NY

SFA

AA

NYSFAAA Statewide TrainingSpring 2009

New Requirements for Exit and

Entrance Loan Counseling

NY

SFA

AA • Introduction - Background

• Entrance Counseling

• Exit Counseling– Repayment Options for Stafford Loans

• What’s Next ? Discussion

AGENDA

2

NY

SFA

AA

New Counseling Requirements

• The Higher Education Opportunity Act (HEOA) was signed into law on 8/14/08– New entrance/exit requirements– Maintained/duplicated existing

requirements– Stricter state statutes may supersede

HEOA

3

NY

SFA

AA

New Counseling Requirements

• Mapping Your Future is compliant– Schools must modify profile to add school

specific information– It provides a school the ability to customize the

counseling start pages. This would meet all requirements of the HEOA.

• Direct Lending Software is also compliant– Schools must provide borrowers school specific

information

4

NY

SFA

AA

Entrance Counseling

5

NY

SFA

AA

Entrance Counseling Requirements

• Entrance counseling is now required by law for Grad PLUS borrowers (previously it was only a regulatory requirement).

• The requirements for entrance counseling are now consistent for both Stafford and Grad PLUS borrowers.

• Counseling can be conducted in-person or through the use of written or on-line tools.

6

NY

SFA

AA

Entrance Counseling Requirements

Entrance counseling must take place at or prior to disbursement

• Students must receive information on– terms and conditions of loan rights and responsibilities of loan

7

NY

SFA

AA

Entrance Counseling Requirements

• Information should be simple and understandable– during in-person entrance counseling– on separate form that borrower signs

and returns– online, with borrower acknowledging

receipt– encourage the use of quizzes and

other interactive tools to test borrower knowledge

8

NY

SFA

AA

Entrance Counseling Requirements

• Entrance Counseling for first time FFEL and DL borrowers added to law consistent with regulations, except:

– Borrower’s acknowledgement of receipt is required. If an on-line tool is used, it must include a method for the student to provide an acknowledgement.

9

NY

SFA

AA

Entrance Counseling Requirements

– If using electronic entrance interview product

• Must offer Title IV knowledgeable person to answer questions, or

• Provide the student with a name of someone to contact to obtain answers to questions

10

NY

SFA

AA

Entrance Counseling Requirements

– Schools must explain interest accrual/capitalization of interest while the borrower is in school

– Borrower has option to pay interest on unsubsidized Stafford and Grad PLUS loans while in school (or any other period)

– Must provide information on NSLDS and how to access

11

NY

SFA

AA

Entrance Counseling Requirements

– Schools must explain to borrowers the effect of loan acceptance on their eligibility for other types of aid.

– Schools must define ½ time enrollment status at the school and the consequences of not maintaining ½ time status

– Schools must explain importance of office contacts when withdrawing so exit counseling can be scheduled

12

NY

SFA

AA

Entrance Counseling Requirements

– Schools must add information that a borrower is obliged to repay their loans whether or not they completed the program within the regular time for program completion.

– Schools must provide contact information for staff to respond to borrower follow-up questions

– If a student borrows both Stafford and Grad PLUS, the sample repayment amount must include both Stafford and Grad PLUS

13

NY

SFA

AA

Entrance Counseling Requirements

• Sample monthly repayment amounts have been revised and now must be based on either:– The average cumulative indebtedness

of other borrowers in the same program as the borrower at the same school

14

NY

SFA

AA

Entrance Counseling Requirements

– A range level of indebtedness of• Borrowers of subsidized or

unsubsidized Stafford loans; and

• Graduate borrowers of unsubsidized Stafford or Grad PLUS loans

15

NY

SFA

AA

Exit Counseling

16

NY

SFA

AA

Exit Counseling Requirements

• Exit Counseling is required for all Stafford, Perkins and is now required for Graduate PLUS borrowers.

• Schools must provide exit counseling before completion of studies or if a borrower stops attending at least ½ time. If a borrower drops out without notifying the school, the school must confirm that they attempted to contact the borrower to complete exit counseling.

17

NY

SFA

AA

Exit Counseling Requirements

• The school can receive confirmation of on-line counseling or they must mail exit counseling materials within 30 days of learning the borrower dropped out or failed to participate in an exit counseling session. The school must maintain documentation that they tried to contact the student.

18

NY

SFA

AA

Exit Counseling Requirements

• The information must be simple and easy to understand and read and it must address the terms & conditions of the loan (s) they borrowed. It must include the responsibilities the borrower has toward the loan (s).

• Counseling can be conducted in person or online. Interactive counseling with tests or quizzes are a good way to determine if the borrower understands.

