congratulations class of 2014! from: the financial aid office team
DESCRIPTION
Congratulations Class of 2014! From: The Financial Aid Office Team. (Atheia, Jacqui, Kristin, Melissa, Sean, Sue, Tom, Usha). Exit Interview Goals. BASICS Rights/responsibilities servicer requirements Verifying the accuracy of your debt STRATEGIES Repayment Hierarchy & overall strategies - PowerPoint PPT PresentationTRANSCRIPT
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Congratulations Class of 2014!
From: The Financial Aid Office
Team
(Atheia, Jacqui, Kristin, Melissa, Sean, Sue, Tom, Usha)
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Exit Interview Goals
BASICS Rights/responsibilities servicer requirements Verifying the accuracy of your debt
STRATEGIES Repayment Hierarchy & overall strategies What to do/when to do it Forbearance or Income Based Repayment or
something else?? Consolidation Tax Benefits Don’t Default!!
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Loans to cover
1) Institutional loans TJU loan Alumni loan Perkins loan PCL Donor named
2) Stafford3) Grad PLUS4) Private alternative loans
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Submit before you leave presentation
1. Statement of Attendance 2. Repayment Schedule (only for those
with Jefferson loans)
Survey – we will email you a Survey Monkey link prior to March 15
Remember to complete federally required online EXIT counseling at http://studentloans.gov
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TJU Debt Record
Includes all aid you received each academic year
Loans reflect Principal amount only – payments & interest are not reflected
Bottom of sheet tallies your total loan principal debt by Banner code –
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Institutional & Institutionally administered Loans
Federal Perkins Loan Alumni Loan, Simpson Loan, Levi Loan, TJU Loan etc. Federal PCL and LDS
Serviced by Xerox/ACS, Inc. (800) 826-4470 http://acs-education.com
Mailing of payments to:
With coupon: Without coupon:Xerox Educational Services Xerox Educational
Services, Inc– PO Box 3295 CPS Monetary Processing
Milwaukee, WI 53201-3295 PO Box 7061 Utica, NY 13504-7061
All institutional loans get repaid to the University via Xerox (ACS)
Your TJU contact person:
Rebecca Reynolds1020 Walnut Street, Room 521
Philadelphia, PA 19107(215) 503-7226
Serviced by Xerox/ACS, Inc. (800) 826-4470
http://acs-education.com
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Jefferson is the lender for….
Institutional loans (e.g., TJU Loans, Alumni Loans, Morgan Loan etc.)
Certain Federal Loans Federal Perkins Federal Loans for Disadvantaged
Students Federal Primary Care Loans
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TJU Loan Repayment Schedule
The Repayment Schedule Lists:1. payment start date2. monthly payment amount3. repayment period4. interest rate 5. Amount of interest that will accrue
over life of loan6. total loan cost (interest and principal)
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Jefferson Loan Parameters
Jefferson Loans – aka TJU Loan, Alumni Loan, or loan named after Donor (Morgan, Simpson, Mills etc.)1. 12 month grace only
(exceptions: Wayland, Robt. Wood Johnson, Sledd Cunnison loan have post graduate training deferment options beyond Grace period)
2. 10 year repayment
3. Fixed 5% interest rate (exceptions: Wayland, Kellogg, Snyder, Bacharach, and Robt Wood Johnson have reduced interest rates)
4. Cancelled upon Death/permanent disability
Jefferson is the lender/Xerox-ACS is the Servicer
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Federal Perkins Loan Parameters
Federal Perkins – 9 month grace Forbearance is permitted 6 month grace before repayment begins 10 year repayment Fixed 5% interest rate Cancelled upon Death/permanent disability
CAN BE CONSOLIDATED WITH FEDERAL STAFFORD/GRAD PLUS!
