EXIT LOAN COUNSELING

Things to Know Before you Go…..• Know your Loans • Repayment Options• Loan Consolidation• Deferment and Forbearance• Loan Forgiveness• Consequences of Default• Rights & Responsibilities• Tax Benefits

KNOW YOUR LOANS

Types of Loans

• Federal Direct Stafford Loan

• Federal Direct PLUS

Loan TermsStafford PLUS

Interest Rate 6.8%, Fixed 7.9%, Fixed

Interest Accrual while in School

Sub- NoUnsub - Yes Yes

Grace Period after Graduation 6 mo. 6 mo.

(available upon request)

Lender Private orUS Govt.

Private orUS Govt.

Where is my loan?

National Student Loan Data System

Who is my servicer?

What is my interest rate?

When will I need to start making payments?

How much do I owe?

www.NSLDS.ed.gov

www.NSLDS.ed.gov

Tracking Your Loans

REPAYMENT OPTIONS

Stafford and PLUS Repayment Plans• Standard

• Graduated

• Extended

• Income Based Repayment (IBR)

• Income Sensitive and Income Contingent

Standard

• Available for all Federal Loans• 10 year repayment schedule• Fixed payment amount

Advantage: Pay lowest amount of interest over the life of the loan.

Graduated• Available for all Direct, FFEL, and Federal Consolidation Loans

(w/out Parent PLUS)

• 10 year repayment

• Payment amount is lower in the earlier years of repayment and gradually increase over time.

• Payment amount is generally reset every two years.

• Minimum Payment = Interest.

Advantages: Loan payments increase as salary increases, and lower interest cost than Extended Repayment

Extended• Available for all Direct, FFELP, and Federal Consolidation Loans

(w/out parent PLUS)• Must have more than $30,000 in outstanding Direct or FFEL

Loans.• Up to 25 year repayment • Payments are fixed or graduated, and are not based on

income.• Minimum Payment = Interest

Advantage: Allows for a more gradual increase in loan payments than the Graduated Repayment Plan

Payment = $312

Interest = $48,000

Payment = $518

Interest = $17,000

Payment = $355 up to $767

Interest = $20,000

How my payment plan affects my payment and the interest I will pay….

Standard(10 Years)

Extended(25 Years)

Graduated(10 Years)

$45, 000 Loan @ 6.8% Interest

Income Contingent (ICR)

• Available for Direct loans only • 25 year repayment• Payment amounts are based on annual income, total

loan debt, and family size.• Monthly payment may be less than interest charged.

Advantage: Loan payments increase as salary increases, and allows for loan forgiveness after 25 years.

Income-Based Repayment (IBR)• Available for Direct Loans or Direct Consolidation Loans

(w/o PLUS)

• Loan payment limited to 15% of discretionary income

• After 25 years remaining balance is forgiven.

• Monthly payment maybe less than the interest charged.

• For subsidized Stafford loans, if your payment does not cover your monthly accrued interest, your interest will be subsidized for up to 3 years.

IBR Comparison

10 Yr. Standard Monthly Payment = $518

IBR Monthly Payment = $288

Borrower has loan debt of $45,0006.8% interest rate

Salary is $40,000/yrSingle with no dependents

Direct Loan Servicing

www.myedaccount.com

LOAN CONSOLIDATION

Federal Loan Consolidation

• Available for Stafford, Perkins and PLUS loans

• Pays off multiple loans with one new loan

• New loan carries new terms (interest rate is calculated using a weighted average)

• You may consolidate a defaulted loan

http://loanconsolidation.ed.gov

loanconsolidation.ed.gov

More on consolidation…

• May only consolidate once, allowed to add loans, but consolidation cannot be reversed

• Can be much more expensive due to longer repayment term

• ACS is the servicer for all Direct Consolidation loans

DEFERMENT AND FORBEARANCE

Deferment and Forbearance

What’s the same?Temporary suspension of regularly scheduled payment

What’s different?• Interest accrual • Forbearance is granted according to borrower’s

eligibility, and also at the lender’s discretion.• Deferment is granted according to borrower’s eligibility

as determined by federal regulation.

