student loan fundamentals

STUDENT LOAN FUNDAMENTALS

2014 TASFAA NAOW Workshop

May 12-14, 2014 – Arlington, Texas

Tanya VittitowAssociate Director – UT Arlington

Student Loan Programs and Eligibility

Student Loan Application Process

Student Loan Repayment

Federal Student Loan Programs

Direct Subsidized Loan

Direct Unsubsidized Loan

Direct PLUS Loans

Direct Consolidation Loans – Student Loan Repayment

Perkins Loan Program

Alternative Loans

Direct Subsidized Loans

Need-based Loan for Undergraduate Students Enrolled at Least

Half Time

No In- School Accrued Interest – 6 Month Grace Period

150% Direct Subsidized Loan Limit Rule Applies

Fixed Interest Rate 3.86% – July 1 Annual Adjustment

Origination Fee 1.072% – Sequester Adjustment on October 1, 2014

150% Direct Subsidized Loan Limit

New Borrowers on/after July 1, 2013 – 0 Loan Balance

Ineligible for Additional Subsidized Loans Beyond 150% of the

Published Program Length

Replaced with Unsubsidized Loan

Additional Dependent Subsidized Loan – Parent PLUS Denial

Direct Unsubsidized Loans

Non-Need-based Loan for Undergraduate & Graduate

Students Enrolled at Least Half Time

In- School Accrued Interest – 6 Month Grace Period

Fixed Interest Rate 3.86% Undergrad &

5.41% Grad – July 1 Annual Adjustment

Origination Fee 1.072% – Sequester Adjustment on October 1, 2014

Direct PLUS Loans

Parent/Gaurdian of Dependent Undergraduate Students

Graduate Students

Non-Need-based Loan - Student Enrolled at Least Half Time

Borrow to Cost of Attendance – No Aggregate Limit

Credit Check Required – Adverse Credit = Additional Unsubsidized for Undergraduate Students

Fixed Interest Rate 6.41% – July 1 Annual Adjustment

Origination Fee 4.288%– Sequester Adjustment on October 1, 2014

Interest Accrues and Repayment Begins at 100% Loan Disbursement

Deferment Can be Requested at Application

Independent Undergraduate Student

Base Eligibility (Sub or Unsub)

Additional Unsubsidized Loan

Freshman $3,500 $6,000Sophomore $4,000 $6,000Junior/Senior $5,500 $7,000Maximum Total (Aggregate) Limit:

$57,500 ($23,000 can be subsidized)

Graduate/Professional StudentUnsubsidized Loan $20,500/academic yearMaximum Total (Aggregate) Limit:

$138,500 ($65,500 may be subsidized)

Dependent Undergraduate Student

Base Eligibility (Sub or Unsub)

Additional Unsubsidized Loan

Freshman $3,500 $2,000Sophomore $4,000 $2,000Junior/Senior $5,500 $2000Maximum Total (Aggregate) Limit:

$31,000 ($23,000 can be subsidized)

Direct Loan Application Process

Eligible Student in Eligible Program with Pell Eligibility Determination Complete

www.studentloans.gov

Entrance Counseling

First Time Subsidized/Unsubsidized and PLUS Student Borrowers

Completed Prior to First Disbursement

Master Promissory Note

Loan Note for All Programs Valid for 10 Years

Additional Direct Loan Requirements

Exit Counseling

www.nslds.ed.gov

Required when Student Ceases to Attend Half Time –

Includes Transfers

14 Day Disbursement Notification – Right to Cancel

Per Disbursement

Perkins Loan Program

Need-based Loan – Student Enrolled at Least Half Time

School with Funds – Lender and Servicer

Undergraduate and Graduate Students

Annual Limit – Undergraduate $5,500 and Graduate $8,000

Aggregate Limit - Undergraduate $27,500 and Graduate $60,000

Grace Period 9 Months - 10 Year Max Repayment

Alternative Loan Programs

Non-need Based External Loan

Interest Rates, Origination Fees and Repayment Terms Vary

Should Require School Certification - http://

ifap.ed.gov/dpcletters/attachments/GEN1001A-AppSelfCert.pdf

School Provided List – Consumer Disclosure Requirements

Student Loan Repayment

Single Source – www.nslds.ed.gov

Multiple Repayment Options Via ServicerStandard – Monthly payment remains consistent for up to10 years

Graduated – Monthly payments are lower at first but then increase every 2 years up to 10 years.

Income-sensitive – Monthly payments are based on your annual income and payments change as your income changes.

Extended – Payments may be fixed or graduated for up to 25 years. Income Contingent – payments based on annual

calculations and adjusted so as not to cause “undue hardship”; (25 year forgiveness)

Income Based- Monthly payments will not exceed 15% of the amount by which your adjusted gross income exceeds

150% of the poverty guideline for your family size. (25 year forgiveness)

Pay As You Earn – Monthly payments will not exceed 10% of the amount by which your adjusted gross income exceeds

150% of the poverty guideline for your family size. (20 year forgiveness)

Student Loan Repayment Continued

Grace Period – Period of time (generally 6 months) in witch a

student has to begin repayment.

Deferment – Period of time payments are postponed for an approved

set of reasons; no-accrued interest on Subsidized Loans.

Consolidation – Can be fix for default issues and/or way to combine

all loans into one with one servicer.

Student Loan Repayment Continued

Cohort Default RateIncludes DL loans, and loans underlying DL consolidation loans

CDR = % of borrowers who enter repayment in a given federal fiscal year who then

default within the next 3 fiscals years

High rate has consequences for schools

>15% = loss of 1 installment/semester

15% = 30 day hold on 1st time, 1st year borrowers

> 40% = loss of participation in Title IV funding

THANK YOU

QuestionsTanya Vittitow

Associate Director – UT Arlingtonvittitow@uta.edu

817.272.69169