Class of 2018! Congratulations! University of Louisville School of Medicine. From the SOM Financial Aid Office. aamc.org/first

Transcription

1 From the SOM Financial Aid Office Congratulations! University of Louisville School of Medicine Class of 2018! 1

2 Student Loans and Repayment Strategies Prepared for the Graduating Class of 2018 Leslie R. Kaelin M.Ed. UofL SOM Financial Aid Director Spring 2018 Disclaimer: All information and estimates are based on AAMC interpretation of federal regulations as of January 2018 and are subject to change. These are estimates only. Students should contact their servicer(s) to discuss exact loan balances and repayment options.

3 Why Do I Need to Know This? 3

4 Oh, That s Why! 4

5 Agenda Know Your Loans What Happens After Graduation Repayment Plans How Repayment Looks in Residency Other Considerations 5

6 Free Online Resource (PDF Download) Education Debt Manager (EDM) aamc.org/first/graduating-edm 6

7 Know Your Loan Portfolio 7

8 Class of 2017 Indebtedness Median MD School Debt: $192,000 PUBLIC PRIVATE $180,000 $202,000 Source: AAMC 2017 Graduate Questionnaire (GQ) 75% of class report having educational debt 48% report debt of $200,000 or higher 8

9 UofL SOM Class of 2018 Debt Estimated Average TOTAL DEBT (ME & Prior Debt) for 127 graduates (28 graduates without ME & Prior Debt not included in average) Class of 2018-$213,291 (Class of 2017-$191,334) Estimated Average MEDICAL SCHOOL DEBT ONLY for 124 graduates (31 graduates without ME Debt not included in average) Class of 2018-$197,948 (Class of 2017-$181,544) 9

10 Master Promissory Note Is a contract with the lender Has a multi-loan feature Details terms and conditions Includes rights & responsibilities 10

11 Rights and Responsibilities Prepay any federal loan without penalty Change repayment plans Request a deferment or forbearance Request a shorter repayment schedule Review the promissory note for all rights 11

12 Rights and Responsibilities Make on time loan payments Make payments despite non-receipt of bill Notify servicer if contact information changes Complete exit counseling Review promissory note for all responsibilities 12

13 A Serious Obligation Manage your Manage debt - your don t debt let it manage don t let you it manage you Student loans must be repaid 13

14 14

15 Loan Discharge 15

16 Finding Your Federal Loans To access, provide your FSA ID, including : Username & Password For questions, visit nslds.ed.gov 16

17 Subsidized Loans vs. Unsubsidized Loans Subsidized Direct Subsidized Perkins Loans* Primary Care Loans Loans for Disadvantaged Students (LDS)* Institutional Loans (some) Consolidation Loans (underlying subsidized loans) Unsubsidized Direct Unsubsidized Direct PLUS Private Loans Institutional Loans (some) Consolidation Loans (underlying unsubsidized loans) * Subsidy and deferment rights are lost in a consolidation loan 17

18 Fixed Interest Rates for the Class of 2018 M M M M PERKINS* 5.0% PERKINS* 5.0% PERKINS* 5.0% PERKINS* 5.0% DIRECT UNSUBSIDIZED DIRECT UNSUBSIDIZED DIRECT UNSUBSIDIZED DIRECT UNSUBSIDIZED 6.21% 5.84% 5.31% 6.0% DIRECT PLUS 7.21% DIRECT PLUS 6.84% DIRECT PLUS 6.31% DIRECT PLUS 7.0% * Perkins, PCL and LDS Loans are disbursed at a fixed rate of 5%. All loans shown have a fixed interest rate. 18

19 Capitalization Addition of unpaid interest to the principal $192,000 $224,200 $30,400 Principal + Interest = Larger Principal 19

20 Repayment Tip When Sending a Voluntary Payment 1) Send as a Separate Payment - Instruct servicer to APPLY NOW - Specify WHERE to apply it (high interest rate loans are the priority) 2) Verify Payment was Applied Accurately Pay the interest on your loans before they capitalize when possible. 20

