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G General AudiencesAll ages admitted. No content that would be objectionable to most parents. Polite language. No swearing. Only mild violence.

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Bill MackBill MackAssociate Director of Financial AidAssociate Director of Financial AidUniversity of Texas at DallasUniversity of Texas at Dallas

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Federal Insured Student Loans (FISL)Guaranteed Student Loan (GSL)Auxiliary Loans to Assist Students (ALAS)

Supplemental Loan for Students (SLS)Federal Family Education Loan Program (FFELP)

Robert T. Stafford Loan ProgramWilliam D. Ford Federal Direct Loan Program

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www.studentloans.govwww.studentloans.gov Entrance Counseling Entrance Counseling

First-time borrowersFirst-time borrowersInform them of their rights and responsibilities of taking out Inform them of their rights and responsibilities of taking out

this loanthis loan

www.nslds.ed.govwww.nslds.ed.gov Exit CounselingExit Counseling

All borrowers that depart from your institutionAll borrowers that depart from your institutionGraduate, withdraw, transfer, do not returnGraduate, withdraw, transfer, do not return

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• The school is required to notify the The school is required to notify the borrower that a loan disbursement borrower that a loan disbursement has been made, and that the has been made, and that the borrower may reduce or cancel the borrower may reduce or cancel the disbursementdisbursement

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• Document executed by borrower, Document executed by borrower, which which spells out the terms & spells out the terms & conditions of conditions of the loan disbursements, the loan disbursements, use and use and repaymentrepayment

• If the note is for multiple loan periods If the note is for multiple loan periods and varying amounts, the school and varying amounts, the school

may elect to have the borrower use a may elect to have the borrower use a

Master Promissory NoteMaster Promissory Note

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Oldest active educational loanOldest active educational loan• Institution administers this loanInstitution administers this loan• Previous allocations came from the Dept Previous allocations came from the Dept of of Ed, now schools operate this loan from Ed, now schools operate this loan from

repaid fundsrepaid funds• Fixed 5% interest rateFixed 5% interest rate• Repayment begins 9 months after student Repayment begins 9 months after student

ceases to be enrolled at least 1/2 timeceases to be enrolled at least 1/2 time• Minimum payment as low as $30Minimum payment as low as $30• Maximum repayment term is 10 yearsMaximum repayment term is 10 years

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Undergraduate annual limit Undergraduate annual limit $5,500$5,500Underclassman (first two years) Aggregate limitUnderclassman (first two years) Aggregate limit$11,000$11,000Undergraduate Aggregate limitUndergraduate Aggregate limit$27,500$27,500Graduate annual limit Graduate annual limit $8,000 $8,000 Graduate Aggregate limitGraduate Aggregate limit$60,000$60,000

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• Federal PLUS Loan is a loan for parents of Federal PLUS Loan is a loan for parents of dependent studentsdependent students

• Parent borrower is fully liable for loanParent borrower is fully liable for loan• FAFSA is required, but not based on needFAFSA is required, but not based on need• EligibilityEligibility

• Borrower must be the natural or adoptive parent of the Borrower must be the natural or adoptive parent of the student, or spouse of one of those people (step-parent can student, or spouse of one of those people (step-parent can borrow if he/she is included in the FAFSA)borrow if he/she is included in the FAFSA)

• Borrower must be a US Citizen, U.S. National or eligible non-Borrower must be a US Citizen, U.S. National or eligible non-citizen citizen

• Borrower must have no Title IV loans in defaultBorrower must have no Title IV loans in default• Borrower must be credit worthy, or have credit worthy Borrower must be credit worthy, or have credit worthy

endorserendorser

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•No Annual limit, other that COA minus No Annual limit, other that COA minus AidAid

•No Aggregate limitNo Aggregate limit

• If the parent is not eligible, the student If the parent is not eligible, the student may borrow a Stafford Loan using the may borrow a Stafford Loan using the independent student limits.independent student limits.

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• EligibilityEligibility• Borrower must complete a FAFSA, not need-Borrower must complete a FAFSA, not need-

basedbased• Eligible graduate student attending at least half-Eligible graduate student attending at least half-

time time • Borrower must pass a credit evaluation (or have Borrower must pass a credit evaluation (or have

an eligible “endorser”.an eligible “endorser”.• Annual Loan LimitAnnual Loan Limit

• COA minus other aidCOA minus other aid• No aggregate maximumNo aggregate maximum• 7.9 percent fixed interest. 4% Origination fee.7.9 percent fixed interest. 4% Origination fee.

