Navigating Student Loan Repayment
Objectives The goal of this presentation is to prepare you for student loan repayment, to encourage healthy financial habits, and to connect you with resources to help you navigate your job search approaching and following graduation.
What do we mean when we talk about loans? This presentation is specific to your Federal Direct subsidized and/or unsubsidized student loans. Some people also refer to these loans as Stafford Loans. These are the loans that were offered to you each year after you completed a FAFSA. The information in this presentation will apply to loans you received at MSU Denver, and to any Federal Direct loans you received at other schools if you attended MSU Denver as a transfer student. Older FFEL loans (issued prior to 2009) are paid to either the loan servicer or to the lender, depending on who owns the loans. They will generally have different terms and repayment options than the ones covered in this presentation. If you borrowed a Perkins Loan, repayment will be a separate process through MSU Denver s Office of the Bursar and our third-party Perkins servicer, UNISA Inc. If you borrowed a private loan through an alternative lender (e.g., Sallie Mae or Wells Fargo), they will control the terms and conditions of your loan individually and your repayment will be separate of your Federal Direct loans.
Loan Repayment When do I have to make payments on my loans? Repayment will begin after a six months grace period following graduation. For most loans, interest will accrue during your grace period. Your loan servicer will let you know when your first payments are due.
Loan Repayment How much will my monthly payments be? Your monthly payments are determined by the amount you have borrowed, the interest rate on your loan, and the payment plan you have selected.
Loan Repayment Who do I pay? Your payments are made directly to a loan servicer, such as Great Lakes or Nelnet. You do not make payments to MSU Denver, the Office of Financial Aid, or directly to the U.S. Department of Education
Loan Repayment What if I can t pay? You have options and resources! If you re struggling to make payments, contact your loan servicer. There is usually a solution to your problem, but you can t get the help you need if you don t ask for it.
Loan Repayment Remember: You never have to pay for help with your student loans. Your loan servicer helps you with your student loans for free.
Repayment Plans Knowing which repayment plan best suits your personal situation can provide critical relief for you as a student loan borrower, but there are many variables to consider. Payment plans and payment amounts can vary based on: How quickly you hope to pay your loans off Your current and projected salaries The type of work you do, and even your marital status and household size. Only you can know what plan is best for your personal situation, but we ve done our best to highlight the pros and cons for you here.
Repayment Plans
Repayment Plans If your goal is to pay your loans quickly and you can afford the same fixed amount every month, select the Standard Repayment Plan. If you don t select a specific repayment plan, your loan will be put on the Standard Repayment Plan. You can switch to a different plan at any time by contacting your loan servicer.
Standard Repayment Plan Under this plan your loans will be paid off after 10 years of payments, unless you decide to consolidate them. You will pay the same fixed amount every month for 10 years. If you don't qualify for loan forgiveness, this is typically the quickest and most cost effective way to repay your loans.
Graduated Repayment Plan The standard plan can also be re-structured in a Graduated Payment schedule, where monthly payments begin small and increase over the 10 year period. Payments increase typically every two years for an amount that will ensure your loans are paid in full within 10 years. This plan may be right for you if you know you won t qualify for loan forgiveness, want a plan resembling an income driven plan, but don t want to reapply for plans annually.
Income-Driven Repayment Plans If your monthly payments are high compared to your income or if you plan to use a loan forgiveness option, consider an income-driven repayment plan. These plans: set your payment at a percentage of your income, will usually have a lower monthly payment than other plans, and can have payments as low as $0 per month. Monthly payment amounts are subject to change as they are recalculated each year.
Income-Driven Repayment Plans Payments are typically 10-20% of your income or less. Duration of repayment will depend on loan type and payment plan but is generally 20-25 years. If your loans are not repaid in full after the 20 or 25 year repayment period, most plans are structured so your remaining balance will be forgiven. Note: There are many different income-driven options, each with their own terms and restrictions. These images depict example plans only yours might vary based on your loan type and plan qualifications. Visit www.studentaid/gov/idr for more information.
Income-Driven Repayment Plans While income-driven plans may result in you paying more than you would under the standard plan, they provide protection against unaffordable loan payments and default by linking loan payments to your earnings. Income-driven plans provide insurance in the event that you may encounter periods of low or no income. You should consider these plans if: you expect your career field may be subject to occasionally poor labor market outcomes you plan on using public service loan forgiveness, teacher loan forgiveness, or you would benefit from smaller monthly payments and the balance of your loan forgiven after 20-25 years of payments
Employment Based Loan Forgiveness Know if you re eligible for loan forgiveness based on your employer or your job. Public Service Loan Forgiveness (PSLF) forgives loans for qualifying employees of government or not-for-profit organizations following 120 payments under an Income-Driven Repayment plan. Teacher Loan Forgiveness Program forgives loans for qualifying teachers after five complete and consecutive years of full-time teaching at lowincome serving elementary and secondary schools. More information about forgiveness, cancellation, and discharge may be found at www.studentaid.gov/forgiveness
Loan Consolidation A Direct Consolidation Loan allows you to combine multiple loans into one, resulting in a single monthly payment. Pros: Simplifies repayment if you have multiple loans with different servicers. Can provide lower monthly payments as a result of longer repayment periods. May provide access to repayment plans that weren t available on your older loans. Cons: Extending repayment will result in more interest paid over time. Since a consolidation loan is technically a new loan, you ll also lose any qualifying payments you made previously towards loan forgiveness. If you are still in your grace period when you consolidate, you will lose the remaining grace period and payments will begin two months after your new loan pays.