21 After Graduation 21

22 Loan Repayment Timeline The path for many federal student loans 22

23 When are the First Payments Due? aamc.org/first/timeline 23

24 Postponement Options Contact the loan servicer to apply - Request 30-days before needed - Forbearance Forbearance Deferment Deferment 24

25 Postponement Options Subsidized loans are interest free Interest accrues on unsubsidized loans Contact each loan servicer to apply Strict requirements to qualify NOTE: For more details, or to request a deferment or forbearance, contact each loan servicer 25

26 Postponement Options Interest accrues on all loans Interest will capitalize Contact each loan servicer to apply Request 30-days before needed NOTE: For more details, or to request a deferment or forbearance, contact each loan servicer 26

27 Postponement Options Medical Residency Forbearance Postpones payments in annual increments Capitalization may occur at end of residency (if increments occur back-to-back throughout residency) An option for medical residents/interns NOTE: Request increments in a timely manner to avoid unnecessary and additional capitalization. 27

28 Repayment Plans 28

29 Monthly Payment Estimator aamc.org/first/estimator 29

30 Managing Loans During Residency The Impact of Popular Management Strategies 30

31 Debt Fact The lower the monthly payment, the higher the overall cost 31

32 Repayment Plans Traditional Standard Monthly payments for the entire repayment term are calculated up-front Extended and disclosed to you. Graduated 10 Years 25 Years 10 Years $ 2,460/mo $ 1,420/mo $ 1,100/mo * Based on the median debt from the Class of 2018 at this medical school, a PGY1 stipend of $55,700 and a family size of one. 32

33 Repayment Plans Income-Driven $730/mo $470/mo $310/mo $310/mo Income-Contingent Repayment (ICR) Income-Based Payments Repayment are based (IBR)* on household income (AGI) Pay As You and family Earn (PAYE) size - recalculated annually. Revised Pay As You Earn (REPAYE) Based on the median debt from the Class of 2018 at this medical school, a PGY1 stipend of $55,700 and a family size of one. * New Borrowers on or after July 1, 2014 that select IBR will receive payment amounts equal to that of PAYE. 33

34 What s the Catch? How are these payments possible? 34

35 Income-Driven Repayment (IDR) Plans ICR IBR PAYE 20% 15% 10% Different Payment Amounts REPAYE 10% 35

36 IDR Plans: Payments ICR IBR PAYE No Max Max Max Different Payment Limits REPAYE No Max 36

37 IDR Plans: Terms ICR IBR PAYE REPAYE 25 years 25 years Plans 20 years 25 years Different Term Lengths 37

38 IDR Plans Eligibility: Eligible Loans ICR IBR Eligible Loans Eligible Loans Perkins and LDS loans are not eligible unless included in a Direct Consolidation Loan PAYE Eligible Loans REPAYE Eligible Loans 38

39 IDR Plans Eligibility: Financial Need ICR Eligible Loans Must have a Partial Financial Hardship (PFH) IBR Eligible Loans Show Need PAYE Eligible Loans Show Need REPAYE Eligible Loans 39

40 The Test for a PFH Partial Financial Hardship (PFH) Standard $2,460 / mo Payment > $470 PAYE (IBR) or or IBR $310 Payment (PAYE) Must have PFH to enter into IBR or PAYE Can remain in IBR or PAYE in subsequent years, even without a PFH Must submit annual documentation Max payment in IBR or PAYE is the Standard amount (determined when entering the plan) Based on indebtedness of 192K with a PGY1 stipend of $5,700 and a family size of one. 40

41 IDR Plan Eligibility: New Borrowers Only ICR Eligible Loans IBR Eligible Loans Show Need PAYE Eligible Loans Show Need NEW Borrower REPAYE Eligible Loans Must be a new borrower 41

42 New Borrower Defined Two Requirements 1) No outstanding loans on October 1, 2007 or paid-off all outstanding loans before receiving a new loan on or after 10/1/07 AND 2) Received a Direct Loan disbursement on/after October 1,

43 How to Know Your Best Strategy It s not about the best one It s about what fits with your life and financial goals 43

44 Options During Residency CASE STUDIES 44

45 Decision Time: 6 Months Post-Graduation Make Payments PAYE REPAYE IBR Postpone Payments Medical Residency Forbearance Association 2018 Association of American of American Medical Colleges. All rights reserved.