Jefferson is the lender/Xerox-ACS is the Servicer
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Federal LDS Loan Parameters
Loan for Disadvantaged Students
12 month grace Deferment is permitted for 3 year Residency 10 year repayment Fixed 5% interest rate Cancelled upon Death/permanent disability
CAN BE CONSOLIDATED WITH FEDERAL STAFFORD/GRAD PLUS
Jefferson is the lender/Xerox-ACS is the Servicer
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Federal PCL Loan Parameters Primary Care Loan
12 month grace Deferment is permitted for 3 yr Residency 10 year repayment (20 years max if requested
depending on loan amount) Fixed 5% interest rate Cancelled upon Death/permanent disability
Has requirement to work in Primary Care (as defined in promissory note) while loan is in repayment
Cannot be consolidated!
Jefferson is the lender/Xerox-ACS is the Servicer
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Who is Who? Lender – who lends the money Guarantor – who guarantees the funds to
the lender if you do not repay Servicer – MOST IMPORTANT – they
have processed your loan, disbursed the funds and will be collecting your payments and working with you on deferment/forbearance
Many to most borrowers only have a “servicer” due to Direct Lending
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Forbearance
• What is it? Postponement of your federal loans for a set period of time - usually for 12 months at a time.
• Available for duration of residency for Stafford, Grad PLUS and Federal Consolidation Loans
• Application required at least annually – most servicers require a form for sign-off from Housestaff Office
• Mandatory that servicer grant forbearance for duration of residency… but borrower MUST ask for it and complete form
• Interest accrues and may capitalize on all loans, subsidized and unsubsidized – confirm with your servicer
• Use only after you have exhausted your grace period
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Federal Stafford Loan (FFELP/Direct Loan)
6 month grace period
Eligible to apply for Forbearance
Can be consolidated with Grad PLUS, Perkins, LDS
Interest rate - If borrowed: 7/1/13 to 6/30/14 – fixed 5.41% 7/1/06 to 6/30/13 –fixed 6.8%; Prior to 6/30/2006 - Rate is variable on all loans that are not
consolidated.
10 year repayment is standard – can ask for longer repayment period (see loan repayment slide)
Cancelled upon Death/permanent disability
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Federal Graduate PLUS
No grace period (check with servicer- many grant auto-forbearance for 6 months to align with Stafford)
Eligible to apply for Forbearance just like Stafford Can be consolidated with Stafford, Perkins, and LDS Interest rate - If borrowed:
7/1/13 to 6/30/14 – fixed 6.41% 7/1/10 to 6/30/13 –fixed 7.9%; 7/1/06 to 6/30/10 – fixed 8.5%
Prior to 6/30/2006 – loan was available to parents only
10 year repayment is standard – can ask for longer repayment period- (see loan repayment slide)
Cancelled upon Death/permanent disability
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Private Alternative Loans (includes Residency/Relocation loans)
Usually 6 to 9 month grace (interim) period
Most deferred for at least 3 years during residency – read promissory note or call lender to check parameters on length of forbearance and necessary documentation of internship/residency
Interest rate will change as frequent as the index used (indexes include 30 day LIBOR; 91 day LIBOR; PRIME RATE)
there is usually no ceiling on the interest rate.
Not cancelled upon death or permanent disability
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Finding Your Federal Loans on NSLDS.ed.gov
To access, provide:
- SS#
- Date of Birth
- First 2 letters (last name)
- PIN # (www.pin.ed.gov)
www.nslds.ed.gov
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Contact all of your loan Servicers REQUIRED!
45 days before or after your last date of enrollment Confirm
1. That you are no longer enrolled2. repayment amount/amount owed3. Grace period:
Start date End date when first payment is due!!!
4. when Forbearance form should be submitted(for Stafford and Grad PLUS)
Call first - then follow up in writing if you think this is necessary – keep copy of written letter for your file
Update your address
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Dates To Remember- What to do and when to do it! (See chart in handout-page 2)
Grace periods relate to each individual loan borrowed. If you have consolidated any loans, you have used the grace
period and repayment will start immediately at graduation (check with servicer for exact date). Federal Grad PLUS loans have no grace period as well (check with servicer to confirm options such as immediate forbearance).
If you used the full 6 month Grace period on a loan or group of loans (e.g., between college and TJU, leave of absence) you do not get another grace period on these loans
FILE FOR FORBEARANCE 2 - 4 WEEKS BEFORE REPAYMENT DUE DATE – Standard form is usually necessary
If no consolidation or if loan was never in repayment, 6 month grace period still exists.
