Kasia Parecki, Director of Student Financial Management University of Denver, Sturm College of Law

Kasia Parecki, Director of Student Financial Management University of Denver, Sturm College of Law

College Cost Reduction and Access Act (CCRAA) of 2007 Creates Income-Based Repayment (IBR) plan for federal student loan borrowers Creates Public Service Loan Forgiveness program for those who are employed in qualifying public service jobs These provisions were effective July 1 st, 2009 Health Care & Education Reconciliation Act of 2010 Modifies Income-Based Repayment (IBR) plan to reduce payments and length of repayment. Only applies to new borrowers after July 2014 Pres. Obama Executive Order October 2011 Created the Pay As You Earn (PAYE) repayment plan, to reduce payments for many recent graduates and current students. Changes took effect on December 2012 Only applies to new borrowers after October 2007 Pres. Obama Executive Order June 2014 Expands the Pay As You Earn (PAYE) repayment plan to additional borrowers as the Revised Pay As You Earn (REPAYE) plan. Changes took effect December 2015

Employment statistics for 2016 Denver Law graduates About 44% were employed in public service # $57,000: median salary * $44,568: estimated take-home pay^ Monthly: $3,714 $48,252: 25 th percentile * $38,580: estimated take-home pay^ Monthly: $3,215 Median Loan Debt, 2016-17 Grad: $140,000 Loan Debt, if borrowing full COA: ~$220,000 # Includes Public Interest (4%), Government (29%), Academia (1%) and Judicial Clerkships (10%) * Based on 88 reported full-time salaries (out of 267 graduates) ^ Based on a single person working in Denver, with no pre- or post- tax deductions

Loan Balance Standard 10-Year Extended 25-Year Graduated 25-Year $140,000 $1,594 $951 $765 - $1,378 $220,000 $2,523 $1,516 $1,232 - $2,176 Payments can be significantly reduced for those selecting an Income Driven Repayment Plan over the Standard, Extended or Graduated Repayment Plans. Selecting an Income Driven Repayment Plan will help you take advantage of the Public Service Loan Forgiveness program

Payments are based on annual income & family size Payments can be as low as $0 Payments don t have to cover accruing interest Make payments until: You pay the loan off in full, You reach the end of the repayment plan, You qualify for Public Service Loan Forgiveness. If you reach the end of the repayment plan, the remaining loan principal & interest is cancelled. The cancelled amount is considered taxable income

Discretionary Income = AGI minus 150% of the federal poverty level for your family size For 2018, 150% of the federal poverty level is $18,210 for 1 person & $6,480 for each additional family member Partial Financial Hardship (PFH) To qualify for IBR or PAYE, initially, you must have a PFH. Meaning, your payment under IBR/PAYE is less than the payment required under the Standard 10-Year plan.

IBR PAYE new IBR RE-PAYE Payment Amount: 15% discretionary income 10% discretionary income 10% discretionary income 10% discretionary income Repayment Length: 25 yrs (300 pmts) 20 yrs (240 pmts) 20 yrs (240 pmts) 25 yrs (300 pmts) if have graduate debt 20 yrs (240 pmts) if have ugrad debt only Married Borrowers: Includes joint income if file taxes jointly, borrower's income only if file married filing separately. Includes joint income if file taxes jointly, borrower's income only if file married filing separately. Includes joint income if file taxes jointly, borrower's income only if file married filing separately. Includes joint income, regardless of how taxes are filed Payment Cap: amt of 10-Yr Standard pmt amt of 10-Yr Standard pmt amt of 10-Yr Standard pmt None Other: If monthly payments do not cover full amount of interest accrued, only 50% of accrued interest is assessed. Criteria: All borrowers: FFEL & Direct Loans Direct loans only. No loans prior to Oct 1, 2007 & at least one loan on/after Oct 1, 2011 Direct loans only. No loans prior to 07/01/2014 All borrowers: Direct Loans only

