Ten Things You Should Know About Student Loans

Ten Things You Should Know About Student Loans 1: BORROW ONLY WHAT YOU NEED 4: UNDERSTAND YOUR LOANS There are several different kinds of loans. Here are some key factors to be aware of: 7: MAKE PAYMENTS WHILE IN SCHOOL (EVEN IF IT S ONLY A LITTLE) Even if you can only afford Student loans are a great way to help pay for school. SUBSIDIZED VS. UNSUBSIDIZED Accrued interest for subsidized loans is paid by the government while you re in school. Unsubsidized loans require immediate interest repayment. 1 But student loans will eventually have to be paid back... FEDERAL VS. PRIVATE That s only 1 latte 5 song downloads...with Interest. Federal loans are funded by the federal government while private loans are issued by banks or similar institutions. They can help bridge any financial gap not covered by federal loans. Making small payments now will help reduce your principal and/or interest balance in the long run. Minimize Loans As Much As Possible Take advantage of all grants, scholarships, and work study available to you before you borrow student loans. Your financial aid advisor can help you only borrow what you need. 2: HAVE A PLAN Map out the cost of your entire education and how you ll pay for it. For tools and resources to help you build a healthy financial future, visit Nelnet.com/Get-Financially-Fit. 3: CREATE AND FOLLOW A MONTHLY BUDGET FIXED INTEREST VS. VARIABLE INTEREST Fixed rates are constant for the life of the loan, but variable interest rates are adjusted annually on July 1. Find more loan terminology at Nelnet.com/Terms-To-Know. 5: KNOW YOUR SERVICERS Federal Loans are Managed by Loan Servicers: We re Here to Help You. Servicers send important loan info, collect payments, and answer questions. To find out who the loan servicers are for your federal loans, visit nslds.ed.gov. 6: SET UP AN ONLINE ACCOUNT 8: YOU HAVE REPAYMENT OPTIONS If you need to lower or postpone your payment, or seek other repayment options, including forgiveness or discharge of your student loan, contact your servicer today. 9: REPAYMENT IS EASIER WHEN YOUR OVERALL DEBT IS LOWER During college, avoid racking up credit card debt or purchasing unnecessary big-ticket items. When you graduate, you can focus on paying down your student loans instead of juggling multiple (avoidable) monthly payments. 10: KEEP IN TOUCH! Before you graduate, create an estimated monthly budget that factors in your future monthly student loan payment. Several repayment plans are available to fit your budget. Budget worksheets and resources are available at Nelnet.com/Get-Financially-Fit. An online account with your servicer is an easy way to connect with them and keep your contact info current. Visit your servicer s website to create your online account today! Stay in touch with your servicers and ask questions as your situation changes. 2015 Nelnet, Inc. All rights reserved. Nelnet is a registered service mark of Nelnet, Inc. 1 First-time Direct Loan borrowers on or after July 1, 2013, are no longer eligible for the Subsidized Student Loan program if they are in school longer than 150% of the published length of time necessary to graduate from an undergraduate degree program. EDUCATION LOAN SERVICING