FFELP vs. DIRECT Loans
FFELP – Federal loans borrowed from a bank/lender (e.g., Wells Fargo, Citibank). Most have been turned over to federal servicer
DIRECT - Federal loans borrowed directly from government; only lender beginning 7/1/10 – sometimes referred to as a “DL” loan
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Current Repayment Options
1. Standard (Level) Repayment
2. Extended Repayment
3. Graduated Repayment
4. Income Sensitive Repayment – FFELP only
5. Income Contingent – Direct Loans only
6. Income Based Repayment – FFELP and Direct Loans – NEW 7/1/09
7. Pay As You Earn (PAYE) – New 12/2012
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Loan Repayment Plans
Standard (Level)• Level monthly payments over 10 year
period • Higher monthly payments - Lowest overall
cost
Extended (Level)*• Level monthly payments over 25 year
period
*Must have an outstanding balance of more than $30,000 in Stafford Loans on or after October 7,1998
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Graduated Payments start low, increase usually every two years FFELP – must have more than $30,000 outstanding DL – monthly payment calculated based on DL debt and
interest rates of loans; never less than monthly interest accrual Higher overall cost - Good for early cash flow, but remember
cost!
Income Sensitive - FFELP Program Only Payments tied to income Finish in 10 years (may be extended to 15 years)
Income Contingent - Direct Loan Program Only Monthly payment amount calculated based on borrower’s
household income, family size, and total Direct Loan debt.
Loan Repayment Plans
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Loan Repayment Plans
Income Based Repayment (IBR)• caps loan payments at 15% of your household income that
exceeds 150% of the federal poverty guideline for your family size
• payment amount will change with increase in income• 25 years repayment period• Calculation includes ONLY Federal education loans - cannot
include Perkins or LDS unless you have had these loans included in a Federal Direct Loan consolidation
• Must provide income verification (W2s, tax returns, paycheck stub, employment contract). *DEPENDING ON SERVICER*
Any balance remaining after 25 years is forgiven but amount is considered taxable!!!
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Loan Repayment Plans
Pay As You Earn Plan – 2012
Direct Loan Program only For new borrowers only: You are a “new Borrower” “new Borrower” if you
Have no Direct or FFEL loans as of 10/1/2007
and Received a Subsidized, Unsubsidized, or Grad PLUS loan
disbursement on or after 10/1/2011, or a Direct Consolidation * loan based on an application received on or after 10/1/2011.
* Exception: You are not a new borrower for the PAYE plan if you consolidated loans that otherwise made you ineligible, i.e., loans made prior to 10/1/2007
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Loan Repayment Plans
Pay As You Earn Plan – 2012 (continued)
Modeled on IBR, incorporating statutory IBR changes scheduled to take effect for new borrowers in 2014
Under Pay As You Earn, borrowers pay the lesser of: 10% of discretionary income (income-based payments) or What they would have paid under the 10-year standard
repayment plan (non-income-based payments) Must demonstrate Partial Financial Hardship (PFH) 20 year repayment period then cancelation/forgiveness of
remaining balance. Forgiven portion is taxable.
More information available at StudentAid.gov/PayAsYouEarn
Income-Based Repayment
Formula for a Partial Financial Hardship (PFH):
Standard payment* > IBR payment
More likely when income is low and debt is high Max payment in IBR is the Standard amount* 1st post-M.D. year median stipend is $48,700**
•As originally determined when calculating Partial Financial Hardship based on $185,000 entering repayment
•($162,000 total education debt plus $23,000 of capitalized interest from 4-years of school and 6-months of grace).
•**Preliminary data from AAMC Survey of R/F Stipends and Benefits and AAMC Analysis
$2,130 / mo* $410 / mo
Income-Based Repayment
Benefits
1. Partial interest subsidy during the first 3 years
2. Unpaid interest does not capitalize when:
1. Annual paperwork* is filed timely
2. Borrower demonstrates a PFH
3. Possible loan forgiveness
*As reported to the IRS. Annual verification required of both AGI and family size
Income-Based Repayment
To enter IBR, borrower must
• Contact each servicer individually to request • Give access to household AGI* (tax records)
• Inform servicer(s), annually, of family size
• Demonstrate a Partial Financial Hardship (PFH)
*As reported to the IRS. Annual verification is required of both AGI and family size.
