL after that More than $30,000 in outstanding DL Eligibility criteria for FFEL borrowers No outstanding FFEL balance as of 10/07/98 or on date obtained FFEL after that More than $30,000 in outstanding FFEL 6 U.S. Department of Education 2

3 Extended Plan Direct Subsidized Loans Direct PLUS Loans Subsidized Federal Stafford Loans FFEL PLUS Loans Direct Unsubsidized Loans Direct Consolidation Loans Unsubsidized Federal Stafford Loans FFEL Consolidation Loans Monthly payments are a fixed or graduated amount made for up to 25 years generally lower than payments made under Standard and Graduated Repayment Plans 7 Graduated Plan Loans eligible for inclusion Direct Subsidized Loans Direct PLUS Loans Subsidized Federal Stafford Loans FFEL PLUS Loans Direct Unsubsidized Loans Direct Consolidation Loans Unsubsidized Federal Stafford Loans FFEL Consolidation Loans 8 Graduated Plan Monthly payments start out low and increase every two years are made for up to 10 years for all loan types except Direct Consolidation Loans and FFEL Consolidation Loans (between years for Consolidation Loans) will never be less than amount of interest that accrues between payments won t be more than three times greater than any other payment 9 U.S. Department of Education 3

4 Graduated Plan Repayment terms for consolidation loans 10 If your Total Education Loan Indebtedness is At Least Less Than your Repayment Period will be $7, years $ 7,500 $10, years $10,000 $20, years $20,000 $40, years $40,000 $60, years $60, years Income-Driven Repayment (IDR) Plans Four IDR plans Revised Pay As You Earn Repayment Plan (REPAYE Plan) Pay As You Earn Repayment Plan (PAYE Plan) Income-Based Repayment Plan (IBR Plan) Income-Contingent Repayment Plan (ICR Plan) 11 Eligible Borrowers ICR Eligible loan IBR Eligible loan Show need 12 U.S. Department of Education 4

5 Eligible Borrowers PAYE Eligible loan Show need Recent borrower REPAYE Eligible loan 13 Eligible Loan Programs Loan Program ICR IBR PAYE REPAYE Direct Loans X X X X FFELP X Perkins Loans 14 Eligible Loan Type Loan Type ICR IBR PAYE REPAYE Loan received as student X X X X Loan received as parent Consolidation (no underlying parent loans) Consolidation (underlying parent loans) X X X X X 15 U.S. Department of Education 5

6 Payment Amounts Most IDR plans have two formulas--for those that do, borrowers always pay the lesser of the two. Repayment Plan Payment based only on income Payment based on loan debt ICR 20% of discretionary income 12-year standard payment adjusted based on income IBR 15% of discretionary income 10-year standard amount PAYE / new IBR 10% of discretionary income 10-year standard amount REPAYE 10% of discretionary income None 16 Interest Subsidy Benefits ICR IBR PAYE REPAYE REPAYE No subsidy Sub. Loans only Sub. Loans only For sub. loans For unsub. loans Only during negative Only during negative Only during negative Only during negative Only for first 3 years under plan Only for first 3 years under plan For first 3 years under plan No time limit 100% of negative 100% of negative 100% of negative 50% of negative After 3 years, 50% of negative 17 Interest Capitalization IBR ICR PAYE REPAYE While payment is income-based, normal rules are suspended While normal rules suspended, only trigger is conversion to standard plan amount Interest capitalizes when leaving the plan Normal rules apply (upon expiration of deferment/forbearance) Interest accruing due to negative is capitalized annually Capitalization of negative interest is limited to 10% of balance While payment is income-based, normal rules are suspended While normal rules suspended, only trigger is conversion to standard plan amount Capitalization caused by conversion is limited to 10% of balance Interest capitalizes when leaving the plan Normal rules apply (upon expiration of deferment or forbearance) Interest capitalizes when leaving the plan 18 U.S. Department of Education 6

7 Loan Forgiveness IBR: 25 years 20 years is for undergraduate borrowers and 25 years is for graduate borrowers PAYE / new IBR: 20 years IRS: it s taxable ICR: 25 years REPAYE: 20 or 25 years Generally, payments on an IDR plan, 10-year standard plan, or periods of economic hardship deferment count toward forgiveness 19 Billy Borrower Billy Borrower: Is single with no dependents and lives in Georgia Has an AGI of $35,000 that rises at 5% per year Has $50,000 in Direct Loan debt ($23,000 of which is subsidized), all of which has a 6% interest rate Borrowed for graduate school 20 Billy - ICR Year Interest Payment 1 $250 $387 2 $242 $405 3 $231 $410 4 $220 $415 5 $208 $419 6 $195 $424 7 $181 $429 8 $166 $434 9 $150 $ $132 $ $112 $ $91 $ $69 $ $45 $ $18 $ U.S. Department of Education 7