Locating All Your Loans To find out what loans you have and who they are payable to, there are two (2) separate tasks that must be done: 1. To find information on your Federal (Title IV) Loans you may log on to the National Student Loan Data System (NSLDS) at www.nslds.ed.gov. You will need your FASFA pin number or your FAFSA User Name and Password to gain access to this system. Once you are logged onto the NSLDS website, you will see all of your Title IV Federal Loans (keep in mind that NO Private Loans will appear on this website). If you click on the Blue numbered block next to each loan, the system navigates to a page that tells you more details about the loan, such as: who the servicer and lenders are, what the current status of the loan is, etc. 2. To find information on Private/Alternative Loans, you will need to run a credit report on ALL THREE (3) major credit bureaus (Equifax, Experian, and Trans Union). You may do this free of charge at www.annualcreditreport.com. WARNING: Be very careful not to sign up for any unwanted services, OR YOU WILL BE CHARGED! This has happened to me in the past, and very recently to one of my borrowers! If you are asked for your credit/debit card information while on this site YOU HAVE SIGNED UP FOR SOME TYPE OF SERVICE. Once you have your credit reports, check all loans listed on the reports carefully. The Federal Loans will appear along with any Private/Alternative Loans. Some loans may show up on one (1), of the reports while others may show up on all three (3) reports. It is your job to weed through the accounts and determine which loans are duplicates. When this is done properly, you should have a listing of all the loans you have that are outstanding. Spreadsheet to Organize Loans You will find a Student Loan Spreadsheet in the Pre-Seminar Module in Canvas. This spreadsheet will assist you with managing your loans. Please feel free to utilize it to help organize your loans. Consolidating Your Loans?? If you are interested in consolidating your federal loans, please contact the Federal Student Aid Department at http://www.studentloans.gov. You will need to sign in using your FAFSA User Name and Password. You may also use their consolidation loan calculator https://studentloans.gov/mydirectloan/whatyouneed.action?page=repayest to assist you in determining the repayment plan that best suits your situation. Note: If you have a 1 of 2

defaulted federal loan, you will required to sign up for Income Based Repayment (IBR) or Income Contingent Repayment (ICR). Please feel free to contact us at any time before or after the seminar with any questions you may have via email at Financial_Foundations@baylor.edu or by phone at 254-710-8244. 2 of 2

Payment Estimator (Government Website) Tied to YOUR Specific Student Loans via FAFSA Information) http://ifap.ed.gov/eannouncements/051316messagingstudentloanborrowersle avingschool.html General Payment Calculator Use to run different scenarios to see How Much or How Soon you can pay to payoff loans http://www.hughcalc.org/missing.cgi Sample: Enter this information. To get this

Trouble making payments? Explore deferment or forbearance options. If you find yourself falling behind on your student loans in the form of delinquency or default, consider applying for a deferment or forbearance until you can properly resume payments. Deferment A deferment is a period when payment on the principal of a loan is postponed. For subsidized Stafford loans and all or a portion of a subsidized consolidation loan, interest payments are made by the federal government. After the grace period (the six months after graduating or dropping below half-time student status) has expired, borrowers are entitled to a deferment if they meet regulatory requirements. You should continue making payments on your loan until you re notified the deferment is approved. Your eligibility for a deferment depends on when the loan was made and the individual deferment s requirements. Eligibility for a deferment does not mean you are required to take it you may choose to continue making payments on your student loan. Any unpaid interest on unsubsidized loans will be capitalized (added to the principal balance) at the end of the deferment period, likely increasing the total balance and your monthly payments. Most common types of deferments: School Deferment Unemployment Deferment Economic Hardship Deferment Education Related Deferment Service Related Deferments Other Deferments: Temporary Total Disability, Parental Leave, and Public Service (See Nelnet.com for eligibility requirements and additional available deferments.) Forbearance A borrower who is willing but unable to make payments, and does not meet the qualifications for a deferment, may request forbearance. Forbearance allows you to temporarily postpone your payment for a specified period of time. The forbearance will eliminate any delinquency that currently exists on the account, but won t reverse any derogatory credit information previously reported. No fees are assessed for obtaining forbearance; however, interest will continue to accrue on your loan(s) during the forbearance period. Interest payments may be made at any time during this time. Any unpaid interest at the end of the forbearance period will be capitalized (added to the principal balance). Capitalization of interest will increase the amount that must be repaid and may result in an increased monthly payment amount. Most common types of forbearances: Hardship Reduced Payment Internship/Residency Student Loan Debt Burden Department of Defense (DOD) Loan Repayment Program Corporation for National and Community Service (CNCS) Loan Repayment Program/Hardship 2011 Nelnet, Inc. All rights reserved. Nelnet is a registered service mark of Nelnet, Inc. EDUCATION LOAN SERVICING

