About Salt Money Management Student Loan Repayment Michele Almeida Senior Associate Director of SFS Jane Aube Loan Programs & Compliance Specialist Kim Downs-Burns AVP Student Financial Services American Student Assistance, ASA, Salt, and corresponding logos are trademarks or registered trademarks of American Student Assistance. 2016 American Student Assistance. All rights reserved. Financial Literacy & Student Loan Repayment Presentation JTerm Workshop January 24, 2018
Middlebury College Wants You To Keep More Money In Your Wallet Middlebury College has teamed up with Salt to help our students and alumni manage their money and student loans. Here s the best part we are providing all of Salt s resources for free! You can create your account at anytime by visitng www.saltmoney.org/middleburycollege. Be sure to sign up using your school email address to take advantage of these free resources. Contact Salt s Member Support team at 855.469.2724 with any questions. What Is Salt? Salt is a nonprofit-backed program dedicated to helping you plan for, pay for, and repay the cost of your degree, while preparing you for a successful financial future. Activating your Salt membership allows you to take advantage of members-only features, like: Money management advice Simple budgeting tools Personalized student loan help from Salt s expert counselors Ways to find free scholarship money to help pay for school Salt Courses a self-paced, online resource that teaches you practical money management strategies for budgeting, credit cards, banking, employment, internships, incomes, careers and more. 2
Salt Is For You at www.saltmoney.org/middleburycollege 3
Money Management American Student Assistance, ASA, Salt, and corresponding logos are trademarks or registered trademarks of American Student Assistance. 2016 American Student Assistance. All rights reserved.
Opening Discussion Questions When you hear the word money, what comes to mind? What is one positive thing you are doing with your finances right now? What is something you would like to change or implement?
Topics Budgeting to Achieve Financial Goals Credit Debt Management Saving & Investing
Budgeting To Achieve Financial Goals
Spending Plan Elements Based on established goals Income Savings Expenses Fixed Flexible Discretionary
Add Up Your Income Paycheck Project pay {money on the side} Gifts Financial aid Other?
Line By Line Put it in to a budget Paper, spreadsheet, online Income expenses =? TIP: Prioritize your savings goals, and strive for 10%!
Credit
Benefits Of Good Credit Developing good credit helps you to: Gain employment Secure the best interest rates Get good insurance rates Get perks!
Consumer Credit Reporting Agencies Free credit report from each agency every 12 months. Request credit reports at annualcreditreport.com. Equifax TransUnion Experian
Debt Management
Long Term Financial Success: It is a Balancing Act Student Loan Debt Investments Credit Card Debt Savings Car Loan Home Mortgage
Good Debt vs. Bad Debt Good Debt Student Loans Mortgage Business Loan ---------------------- Repayment Plan Tax Deductible Credit Card Debt Car Loan Consumer Loan ---------------------- Bad Debt
Keys To Success Update Contact Information with Servicer Always Ask For Help Stay Organized Repayment tips Be Aware of Debt Relief Scams Open All Mail/Email from Servicer Timely Payments = Good Credit Longer Repayment = More Interest 17
Saving & Investing
Reasons To Save Or Invest Emergencies: Money set aside for the unexpected. Expenses: Money set aside for 3-6 months of your total expenses.
Salt Courses Student Loan Repayment American Student Assistance, ASA, Salt, and corresponding logos are trademarks or registered trademarks of American Student Assistance. 2016 American Student Assistance. All rights reserved.
Objectives Recognize your rights and responsibilities. Examine your repayment plan options. Relate your payments to your spending plan. Explore your repayment challenge solutions. Develop successful repayment habits.