19

NY

SFA

AA

Exit Counseling Requirements

• Expanded to include:– Descriptions of different repayment

plans and must include a comparative analysis of the features of those plans, including:• anticipated average monthly

payments• difference in interest paid• total payments the student can

expect for each plan

20

NY

SFA

AA

Exit Counseling Requirements

– Must explain that borrower can:• prepay loan• pay on a shorter schedule• change repayment plans

– Must include debt management strategies

21

NY

SFA

AA

22

Repayment Options for Stafford Loans

• Standard Repayment Plan– Fixed amount for 10 years– $50 minimum

• Graduated Repayment Plan– Start with lower payments– Increase over life of repayment

• Extended Repayment Plan– Must have minimum of $30,000 loan debt– Offers fixed or graduated payments over longer

period of time – up to 25 years– loans must have been disbursed on or after 10/7/98

NY

SFA

AA

Repayment Options for Stafford Loans

• Income-Sensitive Repayment (ISR)– Monthly payment relative to yearly

income – FFELP only

• Income Contingent Repayment (ICR) Plan– Direct Loan borrowers only– FFELP may consolidate into DL to take

advantage of this

23

NY

SFA

AA

24

Repayment Options for Stafford Loans

• Income-Based Repayment (IBR) Plan– Created by CCRA in 2007– Available 7/1/2009– Eligible loans include

• Stafford (Sub & Unsub) – both FFELP and DL• GRAD Plus • Federal Consolidation Loans

– Loans NOT eligible include• Parent PLUS• Consolidation Loans containing Parent PLUS• Perkins Loans (unless part of a federal

consolidation loan)• Private Loans

NY

SFA

AA

Repayment Options for Stafford Loans

– Designed to help borrowers experiencing a “partial financial hardship”

– Payments are capped at 15% of your income over 150% of the federal poverty level Payments can be extended up to 25 years

– After 25 years remaining balance forgiven– If annual household income increases,

maximum monthly payment cannot exceed standard 10 year payment

25

NY

SFA

AA

Repayment Options for Stafford Loans

• Both ICR and IBR plans are based on the borrower’s income family size and total amount borrowed. Monthly payment is adjusted annually based on changes in annual income and family size.

26

NY

SFA

AA

Exit Counseling Requirements

• Must include information about the average monthly repayment amount based on the borrower’s indebtedness, or on the average indebtedness of borrowers at their school and for the same program of study (eg. BA vs. MS, vs. AA, etc.) who have obtained the same types of loans

• Must review the MPN (from entrance counseling) & Terms

27

NY

SFA

AA

Exit Counseling Requirements

– Must include a description of loan forgiveness, cancellation or discharge• Recommended that USDE

publications be provided– Must include information on

forbearance and deferments• Recommended that USDE

publications be provided

28

NY

SFA

AA

Exit Counseling Requirements

– Must include the consequences of default which includes:• delinquent loan collections• adverse credit reports• federal offset or other federal

delinquent debt collection procedures

• litigation

29

NY

SFA

AA

Exit Counseling Requirements

• Must include the effects of Loan Consolidation:– total interest and fees paid– length of repayment– underlying loan benefits such as grace

periods, forgiveness, cancellation, discharge and deferment

– option to prepay consolidation loan or change repayment plans

– how borrower benefits may differ among lenders.

30

NY

SFA

AA

Exit Counseling Requirements

• Must also include:– General description of potential tax benefits

available to borrowers• Tax credits (3 types)• Student Loan interest deduction

– Availability of NSLDS and how borrower can access his or her records

– Information on the availability of the Student Loan Ombudsman’s Office.

31

NY

SFA

AA

Exit Counseling Requirements

– Schools must collect the following information as part of exit counseling and provide it to the guarantor for FFELP loans and to the USDE for Direct Loans within 60 days of receipt:

Name; Address; Social Security Number; References; Driver’s License Number and State; Expected permanent address; Name and address of next of kin; and Name and address of employer or expected employer

32

NY

SFA

AA

33

NY

SFA

AA

What’s Next?

• 2009 Negotiated Rulemaking has begun– There is a committee (Team II) that

will address entrance and exit counseling

• DCL Gen-08-12 Notes that some topics will be incorporated through notice and rule (without negotiated rulemaking)

• New presidency, new priorities and new budget

34

NY

SFA

AA

Questions?

NY

SFA

AA

Evaluation

In the days to come, you will receive an online survey that we will use to access and define our training efforts.

http://www.surveymonkey.com/s.aspx?sm=VIeXstnH4qcWU5ugbMkshA_3d_3d

Thank you.

NYSFAAA Statewide Training Committee