Comparison of Income-Driven Repayment Plans * ICR ORIGINAL IBR NEW BORROWER IBR PAY AS YOU EARN REPAYE (to be offered Eligible Borrowers Direct Loan (FFEL borrowers may qualify through consolidation) Direct Loan and FFEL Direct Loan new borrowers on/after 07/01/2014 Direct Loan new borrowers on/after 10/01/2007 who receive a Direct Loan on/after 10/01/2011 Direct Loan (FFEL borrowers may qualify through consolidation) (FFEL new borrowers on/after 10/01/2007 may qualify through consolidation) Eligible Loans All Direct Loan types except Parent PLUS and Direct PLUS Consolidation Loans made before 07/01/2006 All Direct Loan and FFEL loan types except Parent PLUS and consolidation loans that repaid Parent PLUS All Direct Loan types except Parent PLUS and consolidation loans that repaid Parent PLUS Same as New Borrower IBR All Direct Loan types except Parent PLUS and consolidation loans that repaid parent PLUS Note: Direct Consolidation Loans made on/after 07/01/2006 that repaid Parent PLUS may be repaid under ICR Income Requirement to Qualify None Must have partial financial hardship (PFH) to initially qualify and to continue making payments based on income Same as Original IBR Same as Original IBR None * Based on original Department of Education document and expanded by NASFAA 2015 National Association of Student Financial Aid Administrators 1

ICR ORIGINAL IBR NEW BORROWER IBR PAY AS YOU EARN REPAYE (to be offered PFH Definition N/A Annual amount due on eligible loans under 10 year standard plan must exceed 15% of discretionary income Monthly Payment 1 Discretionary Income Lesser of: 20% of discretionary income, divided by 12; or Amount repaid annually over 12 years under standard amortization multiplied by income percentage factor corresponding to AGI and marital status, divided by 12 Difference between AGI and 100% of poverty line amount for family size and state PFH periods: 15% of discretionary income, divided by 12 Non PFH periods: 10 year standard plan payment based on amount owed when entered IBR Difference between AGI and 150% of poverty line amount for family size and state Annual amount due on eligible loans under 10 year standard plan must exceed 10% of discretionary income PFH periods: 10% of discretionary income, divided by 12 Non PFH periods: 10 year standard plan payment based on amount owed when entered IBR Same as New Borrower IBR PFH periods: 10% of discretionary income, divided by 12 Non PFH periods: 10 year standard plan payment based on amount owed when entered Pay As You Earn N/A 10% of discretionary income, divided by 12, unless the monthly payment amount is adjusted under the catch up provision under 685.209(c)(4)(vii)(E) No 10 year standard payment cap (i.e., payment can be higher than what it would be under the 10 year standard plan) Same as Original IBR Same as Original IBR Same as Original IBR 1 Under the ICR Plan, if the calculated monthly payment is greater than $0, but less than or equal to $5, the required monthly payment is $5. Under the Original IBR, New Borrower IBR, Pay As You Earn, and REPAYE Plans: If the calculated monthly payment is less than $5, the required monthly payment is $0. If the calculated monthly payment is greater than or equal to $5, but less than $10, the required monthly payment is $10. 2015 National Association of Student Financial Aid Administrators 2

ICR ORIGINAL IBR NEW BORROWER IBR PAY AS YOU EARN REPAYE (to be offered Repayment Period Before Forgiveness Remaining balance forgiven after 25 years of qualifying repayment (includes periods of economic hardship deferment) Same as ICR Remaining balance forgiven after 20 years of qualifying repayment (includes periods of economic hardship deferment) Same as New Borrower IBR Remaining balance forgiven after: 20 years of qualifying repayment for borrowers whose loans being repaid under REPAYE include only loans received as undergraduate or a consolidation loan that repaid only loans borrowers received as undergraduate 25 years of qualifying repayment for borrowers whose loans being repaid under REPAYE include a loan received as graduate or professional student or a consolidation loan that repaid a loan received as a graduate or professional student 2015 National Association of Student Financial Aid Administrators 3