Think About It - Consider These Questions Do you understand your options for managing your student loans? How confident do you feel about your ability to repay your student loans? Who will you contact if you have a problem repaying your student loans? 22
Know Before You Go 23
Before Leaving School Student Financial Services Lender(s) Servicer(s) 24
The Basics Federal loans: nslds.ed.gov Other loans: annualcreditreport.com Master Promissory Note (MPN) Grace period Exit counseling 25
Loan Type Refresher 26
Loan Type Refresher Federal Direct/Stafford Subsidized and Unsubsidized Parent PLUS Grad PLUS Private Institutional Perkins ~ Program Ended 27
Direct/Stafford Loans Subsidized Stafford loans Who Can Borrow? Loan Limits Repayment Terms Interest Rate Undergraduate students enrolled at least half-time in a degree or certificate program. Students who have demonstrated financial need. Must be U.S. citizen or eligible non-citizen. Undergraduate students may borrow up to a lifetime maximum of $23,000 that includes: Up to $3,500 in their first year. Up to $4,500 in their second year. Up to $5,500 in their third year and beyond. Repayment begins 6 months after borrowers graduate, withdraw, or drop below halftime enrollment. Typically, borrowers have between 10 and 25 years to complete repayment, and may choose from various repayment schedules. There are no penalties for prepayment. Loans have a fixed interest rate for the life of the loan and is set annually for new loans on July 1 (with a cap of 8.25%). The interest rate as of July 1, 2017 is 4.45%. 2 8
Direct/Stafford Loans Unsubsidized Stafford loans for dependent students Who Can Borrow? Loan Limits Repayment Terms Interest Rate Undergraduate students enrolled at least half-time in a degree or certificate program. Students do not need to demonstrated financial need but do need to complete the FAFSA. Must be U.S. citizen or eligible non-citizen. Dependent undergraduate students may borrow a base amount, in either subsidized or unsubsidized Stafford loans that includes: Up to $3,500 in their first year. Up to $4,500 in their second year. Up to $5,500 in their third year and beyond. If the student s aid has not exceeded cost of attendance, the student may borrow up to an additional $2,000 per year in unsubsidized funds. Dependent undergraduate students can borrow up to a maximum of $31,000 of Stafford loans. Of that, no more than $23,000 may be in subsidized funds. Repayment begins 6 months after borrowers graduate, withdraw, or drop below halftime enrollment. Typically, borrowers have between 10 and 25 years to complete repayment, and may choose from various repayment schedules. There are no penalties for prepayment. The Federal government does not pay the interest while borrowers are in school or during grace and deferment periods. Loans have a fixed interest rate for the life of the loan and is set annually for new loans on July 1 (with a cap of 8.25%). The interest rate as of July 1, 2017 is 4.45%. 29
Parent PLUS And Grad PLUS Loans Who Can Borrow Undergraduate Parent of an undergraduate student enrolled at least half-time in a degree or certificate program. Graduate Students enrolled at least half-time in a degree or certificate program. Loan Limits Undergraduate and Graduate Borrowers can borrow up to the total cost of attendance minus all other aid received. Undergraduate Parent PLUS loans do not have annual or maximum borrowing limit. Repayment Terms Undergraduate Borrowers can choose to start repayment no later than 60 days after the loan is fully disbursed or (upon request) six months after the student for whom the loan was borrowed drops below half-time enrollment. Undergraduate and Graduate Interest rates are fixed, but are set annually on July 1 for loans made in the next 365 days. Undergraduate and Graduate Student borrowers do not need to demonstrate financial need but must complete the FAFSA. Undergraduate and Graduate Borrowers must have credit in good standing. A endorser may be required. Graduate Grad PLUS loans do not have an annual maximum borrowing limit. Graduate Grace period, after they drop below half-time, is typically six month Undergraduate and Graduate Typically, borrowers have between 10 and 25 years to complete repayment, and may choose from various repayment schedules. Undergraduate and Graduate Must be U.S. citizen or eligible noncitizen. There are no penalties for prepayment. The Federal government does not pay the interest while borrowers are in school. Interest Rate 30
Other Types Of Loans Private Loans Institutional Loans Offered through banks, lending institutions, and schools Terms and conditions vary AnnualCreditReport.com Offered through your school Small amounts Shorter repayment Offered for emergencies Not eligible for Federal loan consolidation plans Not eligible for Federal Repayment Plans 31
Know Your Rights Be aware of your rights when change happens Different loan types have different terms and conditions. MPNs provide details. Loans may be sold or reassigned terms and conditions for federal loans remain the same. 32
Repayment Options 33
Repayment Options Basics for student loan repayment Keep your address, email, and phone number updated with servicer, lender, and Student Financial Services. There are no penalties for prepayment for all federal student loans. You have many options when it comes to student loan repayment. 34
Options When Repaying Income- Sensitive (FFELP borrowers only) Revised Pay As You Earn (REPAYE) DL borrowers only Standard Options Graduated Extended Income- Contingent (DL borrowers only) Pay As You Earn (DL borrowers only) Income- Based 35
Standard Repayment Default option Typically results in least amount of interest accrued $50/month minimum Standard repayment Up to 120 equal payments Up to 10 year term 36