46 Which Option to Choose? 46

47 Dr. Internal Medicine (General) Student Loan Debt: $192,000 Career: Internal Medicine Residency Length: 3 years Debt: $192,000 Post-Res. Y-1 Salary:$190,000 47

48 Dr. Internal Medicine (General) Repayment Plan Total Yrs Pay As You Earn (PAYE) 20 Revised Pay As You Earn (REPAYE) 20 Income- Based (IBR) 15 * Currently a taxable forgiveness amount. Student Loan Debt: $192,000 Post- Residency Payment (range) $1,600 2,300 $1,600 2,300 Total Repayment Amount Forgiven* Lowest Cost Highest Cost $402k $23k* X $3967k $0 $2,400 $353k $0 X 2,500 aamc.org/medloans 48

49 Dr. Internal Medicine (General) Repayment Plan Total Yrs Pay As You Earn (PAYE) 20 Revised Pay As You Earn (REPAYE) 25 Income- Based (IBR) 19 * Currently a taxable forgiveness amount. Student Loan Debt: $250,000 Post- Residency Payment (range) $1,600 2,300 $1,600 2,600 $2,400 3,300 Total Repayment Amount Forgiven Lowest Cost $402k $239k* X Highest Cost $551k $107k X $528k $0 aamc.org/medloans 49

50 Dr. Internal Medicine (General) Repayment Plan Total Yrs Pay As You Earn (PAYE) 20 Revised Pay As You Earn (REPAYE) 25 Income- Based (IBR) 25 * Currently a taxable forgiveness amount. Student Loan Debt: $325,000 Post- Residency Payment (range) $1,600 2,200 $1,600 2,600 Total Repayment Amount Forgiven Lowest Cost $402k $458k* X $551k $380k* Highest Cost $2,400 $826k $ 20k* X 3,900 aamc.org/medloans 50

51 Dr. ObGyn Student Loan Debt: $192,000 Career: Obstetrics & Gynecology Residency Length: 4 years Debt: $192,000 Post-Res. Y-1 Salary:$240,000 51

52 Dr. ObGyn Repayment Plan Total Yrs Pay As You Earn (PAYE) 18 Revised Pay As You Earn (REPAYE) 17 Student Loan Debt: $192,000 Post- Residency Payment (range) $2,100 2,500 $2,100 2,700 Total Repayment Amount Forgiven Lowest Cost Highest Cost $393k $0 X $358k $0 X Income- Based (IBR) 16 $2,500 $374k $0 * Currently a taxable forgiveness. aamc.org/medloans 52

53 Dr. ObGyn Repayment Plan Total Yrs Pay As You Earn (PAYE) 20 Revised Pay As You Earn (REPAYE) 22 Income- Based (IBR) 17 * Currently a taxable forgiveness. Student Loan Debt: $250,000 Post- Residency Payment (range) $2,100 3,000 $2,100 3,100 Total Repayment Amount Forgiven $494k $112k* Lowest Cost Highest Cost $555k $0 X $3,100 $503k $0 X 3,300 aamc.org/medloans 53

54 Dr. ObGyn Repayment Plan Total Yrs Pay As You Earn (PAYE) 20 Revised Pay As You Earn (REPAYE) 25 Income- Based (IBR) 21 * Currently a taxable forgiveness amount. Student Loan Debt: $325,000 Post- Residency Payment (range) $2,100 3,000 $2,100 3,400 Total Repayment Amount Forgiven Lowest Cost $494k $363k* X $686k $205k* Highest Cost $3,100 $774k* $0 X 4,300 aamc.org/medloans 54