ICR ORIGINAL IBR NEW BORROWER IBR PAY AS YOU EARN REPAYE (to be offered Interest Subsidy None If payment does not cover interest on subsidized loans, government pays remaining interest for 3 consecutive years (excluding periods of economic hardship deferment) from repayment start date under plan Same as Original IBR Same as Original IBR Same as Original IBR, except following the 3 year period, ED charges 50% of the remaining accrued interest on subsidized loans during periods of negative amortization For all unsubsidized loans, including Grad PLUS, ED charges the borrower 50% of the remaining accrued interest during periods of negative amortization Interest Capitalization If monthly payment doesn t cover all interest, unpaid interest is capitalized annually Amount capitalized under this condition limited to 10% of original principal balance at time borrower entered ICR Plan If monthly payment doesn t cover all interest, unpaid interest is capitalized when borrower no longer has PFH or leaves plan No limit on amount that may be capitalized under these conditions Same as Original IBR Same as Original IBR, except that amount capitalized under these conditions is limited to 10% of original principal balance at time borrower entered Pay As You Earn Plan If monthly payment doesn t cover all interest, unpaid interest is capitalized when borrower leaves plan except that amount capitalized under these conditions is limited to 10% of original principal balance at time borrower entered REPAYE Plan 2015 National Association of Student Financial Aid Administrators 4

ICR ORIGINAL IBR NEW BORROWER IBR PAY AS YOU EARN REPAYE (to be offered Married Borrowers: Income Joint AGI used if borrowers file joint tax return Only borrower s AGI used if spouses file separate tax returns Same as ICR Same as ICR Same as ICR Joint AGI used if borrower files joint or married filing separately tax return, unless the borrower is separated from his or her spouse or is unable to reasonably access spouse s income Married Borrowers: Loan Debt Joint Direct Loan debt used in determining payment amount if borrowers choose joint ICR repayment option Joint eligible loan debt used to determine PFH status if borrowers file joint tax return. Only borrower s loan debt used if spouses file separate tax returns Same as Original IBR Same as Original IBR Joint eligible loan debt used to determine borrower s payment amount Married Borrowers: Family Size The borrower, spouse, and children, including unborn children, if the children receive more than half their support, and other individuals if they live with the borrower and receive more than half of their support from the borrower and will continue to do so Same as ICR Same as ICR Same as ICR Same as PAYE, except family size does not include the borrower s spouse for a borrower filing separately if the borrower is separated, or is filing separately and is unable to reasonably access the spouse s income information 2015 National Association of Student Financial Aid Administrators 5

ICR ORIGINAL IBR NEW BORROWER IBR PAY AS YOU EARN REPAYE (to be offered Failure to Recertify Income and Family Size Borrower may remain in ICR ED assumes family size of one Maximum monthly payment amount is the amount the borrower would have paid under the standard repayment plan based on a 10 year repayment period using the amount of the borrower s eligible loans that was outstanding at the time the borrower began repayment on the loans under the incomecontingent repayment plan Same as ICR Same as ICR Same as ICR Borrower is removed from REPAYE and placed in an alternative repayment plan with a monthly payment amount equal to the amount required to pay off the loan within 10 years of entry into the alternative plan, or by the end date of the 20 or 25 year REPAYE repayment period, whichever is earlier Borrower may re enroll in REPAYE from alternative plan, but may be required to make catch up payments Payments made under the alternative plan do not count toward PSLF, but may count for income driven forgiveness if the borrower returns to an income driven plan 2015 National Association of Student Financial Aid Administrators 6

ICR ORIGINAL IBR NEW BORROWER IBR PAY AS YOU EARN REPAYE (to be offered Leaving the Plan Borrower may change to any other plan for which he/she is eligible Borrower must first be placed on Standard Repayment Plan May change to a different plan only after making at least one payment under the Standard plan, or one payment under a reduced payment forbearance Same as Original IBR Same as ICR Same as ICR 2015 National Association of Student Financial Aid Administrators 7