8 Billy old IBR Year Interest Payment Subsidy 1 $250 $217 $15 2 $250 $236 $6 3 $250 $254 $0 4 $250 $273 5 $250 $293 6 $248 $314 7 $244 $336 8 $239 $359 9 $231 $ $222 $ $210 $ $196 $ $180 $ $160 $ $137 $ $112 $ $84 $ $55 $ $24 $ Billy PAYE/ new IBR Year Interest Payment Subsidy 1 $250 $145 $49 2 $250 $158 $43 3 $250 $170 $37 4 $250 $182 5 $250 $195 6 $250 $209 7 $250 $224 8 $250 $240 9 $250 $ $250 $ $250 $ $250 $ $250 $ $250 $ $250 $ $250 $ $243 $ $231 $ $218 $ $202 $ Billy - REPAYE Year Interest Payment Subsidy 1 $250 $145 $77 2 $250 $158 $68 3 $250 $170 $59 4 $250 $182 $34 5 $250 $195 $27 6 $250 $209 $20 7 $250 $224 $13 8 $250 $240 $5 9 $250 $256 $0 10 $250 $273 $0 11 $250 $292 $0 12 $250 $311 $0 13 $249 $331 $0 14 $247 $353 $0 15 $241 $376 $0 16 $233 $400 $0 17 $222 $425 $0 18 $210 $452 $0 19 $195 $480 $0 20 $177 $510 $0 21 $157 $541 $0 22 $133 $574 $0 23 $106 $609 $0 24 $75 $646 $0 25 $40 $685 $0 24 U.S. Department of Education 8

9 Billy All IDR Plans Year IBR ICR PAYE REPAYE 1 $217 $387 $145 $145 2 $236 $405 $158 $158 3 $254 $410 $170 $170 4 $273 $415 $182 $182 5 $293 $419 $195 $195 6 $314 $424 $209 $209 7 $336 $429 $224 $224 8 $359 $434 $240 $240 9 $384 $440 $256 $ $410 $445 $273 $ $438 $451 $292 $ $467 $457 $311 $ $497 $463 $331 $ $530 $469 $353 $ $555 $475 $376 $ $555 $0 $400 $ $555 $0 $425 $ $555 $0 $452 $ $555 $0 $480 $ $0 $0 $510 $ $0 $0 - $ $0 $0 - $ $0 $0 - $ $0 $0 - $ $0 $0 - $ StudentAid.gov/Repayment-Estimator Income-Driven Repayment Plans Application Process 27 U.S. Department of Education 9

10 Income-Driven Repayment Plans Applying: Electronic or Paper Select reason for submitting form Provide information about spouse, if applicable Determine what kind of income documentation to submit Select plan, if submitting form to initially apply Certify family size Submit documentation of AGI or ADOI ADOI = alternative documentation of income; not AGI. 28 Application Process: Spouses Almost all married borrowers provide spouse s income documentation Only used by servicer when relevant Exception for those who are separated or cannot access spouse s income 29 Application Process: Spouses Repayment Plan Married borrower filing jointly Married borrower filing separately ICR Use joint AGI Use borrower s AGI IBR Use joint AGI Use borrower s AGI PAYE Use joint AGI Use borrower s AGI REPAYE Use joint AGI Combine AGI of borrower and borrower s spouse 30 U.S. Department of Education 10

11 Application Process: Spouses A married borrower is not required to provide spouse s AGI if the borrower is: 1 2 Separated from his or her spouse; or Unable to reasonably access income information from spouse 31 Application Process: Spouses (REPAYE) REPAYE If a borrower is separated or unable to reasonably access spouse s income information: The borrower s spouse is not counted in family size If the spouse has eligible loans, the spouse s loans are not considered in the monthly payment amount adjustment 32 Application Process: Income Documentation AGI Filed taxes No significant change Alternative File taxes Significant change Alternative Didn t file taxes 29 U.S. Department of Education 11

12 Application Process: Income Documentation AGI Electronic Application Tax Return Tax Return Transcript Alternative Pay stubs, unemployment benefits, etc. Self-certification of zero income Provide electronically only if zero income 34 Resources Studentaid.ed.gov General information about repayment plans Information sheets Income-Driven Repayment Plans for Federal Student Loans (PDF) Income-Driven Repayment Plans: Frequently Asked Questions (PDF) Federal Student Loans: Repaying Your Loans (PDF) Repayment Estimator Loan Servicers 35 QUESTIONS? Thank You! Zack Goodwin U.S. Department of Education 12

13 ED Contacts Research and Customer Care Center Reach FSA Campus-Based Call Center ez-audit 855.FSA.4FAA 1 number to reach 10 contact centers! COD School Eligibility Services Group CPS/SAIG NSLDS G5 Foreign Schools Participation Division Research and Customer Care Center Nelnet Total & Permanent Disability 37 Training Feedback To improve our training, we ask all participants to complete an online session evaluation Go to Additional feedback about training can be directed to joann.borel@ed.gov 38 U.S. Department of Education 13