To Qualify….. Deferment

Military Service

In School (at least half-time)

Economic Hardship (3 yr. max)

Unemployment (3 yr. max)

Forbearance

Serving in AmeriCorps (receiving an education award)

During medical and dental internship or residency programs

Monthly student loan payments are 20 % or more than your total monthly gross income.

Discretionary

Unemployment Deferment

…be unemployed or working less than full-time

AND

Seeking, but unable to find, full-time employment in any field or at any salary or responsibility level, and registered with a public or

private employment agency (school placement offices and “temporary agencies do not qualify)

...be eligible for unemployment benefits

OR

To be eligible the borrower must…

Economic Hardship Deferment

To qualify, the borrower must meet one of the following criteria…

• Receiving an economic hardship deferment in the Federal Direct Loan or Federal Perkins Loan Program

• Receiving/received payments under a federal or state public assistance program

• Peace Corps volunteer• Working full-time and monthly income does not exceed

the larger of the federal minimum wage rate or 150% of the poverty guideline.

LOAN FORGIVENESS

Public Service Forgiveness - Direct Loans

• Available for Direct Loans only (Not FFELP)

• Work full time (at least 30 hours) for the government or a qualifying non-profit organization - 501(c) (3)

• Make 120 on time payments (does not need to be consecutive)

• Payments must be made under the IBR, ICR or 10 Yr. Standard repayment plans.

• Balance is forgiven

• Submit forms annually to the Department of Ed

Stafford & Plus - Additional Forgiveness

• Remaining balance after 25 years of qualifying payments.

• Taxable income to the borrower in the year the loan forgiveness occurs

Discharge• Total and Permanent Disability Discharge• Death

Student loans are usually not

dischargeable due to bankruptcy

CONSEQUENCES OF DEFAULT

The Perils of Default• 270 Days Past Due = Default

• You can’t walk away from making your payments.

• Consequences:• Wages and Federal and State tax refunds garnished• Additional costs to you (collection charges, late fees, etc.)• Professional licenses withheld• Loss of eligibility for future federal financial aid and loan

deferments• Full amount of loan comes due

Avoiding DefaultKeep good recordsOpen and Read your mail.Notify lenders/servicers of name/address

changesPrioritize your debts: pay off most expensive debt

firstTake advantage of deferment options if you qualify

YOUR RIGHTS & RESPONSIBILITIES

Your Rights A copy of your Promissory Note.

Repayment Disclosure Statement with detailed information about interest rates, fees, your balance, and repayment options.

Grace period and deferments (if you qualify)

Loan forgiveness under certain circumstances

Graduated or income-based repayment plan (if you qualify)

Prepayment without penalty

Notice if lender assigns or sells your loan

Questions answered

Your Responsibilities Repay your loan.

Make your payments on time even if you don’t receive a bill.

Notify your loan holder or servicer immediately of any change to your name, address, and other personal identification information.

Notify your lender if enrollment status changes.

Complete exit and entrance interviews.

Read and understand your loan documents.

Ask for help if you need it.

Resolving Disputes – Federal LoansFederal Student Aid Ombudsman’s Office

U.S. Department of EducationFSA Ombudsman

830 First Street, NE, Fourth FloorWashington, DC 20202-5144

www.ombudsman.ed.govfsaombudsmanoffice@ed.govPh: 877-557-2575 (toll free)

What the Ombudsman Office can do:

Research your problem in an impartial and objective manner and will try to develop a fair solution

What the Ombudsman Office cannot do:

x Does not have the authority to impose a solution

TAX BENEFITS

Student Loans and Your Taxes

American Opportunity Credit

Lifetime Learning Credit

Student Loan Interest Deduction

Tuition & Fees Deduction

Contact Information

Duke Student Loan OfficeBox 90775

studentloans@duke.edu919-660-3630

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Questions