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•Eligible student in an eligible program at Eligible student in an eligible program at an eligible institution (per General an eligible institution (per General Provisions)Provisions)

•Enrolled at least 1/2 timeEnrolled at least 1/2 time•COA-aid= greater than zeroCOA-aid= greater than zero•COA-EFC-aid=greater than zero for COA-EFC-aid=greater than zero for subsidized loansubsidized loan

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Subsidized DLSubsidized DL((Need-based)-based)Interest:Interest: ED pays duringED pays during

• In-schoolIn-school• GraceGrace• DefermentDeferment

* Student pays duringStudent pays during• RepaymentRepayment

Unsubsidized Unsubsidized DLDL

((Non need-based)-based)

Interest:Interest:Student responsible for allStudent responsible for all

• Can be capitalized, orCan be capitalized, or• Student can choose to pay Student can choose to pay

interest while enrolled interest while enrolled

YYeeaarr iinn SScchhooooll DDeeppeennddeenntt SSttuuddeenntt IInnddeeppeennddeenntt SSttuuddeenntt

FFiirrsstt YYeeaarr UUnnddeerrggrraadduuaattee TToottaall DDLL $$55550000** TToottaall DDLL $$99550000**

SSeeccoonndd YYeeaarr UUnnddeerrggrraadduuaattee TToottaall DDLL $$66550000** TToottaall DDLL $$1100,,550000**

TThhiirrdd YYeeaarr && RReemmaaiinniinngg UUnnddeerrggrraadduuaattee

TToottaall DDLL $$77550000** TToottaall DDLL $$1122,,550000**

GGrraadduuaattee SSttuuddeenntt

TToottaall DDLL $$2200,,550000**

kk

**NNoo mmoorree tthhaann $$33550000 SSuubb mmaayy bbee aawwaarrddeedd ffoorr FFiirrsstt YYeeaarr SSttuuddeenntt,, NNoo mmoorree tthhaann $$44550000 SSuubb ffoorr 22nndd yyeeaarr ssttuuddeennttss,, nnoo mmoorree tthhaann $$55550000 SSuubb ffoorr 33rrdd yyeeaarr ++ uunnddeerrggrraadd ssttuuddeennttss,, nnoo mmoorree tthhaann $$88550000 SSuubb ffoorr ggrraadd//pprrooff ssttuuddeennttss

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*As of July 1, 2012 Graduate students will no longer be eligible for subsidized Stafford Loans.

CombinedCombinedSub Sub & & UnsubUnsub

Sub may not Sub may not exceedexceed

Undergrad Undergrad DependentDependent

$31,000$31,000 $23,000$23,000*Undergrad *Undergrad IndependentIndependent $57,500$57,500 $23,000$23,000

Grad and Grad and ProfessionalProfessional

$138,500$138,500 $65,500$65,500

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* And dependent student whose parent is unable to obtain a PLUS loan; denial of parent’s PLUS produces add’l unsub

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• Must occur when an undergraduate Must occur when an undergraduate student’s academic program is less than 1 student’s academic program is less than 1 year in lengthyear in length

• Must occur when a student is completing a Must occur when a student is completing a remaining period of enrollment that is remaining period of enrollment that is less less than one academic yearthan one academic year

• Standard proration formula: Amount of DL Standard proration formula: Amount of DL student could have for grade level ÷ 24 x student could have for grade level ÷ 24 x number of enrolled hoursnumber of enrolled hours

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• Perkins Loans – no feesPerkins Loans – no fees• Fixed interest = 5% (no interest while enrolled or Fixed interest = 5% (no interest while enrolled or

when in grace period)when in grace period)

• Direct Loans – 1% origination feeDirect Loans – 1% origination fee• 0.5% rebate0.5% rebate• Undergrad sub = fixed interest of 3.4%Undergrad sub = fixed interest of 3.4%• Graduate sub and unsubsidized = fixed interest of Graduate sub and unsubsidized = fixed interest of

6.8%6.8%

• Direct Parent PLUS / Grad PLUS – 4% Direct Parent PLUS / Grad PLUS – 4% origination feeorigination fee• 1.5% rebate1.5% rebate• fixed interest = 7.9%fixed interest = 7.9%To retain rebates,1To retain rebates,1stst 12 pymts must be on time 12 pymts must be on time

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• As of July 1, 2012 the borrower will be As of July 1, 2012 the borrower will be charged the full origination fee at charged the full origination fee at disbursment.disbursment.

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• Subsidized Stafford interestSubsidized Stafford interest•7/1/98-6/30/06 2.36 (varies annually)7/1/98-6/30/06 2.36 (varies annually)•7/1/06-6/30/08 6.8 fixed7/1/06-6/30/08 6.8 fixed•7/1/08-6/30/09 6.0 fixed7/1/08-6/30/09 6.0 fixed•7/1/09-6/30/10 5.6 fixed7/1/09-6/30/10 5.6 fixed•7/1/10-6/30/11 4.5 fixed7/1/10-6/30/11 4.5 fixed•7/1/11-6/30/12 3.4 fixed7/1/11-6/30/12 3.4 fixed•7/1/12- ? 6.8 fixed 7/1/12- ? 6.8 fixed