55 Dr. Cardiologist Student Loan Debt: $192,000 Career: Cardiology Residency Length: 6 years Debt: $192,000 Post-Res. Y-1 Salary:$300,000 55

56 Dr. Cardiologist Student Loan Debt: $192,000 Repayment Plan Total Yrs Post- Residency Payment (range) Total Repayment Amount Forgiven Lowest Cost Highest Cost Pay As You Earn (PAYE) 20 $2,500 $423k $0 X Revised Pay As You Earn (REPAYE) 15 $2,800 3,300 $349k $0 X Income- Based (IBR) 19 $2,500 $412k $0 aamc.org/medloans * Currently a taxable forgiveness amount. 56

57 Dr. Cardiologist Repayment Plan Total Yrs Pay As You Earn (PAYE) 20 Revised Pay As You Earn (REPAYE) 19 Student Loan Debt: $250,000 Post- Residency Payment (range) $2,800 3,300 $2,800 3,700 Total Repayment Amount Forgiven $547k $38k* Lowest Cost $511k $0 X Highest Cost Income- Based (IBR) 20 $3,300 $570k $0 X aamc.org/medloans * Currently a taxable forgiveness amount. 57

58 Dr. Cardiologist Repayment Plan Total Yrs Pay As You Earn (PAYE) 20 Revised Pay As You Earn (REPAYE) 25 Income- Based (IBR) 20 Student Loan Debt: $325,000 Post- Residency Payment (range) $2,800 3,800 $2,800 4,300 $4,100 4,300 Total Repayment Amount Forgiven Lowest Cost $567k $276k* X Highest Cost $786k $0k X $755k $0 aamc.org/medloans * Currently a taxable forgiveness amount. 58

59 The FIRST Stop A tool for graduates!! MedLoans Organizer and Calculator aamc.org/medloans 59

60 Other Considerations 60

61 Public Service Loan Forgiveness (PSLF) Eligible Loans + + Qualifying Payments Qualifying Work Public Service Loan Forgiveness myfedloan.org 61

62 aamc.org/first/pslfeligibility 62

63 Public Service Loan Forgiveness aamc.org/first/pslfebook 63

64 Loan Forgiveness & Repay Assistance aamc.org/stloan aamc.org/stloan aamc.org/repayasst 64

65 Reasons to Consolidate Reduce # of Servicers Eligibility for PAYE or REPAYE Eligibility for IBR Eligibility for PSLF 65

66 Should You Consolidate? aamc.org/first/consolidatequiz 66

67 Should I Refinance? aamc.org/first/shouldirefinance 67

68 Taxpayer Relief Act of 1997* Single Full Deduction $65,000 or less Partial Deduction $65,001 to $79,999 NO Deduction $80,000 or more Married filing Jointly $130,000 or less $130,001 to $159,999 $160,000 or more Max student loan interest deduction: $2,500/year May be eligible: Voluntary payments & capitalization * Student Loan Interest Deduction for 1/

69 aamc.org/nextsteps 69

70 Support Along The Way feedback.studentaid.ed.gov aamc.org/advocacy/meded Financial Aid Office & Residency Programs MedLoans Organizer & Calculator aamc.org/medloans saltmoney.org/aamc studentloans.gov 70

71 An investment in knowledge always pays the best interest 71

72 UofL SOM Financial Aid Office Leslie R. Kaelin, M.Ed.-SOM Financial Aid Director Cynthia Morse, M.Ed.-SOM Financial Aid Advisor, Sr. University of Louisville School of Medicine Instructional Bldg., Suite 230 Health Sciences Center Louisville KY

73 Questions? More Information: Other Resources: aamc.org/videowebinars