This presentation is for discussion purposes only.

Robyn Hughes School Ombudsman Navient 2

Agenda Student loan cycle What to communicate to borrowers For your students: 10 things to do before you make your 1 st student loan payment Repayment tips 3

What to communicate to borrowers 4

Student Loan Cycle In School Making payments now, even if it's just a little each month, can significantly decrease the amount you'll pay over the life of your loan. Set a monthly budget. Save your money. 5

Student Loan Cycle In Grace If you have a Direct Subsidized or Unsubsidized federal loan, your grace period lasts for six months. You must begin repaying your loan at the end of your six-month grace period. If you have a Direct PLUS federal loan, either as an eligible parent of a dependent student or as a graduate student, there is no grace period. Payments begin immediately after the final loan disbursement is made. Payment postponement options are available. Review your loan information; look for monthly billing statements. You may be able to reduce your payments. Take a look at a repayment plans to find an option that may be a better fit for you. 6

Student Loan Cycle In Repayment Contact us to discuss your student loan obligations. We can answer any questions you have about paying back your loans and the types of repayment plans available to you. The longer you are able to make payments on your student loans, the more likely you are to succeed. Continuing to pay something even if it is a small percentage of your income is a factor in repayment success. Missing payments may damage your credit and lead to higher cost. Public Service Loan Forgiveness: If you are employed in certain public service jobs and have made 120 qualifying payments on your Direct Loans (after Oct. 1, 2007), the remaining balance that you owe may be forgiven. Talk to your servicer! 7

Student Loan Cycle-Success! 8

Student Loan Repayment-Capitalized Interest Borrowers with Direct Unsubsidized, FFELP Unsubsidized, Direct and FFELP PLUS Loans, and Private Loans are responsible for interest that accrues while they are in school. They will have capitalized interest if it is unpaid. Unpaid accrued interest is added to the principal amount of the loan after the borrower leaves school and finishes any applicable grace period. Simply put, there will be interest to be paid on both the principal of the loan and on the interest that has already accumulated. To minimize the effects of the capitalized interest on the amount a borrower will pay overall, they can pay the interest during college instead of waiting until after graduation. That way, they start with the original principal balance when they begin repayment. 15

Student Loan Repayment-Capitalized Interest Forbearance allows borrowers to postpone payments temporarily. It's offered to assist in times of need. Borrowers are responsible for the interest that accrues during this time. Interest that is unpaid may capitalize as often as quarterly and/or at the end of the forbearance period. As a result of capitalization, more interest may accrue over the life of the loan, and the monthly payment amount may increase after capitalization. We encourage borrowers to make any payments they can during forbearance. Payments made will lower the amount of interest to be capitalized added to the unpaid principal balance which can save money over the life of a loan. 16

Student Loan Repayment-Simple Interest Interest accrues on the principal balance (which includes the disbursement check amount plus any applicable fees) as soon as the loan is disbursed. Generally, the borrower is not responsible for interest on Direct Subsidized and FFELP Subsidized Loans until after the six-month grace period. 17

Student Loan Repayment-Simple Interest The amount of interest that accrues on a loan is determined by a simple daily interest calculation. Interest rate factor = interest rate divided by 365.25 (number of days in a year) to get the daily interest rate. For example (rounded up) a $1,000 Unsubsidized Direct Loan at 5.31%.0531/365.25 X $1,000 = about.15 per day in interest..0531/365.25 X $10,000 = 1.46 per day in interest or $531 per year per $10,000. 18

Student Loan Repayment-Payment Allocation Every time a student loan payment is made, it helps pay down various portions of the loan. It typically is applied first to fees, then to outstanding interest, then to principal. Payments may be allocated and applied differently depending on whether the borrower has a federal or private loan, the status of the loan, and if the borrower has multiple loans that are combined into one billing or loan group. 19

Student Loan Repayment-Payment Example Single Loan Account is current 20

Student Loan Repayment-Payment Example Single Loan Account is current 21

Student Loan Repayment-Payment Example Single Loan Account is current 22

Student Loan Repayment-Payment Example Single Loan Account is past due 23

Student Loan Repayment-Payment Example Single Loan Account is past due 24

Student Loan Repayment-Payment Example Single Loan Account is past due 25

Federal Direct Loan-Repayment Estimates 26

Federal Repayment Plans Explore traditional Repayment Plans: Standard, Extended and Graduated Repayment Plan Explore Repayment Plans base on income: Income-Driven (IDR) Plans and Income-Sensitive Repayment Plan (ISR) Utilize tools offered through Federal Student Aid (FSA) at studentaid.ed.gov/sa/repayloans/understand/plans, including the FSA Repayment Estimator Utilize tools offered by federal loan servicers, including Navient s Overview of Direct Loan and FFEL Program Repayment Plans. 27

Income-Driven Repayment Plan Request Borrowers go to the Federal Student Aid site to: Estimate payments and evaluate options Learn more about income-driven repayment plans Apply online at StudentLoans.gov 28