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Income-Based Repayment Chart
IBR Monthly Payment Amount 2009
AnnualIncome
Family Size
1 2 3 4 5 6 7
$10,000 $0 $0 $0 $0 $0 $0 $0
$15,000 $0 $0 $0 $0 $0 $0 $0
$20,000 $47 $0 $0 $0 $0 $0 $0
$25,000 $109 $39 $0 $0 $0 $0 $0
$30,000 $172 $102 $32 $0 $0 $0 $0
$35,000 $234 $164 $94 $24 $0 $0 $0
$40,000 $297 $227 $157 $87 $16 $0 $0
$45,000 $359 $289 $219 $149 $79 $9 $0
$50,000 $422 $352 $282 $212 $141 $71 $1
$55,000 $484 $414 $344 $274 $204 $134 $64
$60,000 $547 $477 $407 $337 $266 $196 $126
$65,000 $609 $539 $469 $399 $329 $259 $189
$70,000 $672 $602 $532 $462 $391 $321 $251
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Income-Based Repayment
Determined by Calculating 15% of income that exceeds 150% of the poverty line for a borrower’s family size
SEE FAQ in PACKET or also located at www.ibrinfo.org
Online IBR Calculators
www.finaid.org
www.IBRinfo.org
www.aamc.org/FIRST
Studentloans.gov
Postpone payments and pay Later (using Forbearance)
Pay Now (using Income-Based Repayment)
Do both –forbear loan payments but make voluntary payments (you are in the driver’s seat to determine the amount and frequency of payments)
The most feasible options during residency:
Determines the payment
amount &
interest cost
Repayment Plan Comparison
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10 Year Public Service Loan Forgiveness
• Must work for a non-profit organization under section 501(c)(3) of IRS code that is exempt from taxation under section 501(a) of the IRS code – includes most not-for-profit private schools, colleges, and universities. Each of the 120 payments must have been made during a period of qualifying employment
• Must make 120 monthly payments under qualifying plan• Only available to those who have loans under the Direct
Loan Program (consolidation may be necessary)• After 120 qualifying payments, your remaining balance can
be forgiven; Payments do not need to be consecutive• Amount forgiven is NOT taxable under PSLF
• MyFedLoan is only federal servicer managing PSLF
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•On January 31, 2012, the Department released a voluntary Employment Certification Form that borrowers can submit to the Department for a determination of whether their employment and payments qualify for PSLF
• Borrower has employer complete employment verification section• Borrower submits form to FedLoan Servicing (regardless of who
current servicer is)• FedLoan Servicing determines whether employment qualifies• If employment qualifies, borrower’s loans are transferred to FedLoan
Servicing, for a determination of how many qualifying payments were made during the period of employment
• Borrowers loans remain at FedLoan servicing permanently
•Borrower can submit the form as often as annually
For more, including Q&As, see StudentAid.gov/PublicService
10 Year Public Service Loan Forgiveness
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Pros and Cons of Public Service Loan Forgiveness Program
• Will federal funding be available in 10 years??
• Will you be required to make career decisions regarding where you work based on program??
• Will your plans change?
• Do you have the financial ability to make loan payments as a resident when payments and income are lowest for you??
• How much federal debt will remain for forgiveness after 10 years??
• Will you have more income potential over a lifetime in the private sector than what would be forgiven in this program???
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Consolidation Fast Facts
Combining many federal loans into one loan, one set of new terms, with one servicer – NEW you can choose the servicer (note: MyFedLoan is the only servicer for PSLF)
Interest rate is determined by calculating the weighted average (+1/8 point) of all loans being consolidated – interest rate is fixed.