AGI PAYE/new IBR/REPAYE (10%) old IBR (15%) Family Size 1 2 3 4 1 2 3 4 $40,000 $183 $130 $78 $26 $274 $196 $117 $39 $50,000 $266 $213 $161 $110 $399 $320 $242 $164 $60,000 $349 $297 $245 $193 $524 $446 $367 $289 $70,000 $432 $380 $328 $276 $649 $570 $492 $414 $80,000 $516 $464 $411 $360 $774 $696 $617 $539 $90,000 $599 $547 $495 $443 $899 $821 $742 $664 $100,000 $682 $630 $578 $526 $1,024 $946 $867 $789 Debt Level 10 Year Repayment 25 Year Repayment Avg. Denver Law Grad Debt - $140,000 $1,594 $951 Full 3yr COA ~ $220,000 $2,523 $1,516

Established by the CCRAA in 2007 Individuals working full-time in public service, and repaying their eligible loans under specific repayment plans can qualify to have their remaining debt (interest and principal) forgiven after 120 payments (10 years). What does that mean?

Working full-time The greater of: What does that mean? whatever your employer considers full-time, or 30 or more hours per week 30 hour minimum only applies if you have more than 1 job: Ex: 1 st job for 18 hrs/week; 2 nd job for 12 hrs/week

What does that mean? in public service Government (local, state, federal) Government contractors DO NOT QUALIFY Organization that is tax exempt under 501(c)(3) of the tax code Certain other non-profit organizations that provide qualifying public services

What does that mean? Repaying eligible loans Federal Direct Stafford loans (subsidized and unsubsidized) Federal Direct PLUS loans Federal Direct Consolidation loans Loans may be from undergrad or grad/ law school Students who borrowed Perkins loans or loans through the bank-based FFEL program (ended in 2009-10), must consolidate those loans to make them eligible for PSLF.

What does that mean? under specific repayment plans Standard 10-Year Plan Income Contingent Repayment Plan (ICR) Income Based Repayment Plan (IBR) both new & old Pay As You Earn Repayment Plan (PAYE) Revised Pay As You Earn Repayment Plan (REPAYE)

after 120 payments 120 payments do not need to be consecutive What does that mean? Payments must be on-time (within 15 days of the due date) Each payment must be made while meeting all the above requirements Payments must be separate, monthly payments (i.e. paying double one month would not count as 2 payments, only 1)

You must be able to prove that you qualify for forgiveness The Dept of Ed has created an Employment Certification Form that borrowers can use to track their eligible payments: Available at www.studentaid.ed.gov/publicservice Can be filed annually It is not mandatory but we strongly recommend you use it!

When you fill out the Certification Form for the first time, your eligible loans will be transferred to FedLoan Servicing (if they are currently with another servicer) FedLoan Servicing will inform you of how many qualifying payments you have made during the period that s been certified Using this form means you don t have to track down 10 years of employment history when applying to get PSLF. Be sure to keep copies of everything you send in!

You must apply for forgiveness after meeting all the above requirements. An is available through FedLoan Servicing (www.myfedloan.org) To qualify for forgiveness, you must also be working fulltime in public service when: You apply for forgiveness Your forgiveness is granted Amounts forgiven under PSLF do not count as taxable income Forgiveness is only granted after 120 qualifying payments are made No partial cancellations

Consider filing taxes in your last year of law school, even if you don t have any/much income IBR/PAYE Application will ask for most recently filed taxes, first, as a way of establishing your income Make sure you have the right loans Go to www.nslds.ed.gov or www.studentloans.gov Any loans labeled as Direct qualify for PSLF Any loans labeled not labeled as Direct, need to be consolidated before they will qualify All loans borrowed after July 1 st, 2010 are Direct loans (except Perkins loans)

In order to qualify for PAYE, REPAYE and PSLF, you must have Direct Loans. How do I know what type of loans I have? All loans borrowed after the 2009-10 academic year are Direct loans (except Perkins) Loans borrowed in 09-10 and earlier could either be borrowed through the Direct loan program or the FFEL (Federal Family Educational Loan) program. FFEL loans were borrowed from private organizations/banks (Wells Fargo, CollegeInvest, etc). Many FFEL loans borrowed in 08-09 and 09-10, were sold to the Department of Education, but they are not Direct loans. Check www.nslds.ed.gov or www.studentloans.gov to see what types of loans you have If you have FFEL or Perkins loans, you can consolidate them to turn them into a Direct loan.