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• Federal education loans that may be Federal education loans that may be consolidatedconsolidated*FISLFISL*FFELPFFELP*Direct LoansDirect Loans*National Direct Student LoansNational Direct Student Loans*PLUS PLUS *PerkinsPerkins*Nursing Student LoanNursing Student Loan*Health Education Assistance Loan (HEAL)Health Education Assistance Loan (HEAL)

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Thirty-year repayment (maximum)Thirty-year repayment (maximum) Interest rate will be a fixed interest rate, capped Interest rate will be a fixed interest rate, capped

at 8.25%at 8.25% A weighted average is used to figure the interest A weighted average is used to figure the interest

rate and then it is rounded up to the nearest 1/8 of rate and then it is rounded up to the nearest 1/8 of a percent.a percent.

*A consolidation loan can “cure” a defaulted federal student loan.

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•StaffordStafford• Begins at the end of grace period (6 months after the Begins at the end of grace period (6 months after the

borrower drops below half-time enrollment)borrower drops below half-time enrollment)• Parent PLUS loan Parent PLUS loan

• Enters repayment after the full disbursement for the yearEnters repayment after the full disbursement for the year• OptionalOptional-parent can request deferment while student is -parent can request deferment while student is

enrolled at least half-time and during six months following enrolled at least half-time and during six months following that – up to 25 years to repay)that – up to 25 years to repay)

• Grad PLUS loanGrad PLUS loan• Six months after borrower falls below half-time Six months after borrower falls below half-time

enrollment enrollment

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• Single information source for all Single information source for all federalfederal loans – loan holder info, amounts loans – loan holder info, amounts owed owed including interest accrualincluding interest accrual

www.nslds.ed.govwww.nslds.ed.gov

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• Standard – Monthly payment remains consistent for 10 years

• Graduated – Monthly payments are lower at first but then increase every 2 years over the 30 yr repayment

term• Income-sensitive – Monthly payments are based on your

monthly gross income• Extended – Monthly payments over a 25 year plan. • Income Contingent – pymts based on annual calculations

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

• Income Based Plan - Monthly payments will not exceed 15% of the amount by which your adjusted gross income exceeds 150% of the poverty line for your family size.

(25 yr forgiveness)

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• Period of postponing paymentsPeriod of postponing payments• Federal government will pay interest for Federal government will pay interest for

the the borrower on Subsidized DLborrower on Subsidized DL• EntitlementEntitlement• Some possible deferments:Some possible deferments:

- Education- Education- Peace Corps/ Public Service/ Military- Peace Corps/ Public Service/ Military

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• Temporary cessation, Temporary cessation, reduction, or extension reduction, or extension of of

paymentspayments• Student is responsible for Student is responsible for interest that accruesinterest that accrues

• Borrower is willing but Borrower is willing but temporarily unable to paytemporarily unable to pay

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•Failure to meet the terms of the promissory noteFailure to meet the terms of the promissory note• Failure to repayFailure to repay• Failure to attendFailure to attend

•Borrower is considered to be in default after Borrower is considered to be in default after being delinquent for 270 daysbeing delinquent for 270 days

•Borrower is subject o wage garnishment, seizure Borrower is subject o wage garnishment, seizure of income tax refunds, lottery winnings, license of income tax refunds, lottery winnings, license non-renewal, sued by DOEnon-renewal, sued by DOE

•Student not eligible for federal financial aidStudent not eligible for federal financial aid•Damage to the borrower’s consumer credit Damage to the borrower’s consumer credit scorescore

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• Satisfactory Repayment Satisfactory Repayment ArrangementsArrangements

•Six on-time voluntary paymentsSix on-time voluntary payments

• RehabilitationRehabilitation•Nine on-time voluntary paymentsNine on-time voluntary payments

• ConsolidationConsolidation

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• Includes DL loans, and loans underlying DL Includes DL loans, and loans underlying DL consolidation loans consolidation loans

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

within the next 3 fiscals yearswithin the next 3 fiscals years

• High rate has consequences for schoolsHigh rate has consequences for schools• >15% = loss of 1 installment/semester>15% = loss of 1 installment/semester• >15% = 30 day hold on 1>15% = 30 day hold on 1stst time, 1 time, 1stst year year

borrowersborrowers• > 40% = loss of participation in Title IV funding> 40% = loss of participation in Title IV funding

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• Interest rates are usually variableInterest rates are usually variable• Origination and repayment fees varyOrigination and repayment fees vary• Co-borrower requirements (underwriting)Co-borrower requirements (underwriting)• Most require school-certificationMost require school-certification

• International studentsInternational students• SAP ineligibleSAP ineligible• Non-degree studentsNon-degree students• Reached federal aggregate maximumReached federal aggregate maximum

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Bill MackBill Mack

Bill.Mack@utdallas.edu972-883-4795972-883-4795