Have option of consolidating all federal loans or only some– or none at all
Federal Government is the only entity offering federal Consolidation http://studentloans.gov (see option “Direct Consolidation Loan Applications” under the
button)
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Consolidation
Why to consider consolidation:
1. Multiple servicers to repay (convenience)
2. To obtain Public Service Loan Forgiveness (DL) (if consolidated, Perkins, LDS, and FFELP loans will become Direct Loans)
3. To make Perkins or LDS loans eligible for IBR
When to Consolidate
If you consolidate before your grace period is exhausted, you may lose the remaining grace period. (Don’t consolidate in June)
Start consolidation 40-60 days prior to first payment Can be done online (debt from NSLDS is integrated) If consolidation is not complete before first payment is
due, apply for forbearance on all loans included in the consolidation so no payment is necessary (don’t make any payments after you have started the application).
A repayment plan will be chosen at this time but entering repayment is not required; forbearance can be utilized
More than likely, a new forbearance on the consolidated loan would need to be filed. 41
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You can prepay your federal student loans with no penalties.
make payments towards the highest cost unsubsidized loans that may have the most frequent capitalization.
Paying Loans Off Early
Unless otherwise noted, loan payments typically are applied first toward collection costs (attorney’s fees, etc.), then interest, and finally principal
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Repayment Hierarchy – do you have the ability to make voluntary or extra payments?
Review all of your debt – include credit cards, car loans etc.
Calculate which is the most expensive using interest rate, repayment terms etc.
Start making voluntary/extra payments to the most expensive first
Perkins/institutional loans – cheapest during 1st year while interest is subsidized
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Loan repayment programs
Military NHSC Pennsylvania Delaware NIH Other – see AAMC resource at
http://services.aamc.org/fed_loan_pub
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Tax Benefits
Lifetime Learning Credit Deduction for student loan interest
payments Tuition and Fee
Full Deduction Partial Deduction NO Deduction
Single $60,000 or less $60,001 to $74,999
$75,000 or more
Married filing
Jointly
$125,000 or less
$125,001 to $154,999
$155,000 or more
www.irs.gov/publications/p970
The Taxpayer Relief Act of 1997Student Loan Interest
(income restrictions subject to change each tax year)
Student loan interest deduction max $2,500 per year
Voluntary payments may be eligibleCapitalized interest may be included
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Mortgages
The Financial Aid Office is not the “lender” of any of your loans. Therefore I/we cannot state anything in writing that indicates your eligibility to postpone your loans.
Feel free to take anything already in print from the packet or the book
contact your servicer directly.
Upon request – handout from the federal Common Manual with policy on Mandatory Forbearance can be emailed to you
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IMPORTANT TO REMEMBER!!!!
Don’t default – don’t ignore your debt After 270 days late, servicer assumes you will not pay Servicer can garnish your wages and tax refunds Servicer can sue - you are responsible for costs Collection agencies take over Default is recorded on Credit Report School can withhold records Professional Licenses are pulled in a growing number
of states Student loans rarely discharged in bankruptcy
Keep all your servicers updated as to phone numbers, address, change in residency status
Call your servicer if you need help Call Financial Aid Office – we are here to help for as long as
you need it
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Student Loan Ombudsman
The student can contact the Ombudsman’s office if unable to resolve any loan difficulties with the school, lender, servicer or guarantor. The contact information for the Student Loan Ombudsman’s Office is:
Office of the OmbudsmanStudent Financial AssistanceU.S. Department of Education
FSA Ombudsman830 First Street, NE
4th FloorWashington, DC 20202
Customer Service Line (877) 557-2575 Website: http://ombudsman.ed.gov
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Summary
Reconcile your records Financial Aid Office records servicers records
Contact your servicers to update address/phone number etc.
Find out when the grace period starts and ends and when first payment is due and then ask when to file your forbearance request. DON’T SUBMIT TOO EARLY!
Make schedule and submit all paperwork when necessary or be prepared to make a payment by due date if not forbearing.
Don’t wait until last minute to get your finances in order. Know what you have!
Ask questions.
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New Address:
University Office of Student Financial Aid1015 Walnut Street, 1st Floor
Suite 115Philadelphia, Pa 19107
If you need an appointment, call the office to schedule a time!!215-955-2867