Consolidate, if necessary You can consolidate after you finish school Go to www.studentloans.gov to consolidate Consolidation takes at least 6-8 weeks to process May graduates should consolidate in no later than October December graduates should consolidate no later than May Sign up for an Income Driven Repayment Plan Application is available online at www.studentloans.gov You can import your most recent tax return directly from the IRS If you didn t file a return, additional documentation will be needed (paystubs, etc)

Submit the Employment Certification Form annually Or, at minimum, anytime you switch employers Available at www.studentaid.gov/publicservice Apply for PSLF once you ve met all the requirements. You don t sign up for PSLF up front, you apply for it once you have met all the requirements Available at www.myfedloan.org

Purpose: To enable and encourage committed students to accept lower paying public interest legal positions by providing forgivable loans to help repay those students law school debt. Requirements: 501(c) (3); government Must be position that utilizes grad s legal skills AGI of $75,000 or less Graduated after May 2003

Awards are renewable for up to 5 years, if still in qualifying employment Awards are competitive and an application must be submitted Application is available each January online Deadline is the 4 th Friday of January each year Applicants are encouraged (though not required) to be enrolled in IBR/PAYE Annual award amount will typically not exceed your annual IBR/PAYE payment If your payment is $200/month, your LRAP award would not exceed $2400/year. In recent years LRAP awards have covered between 15-75% of a graduate s loan payments. Website: www.law.du.edu/financial-aid/du-loan-repayment-assistance-program

PROSPER Act House of Representatives Eliminates Direct Loans for new borrowers after 7/2019 Existing borrowers can borrow Direct Loans through 9/2024 Can complete current program, but not start new one. Because Direct Loans are eliminated, new borrowers do not have access to the current IDR plans or PSLF. Direct Loans continue to have same repayment/forgiveness provisions Important to keep an eye on new legislation to ensure continued access to IDR/PSLF for future borrowers Contact your congressional representatives!

Student Financial Management: www.law.du.edu/financial-aid Income Driven Repayment Plan Application: www.studentloans.gov Public Service Loan Forgiveness Employee Certification & Forgiveness Application: www.myfedloan.org/pslf Loan Consolidation: www.studentloans.gov Perkins Loan Cancellation www.du.edu/bursar/forms.html Loan Repayment Calculators: www.studentloans.gov www.accesslex.org/calculator Information about Income-Driven Repayment Plans & Public Interest Forgiveness: www.studentaid.gov/publicservice www.studentaid.gov/idr www.equaljusticeworks.org Federal Student Loan History: www.studentloans.gov Go to Repayment Estimator click on view loans www.nslds.ed.gov

Loan Repayment and Consolidation Tuesday, April 10 th, 12pm in Law 125 Tuesday, April 10 th, 5pm in Law 180 Wednesday, April 11 th, 12pm in Law 125 Additional sessions will be held next year For event info go to: ww.law.du.edu/financial-aid

Contact us: Email: FinancialManagement@law.du.edu Phone: 303.871.6557 Web: www.law.du.edu/financial-aid Location: Law 115 Availability: Monday/Wednesday 2-5:30, Tuesday/Thursday 8:30-5:45, Friday 8:30-4 after hours by request Appointment Scheduling: Go to the Law Student tab in PioneerWeb Look under the Calendars and Announcements section Click on Schedule an Appointment with Law School Financial Management

Perkins Loans have their own cancellation provisions Up to 100% of the loan can be cancelled for those employed in/as: Law Enforcement (including District Attorneys) Public Defenders Some forms of education Military (service in area of hostilities) Peace Corps or VISTA Certain other professions (see the Cancellation form below for a full list) Loans will have a certain percentage forgiven for each year of service. For full cancellation, you need to complete 5 years of service. Loans are deferred (no payment is due), while you complete your eligible service. You can submit Postponement/Cancellation Form to the school from which you received your Perkins Loan For DU borrowers: www.du.edu/bursar/forms.html If you consolidate your Perkins Loan, you lose these benefits But, you would make the Perkins loan eligible for IBR, PAYE and PSLF