What Happens Next? Complete your Exit Counseling at www.studentloans.gov, where you will also have access to tools showing you the details of available repayment plans, various repayment calculators, options for deferment and forbearance, loan forgiveness, consolidation options, and more.
This tool will provide visualizations of your repayment options, including monthly payment estimates and the total amount of interest you will pay. You can also contact your loan servicer to further discuss which plan might be right for you.
What If I Decide to Continue My Education? Loan repayment is typically deferred for students who maintain at least half time enrollment. Before you start a graduate program or pursue a second undergraduate degree, consider how you will finance it. Loan limits: The federal government sets lifetime loan limits. Know how much you have already borrowed against the limits set for you. Repayment: Estimate what your monthly loan payments will be after borrowing for grad school, and consider the salary range you will encounter when entering the job market. Visit www.bls.gov for occupational outlooks. Remember: Loan interest continues to accrue while loans are deferred. Paying this interest while in school will prevent the interest from capitalizing on your loans once you enter repayment.
Avoiding Default Delinquency and default are the statuses given to loans when you fail to make your monthly payments. If you are more than 90 days delinquent on your student loan payment, your loan servicer will report the delinquency to the three major national credit bureaus. If your loan continues to be delinquent, the loan may go into default. Repercussions of defaulting on your student loans include ruined credit ratings, wage garnishment, loss of tax refunds, referrals to collections, loss of deferment and forbearance options, and more. You may have trouble renting an apartment, buying a house, buying a car or even getting a job with employers who conduct background and credit checks prior to making a job offer. We are committed to helping you navigate avoiding default and are a resource to you, even after you ve graduated.
Avoiding Default It is important to pay the amount shown on your bill - and to pay by the due date. If you are struggling to make your payments, contact your loan servicer! There s usually a solution to your problem, but you can t get the help you need if you don t ask for it. Options include: Changing your repayment plans: Switching from a standard plan to an income driven repayment plan allows you to make your payments more affordable. These plans can help you before you default - but if you wait to change plans until after defaulting, you'll have to rehabilitate your loans first before you regain access these options. Deferment or Forbearance: This allows you to temporarily postpone payments or make smaller payments on your loan.
Three Takeaways for Avoiding Default 1. Contact your loan servicer as soon as you encounter trouble repaying your loans. Ask them about switching to an income-driven repayment plan to reduce the amount of your monthly payments. 2. If you wait until you are already in default, you will no longer be eligible for options like deferment and forbearance. 3. The Office of Financial Aid and Scholarships is always available to help you, even after you've graduated.
Tips and Tools for Financial Wellness Try to make extra loan payments when you can. If you receive cash gifts for graduation, consider directing some of those funds to a large initial payment towards your student loans. These payments will save you money in the long term by reducing the amount of interest you pay over time. For example, a borrower with a $30,000 loan and 5% interest rate would pay $318 every month for 10 years, paying about $38,200 total. If that same borrower pays an extra $100 monthly, they can have their loans paid off almost three full years early and save nearly $2500.
Tips and Tools for Financial Wellness
Tips and Tools for Financial Wellness Enrolling in automatic debit will help you stay on track with your payments they ll be automatically taken from your bank account each month. As an added bonus, most Direct Loan borrowers see a 0.25% interest rate deduction for enrolling.
Tips and Tools for Financial Wellness Reduce your federal income taxes by deducting your student loan interest paid. Your loan servicer will provide you with a statement of your student loan interest (IRS Form 1098-E). Based on the way you file your taxes, you may be eligible to deduct the interest you paid on your federal tax return.
Tips and Tools for Financial Wellness Seek out information. The more knowledge you have, the more empowered you are to make the best choices possible surrounding your personal money management. After building an understanding of healthy financial habits, practice your financial agency by actively engaging in these behaviors. This will be a key to your financial health. These habits take time to build and can be challenging to implement - so the sooner you start, the better. Now is the time to build your budget and set goals for loan repayment, savings, retirement, and more. Consider using free tools like SaltMoney.org or SaveUp.com to help you draft a plan for managing your finances, then customize the plan to your personal goals and spending style. There is no one-size-fits-all approach to financial wellness as long as you find an approach that works for you. If you re still not sure where to start, keep an eye on our website. We re working to build an accessible collection of tools and resources for your financial empowerment.
Employment Search Assistance MSU Denver s Career Services Meet with a Career Counselor and develop a Job Search Strategy. Call 303-615-1133 for an appointment. Find resources for your job search, salary negotiations, resumes and interviewing, and more on the Career Services website. https://msudenver.edu/career/
Employment Search Assistance Additional Resources www.connectingcolorado.com is a Colorado state and countyrun system where you can post your resume, search through job postings, and apply for jobs. www.careeronestop.org is sponsored by the U.S. Department of Labor and provides resources for exploring careers and job searching. www.usajobs.gov is the official website of job vacancies in the United States Federal Government. All three of these sites post many jobs that may qualify for Public Service Loan Forgiveness!
Contact Us You can always visit the Office of Financial Aid and Scholarships in the Student Success Building or at www.msudenver.edu/financialaid. We can be reached by phone at 303-556-8593 or by email at finaid@msudenver.edu.
Congratulations on nearing completion of your degree! Please accept our warmest and sincerest congratulations for your achievement. Be proud of yourself for this accomplishment, and know that everyone at MSU Denver is proud, too.