Graduated Repayment Lower payments now, higher payments later Pay as low as just the interest for up to four years Graduated repayment You pay more interest when you don t pay principal during the early years Repayment term stays 10 years 37
Extended Repayment New borrowers after Oct. 7, 1998 Increases total interest Extended repayment Borrowers with $30,000+ in loans Lowers payments Repayment extended up to 25 years 38
Income-Based Repayment (IBR) Customize your payments Parent PLUS loans are not eligible Income/ family size considered New Income- Based Repayment (IBR) Partial financial hardship 10% of your discretionary income Responsible for interest Subject to annual change 39
Income-Contingent Repayment (ICR) Forgiven after 25 years 20% of your discretionary income No partial financial hardship required Income- Contingent Repayment (ICR)* Only IDR option for consolidated Parent PLUS loans Unpaid interest capitalized once per year *Income-Contingent Repayment (ICR) = DL borrowers only 40
Revised Pay as You Earn (REPAYE) Any borrower with eligible federal student loans Parent PLUS loan are not eligible Revised Pay As You Earn (REPAYE) 10% of your discretionary income Only DL are eligible FFELP/Perkins can consolidate Subject to annual change 41
Consolidation Go to studentloans.gov One new loan = new terms and interest rate Repayment up to 30 years Choose standard or other repayment plan Choose your servicer Ask questions to ensure it is the right option for you Consolidation restarts the clock for loan forgiveness under IDR (Income Driven Repayment) plans and PSLF (Public Service Loan Forgiveness) Private loans and Institutional loans generally do not qualify for consolidation 42
Eligible Loans Direct Stafford loans Subsidized and Unsubsidized PLUS loans Perkins loans 43
Repayment Planning 44
Repayment Reality Relate your payment plan to your spending plan Standard Graduated Extended Income Based Repayment (IBR) Pay As You Earn Income Contingent REPAYE Consolidation 45
Considerations What should you ask yourself when designing a spending plan? Income potential 8-10% of monthly income guideline First year salary total debt guideline Educational requirements Personal situation 46
Repayment Help 47
Deferment* Temporary suspension of payments for a period of time for those who qualify Apply with your servicer Federal government pays interest on subsidized loans, not unsubsidized Examples: Unemployment Extreme economic hardship Half-time enrollment Active military duty *Typically applies to federal student loans 48
Forbearance* Temporary suspension or reduction of payments for a short period of time Request forbearance from Servicer Interest accrues on all loans during forbearance and is capitalized at the end of forbearance period Forbearance increases the amount you owe Examples: Economic hardship Illness 49
Loan Forgiveness Volunteer work Military service Here are some ways to get loan forgiveness: Public Service/Non Profit Employment Teach or practice medicine in certain communities AmeriCorps: americorps.gov Peace Corps: peacecorps.gov Other loan forgiveness resources: studentaid.ed.gov Check out Salt s 100+ Ways to Get Rid of Student Loans (Without Paying Them) RESOURCE: saltmoney.org/forgivenessebook 50
Public Service Loan Forgiveness Work for a qualifying public service organization or nonprofit Be employed full-time with eligible payments After 120 eligible payments in no less than 10 years, the balance of the loan is forgiven Eligible payment plans include: Standard, IBR, New IBR, ICR, PAYE and REPAYE Note: Parent PLUS loans may receive forgiveness if they are consolidated and repaid under ICR (Income Contingent Repayment). 51
Loan Discharge Loan Discharge = Extreme Circumstances Death Total and permanent disability Inability to complete course of study due to school closure Bankruptcy in some cases- rare 52
Late Payment Implications Repayment problems Delinquency Default 53
Delinquency Delinquency: Failing to make payments when they are due even 1 day late can be considered delinquent May adversely affect your credit and result in additional fees Could eventually lead to default 54
Default Default is the failure to repay for 270+ days on your federal student loan. Terms may vary for private loans. If you are having problems repaying your loans, contact your servicer immediately. 55
Negative Effects Of Default Entire loan balance will be due in full immediately. May be denied credit or a job due to poor credit. Outstanding fees and unpaid interest may be added onto your principal balance. Collection fees will be added to your outstanding balance. Up to 15% of your paychecks may be taken. Tax refund may be taken. Will lose eligibility for federal student aid, including Pell grants. Will lose deferment and forbearance options. May be sued. Risk losing professional licenses. 56
Repayment Success 57
Keys To Success Keep school/ lender informed of changes Always ask for help Keep copies in one place Repayment tips Timely payments = good credit Open all mail/e-mail Longer repayment = more interest 58
Reflection & Resources 59
You ve Learned A Lot Recognized your rights, responsibilities, and obligations with your student loans. Identified your student loan debt(s) and the various repayment options. Related your student loan payments to your spending plan. Determined who to ask for help as soon as you need help. Discovered some repayment success tips. 60
Registration today at www.saltmoney.org/middleburycollege 61
My Salt 62
To-Do-List 63
Salt Courses 64
SALT Courses 65
Know What You Owe (Debt Organizer) 66
Loan Repayment Navigator 67
Get Free Assistance Need Loan Help? 877.523.9473 Need SALT Help? 855.469.2724 68
Thank you! Student Financial Services sfs@middlebury.edu 802-443-5158 855.469.2724 membersupport@asa.org saltmoney.org