Grace Period Counseling for Student Loan Repayment Success FAFSAA 2016

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1 Grace Period Counseling for Student Loan Repayment Success FAFSAA 2016

2 Student Loans Today college enrollment increased 20% 2

3 Student Loans Today Student Loan Balances 3

4 Agenda The Grace Period. Set The Stage For Successful Repayment. Your Opportunity To Create Positive Outcomes. Daytona State College. USA Funds School Services. 4

5 The Grace Period 34 CFR ; 34 CFR Subsidized and Unsubsidized Loans Six-month grace period. Begins once no longer enrolled at least half time. Available only once for each loan. PLUS Loans No grace period. May qualify for a postenrollment deferment period. In-school status ends Date entered repayment Enrollment Grace Repayment 6 months Length of repayment varies based on repayment plan. 5

6 The Grace Period 34 CFR ; 34 CFR During the grace period: No payments of principal or interest. No accrual of interest on subsidized loans, except for: Subsidized loans first disbursed between July 1, 2012, and June 30, Borrowers who lost interest subsidy for exceeding the 150 percent limit, for first-time borrowers on or after July 1, Loan holder or servicer confirms: Payment amount. How and when to make payments. After the grace period, the repayment phase begins. Unless deferred, the borrower s first payment usually is due within 60 days of entering repayment. 6

7 Set The Stage For Successful Repayment Preparing for Student Loan Repayment 7 Source: USA Funds Life Skills Course #103: What Do I Need to Know About Repaying My Student Loans?

8 Set The Stage For Successful Repayment Strategy Connect and communicate. Prepare for repayment. Ask about future plans. Explain about options. Examples We re here to help. What is your current contact information? Do you know who your servicer is? Are you ready to start making payments? Is a monthly payment of $xxx going to be affordable for you? Do you have a job? Are you serving in the military? Are you planning to return to school? Do you need to pay less/postpone payments? Who will you contact if you run into trouble later on? 8

9 Set The Stage For Successful Repayment Did you Know? T F A borrower may change repayment plans at any time. T F T F The lowest monthly payment is usually the standard repayment plan. Borrowers usually pay the least total amount of interest on the standard repayment. T F There are five different income-driven plans. T F A majority of borrowers across all school segments are on the standard repayment plan. 9

10 Set The Stage For Successful Repayment Did you Know? T F A borrower may change repayment plans at any time. T F T F The lowest monthly payment is usually the standard repayment plan. Borrowers usually pay the least total amount of interest on the standard repayment. T F There are five different income-driven plans. T F A majority of borrowers across all school segments are on the standard repayment plan. 9

11 Set The Stage For Successful Repayment 80.0% 2013 CDR Repayment Plan Selections % of Repayment Base *Based on sample of school customers 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Standard Repayment Graduated Repayment Income Based Repayment Fixed Payment Pay as You Earn Repayment Extended Repayment Income Contingent Alternative Consolidation Community Colleges Public 4-year Private 4-year Proprietary 10

12 Set The Stage For Successful Repayment 11

13 Set The Stage For Successful Repayment Assumptions 12

14 Set The Stage For Successful Repayment Initial Payment 13

15 Set The Stage For Successful Repayment Maximum Monthly Payment 14

16 Set The Stage For Successful Repayment Interest Paid 15

17 Set The Stage For Successful Repayment Total Amount Paid 16

18 Set The Stage For Successful Repayment Years In Repayment 17

19 Set The Stage For Successful Repayment Help borrowers select the best repayment plan. Encourage use of repayment calculators. Provide information about student loans and managing debt. Repayment Calculator Source: c.html 18 Repayment: What to Expect Source: studentloans.gov

20 Set The Stage For Successful Repayment REPAYE plan differs from Pay As You Earn. For all Direct Loan borrowers. No income requirement to qualify. Exceptions for separated borrowers. ED charges 50% of accrued interest during negative amortization. Forgiveness after 25 years if any graduate level loans. 19

21 Your Opportunity To Create Positive Outcomes Communication Stage 1: Application and First 90 Days Counseling and Orientation Stage 4: Post- Graduation Life Cycle of a Student Stage 2: In-School Period Graduate and Career Counseling Stage 3: Final Year and Program Completion Financial Education and Enrollment Retention Efforts 20

22 Daytona State College Community college serving over 27,000 students. Goal was to decrease loan default through financial literacy. Components: Financial Literacy Awareness Month. Workshop series: Don t Let Student Loans Stress You Out. Student Success course. TRiO Student Support Services. Campus collaboration and support. SGA Partnership. 21

23 Motivation and Campus Buy-in Cohort Default Rate year CDR of 29.6 percent. Wake-up call! Backing from school s president. President supported a college-wide initiative. Invited to present: Executive staff. Departmental faculty meetings. Sessions for faculty during Spring and Fall planning. Promote use of Life Skills in the classroom. Compelling content. Handouts and takeaways. 22

24 23 Motivation and Campus Buy-in

25 24 Motivation and Campus Buy-in

26 Financial Education Activities Present and share resources during faculty departmental meetings. Collaborate with the Student Government Association. Student Success course. Graduation requirement. Now incorporating a financial literacy module. Contact borrowers in grace or delinquent status. 25

27 Financial Education Activities Financial Literacy Awareness Month. Display resources on each of six campuses. Meet students in Academic Support Centers and campus libraries. Teach students how to look up their loan information. 26

28 Financial Education Activities Workshop Series. Don t Let Student Loans Stress You Out. Financial Wellness & Student Loan Forgiveness. Collaboration at student events. Welcome Back. Financial Aid with Waffles. 27

29 Measuring Success 35 DAYTONA STATE COLLEGE 3-YEAR COHORT-DEFAULT RATES DAYTONA STATE COLLEGE NATIONAL DEFAULT RATE STATE (FL) PUB 4YRS+ (NATIONAL) Draft 2013 CDR: 18.0%!!! 28

30 Advice Financial literacy proactively helps prevent default. Encourage a supportive administration and faculty collaboration. Explain the relationship between financial literacy and student success. Research available resources and choose the best option for your students. Ask your students for input. Seek ways to improve. 29

31 USA Funds School Services USA Funds Borrower Connect Advantage TM. Complete default prevention solution that includes awardwinning, patent-pending software; analytics; contact and counseling; robust reporting and tracking. USA Funds Life Skills. Award-winning online financial literacy and student success curriculum that provides measurable results. USA Funds Default Prevention Forum Blog Request for Proposal Tools 30

32 Contact Information Michelle Goldys Daytona State College George R. Covino USA Funds LinkedIn: Thank you! 31

33 A nonprofit corporation, USA Funds works to enhance postsecondary education preparedness, access and success by providing and supporting financial and other valued services.