Repayment of Your Student Loan Debt

ObjectivesParticipants will gain a better understanding of:

• Borrower’s rights and responsibilities• Repayment options available• Ways to stay on track with payments• Where to find help if not able to pay back the

student loans

Types of Federal Student LoansSubsidized Direct Federal Stafford Loans

Loans based on financial need.

Unsubsidized Direct Federal Stafford Loans

Loans not based on financial need.

Federal PLUS Loans: Parent PLUS Grad PLUS

Loans borrowed by an undergraduate student’s parents or by a graduate or professional degree-seeking student. In order to qualify, the borrower must not have adverse credit or must obtain a credit-worthy endorser.

Federal Consolidation Loans

Multiple student loans consolidated or merged into one new loan.

Federal Perkins Loans Loans for which you make repayment to the school.

Finding The Info• National Student Loan Data System:

www.nslds.ed.gov or call 1-800-4-FED-AID

• Student Loan Repayment Calculators: www.studentaid.ed.gov www.mappingyourfuture.org www.finaid.org

Interest• Calculating the monthly interest on a Federal

student loan is done with the “simple daily basis” formula:

Outstanding Principal BalanceX

Interest RateX

Number of days between payments divided by 365

Your RightsYou have the right to know:

• The amount you have borrowed and an estimate of your monthly payment

• Your interest rate• The date repayment will begin• The name of your lender• What type of student loan you have• An explanation of any fees associated with this

loan

Your Responsibilities:• Repay the amount borrowed plus interest

• Update your personal contact information when it changes

• Seek help when you cannot pay

Life Cycle of your Student Loan

• In School Period

• Grace Period

• Repayment Period

• Delinquency Status

• Default Status

RepaymentYou must repay your student loans

EVEN IF:

• You are dissatisfied with the services provided

by the school

• You have not received a payment booklet

• You cannot find a job

• You do not complete your education

Repayment Plan Choices

Standard Automatically selected if another is not chosen.

Graduated Payments start small and increase every 2 years.

Income-Based Includes IBR, ICR, PAYE plans. Based on income and family size. Must submit tax returns and certify household size annually.

Extended Must have over $30,000 in student loan debt after 1998 to apply for this plan.

Standard

• Minimum monthly payment is $50, but may be higher depending on balance

• Maximum repayment period of 10 years

Graduated

• Begins with lower payments that increase over time • Maximum repayment period of 10 years• More interest accrues over the life of the loan

because the principal balance decreases at a slower rate

Income-Based (IBR)

• Available for payments made on or after July 1, 2009

• Adjusted payment amount based on income and family size and poverty guidelines

• Forgiveness of remaining debt after 25 years• Calculator available at: www.IBRinfo.org

Pay As You Earn (PAYE) – New!• Lower monthly payments• Interest payment benefit available for up to

3 consecutive years• Remaining balance forgiven after 20 years• Qualifies for Public Service Loan Forgiveness

• Must contact servicer to apply• Electronic application available

Calculator available at:http://Studentaid.ed.gov/PayAsYouEarn

Extended• Available to new borrowers on or after

October 7, 1998, who have a minimum balance of $30,000 in loans

• Payment amounts can be fixed or graduated

• Maximum repayment term is 25 years

• More interest may accrue over the life of the loan because the principal balance decreases at a slower rate

Compare Repayment Plans

• Know your options! Find the best plan to fit YOUR situation by comparing the different options and choose one according to your needs.

• Repayment plan calculators are available to help you compare monthly payments. Visit www.ibrinfo.org or www.mappingyourfuture.org.

• You may change repayment plans as your situation changes. Discuss your options with the contact person for your loan(s).

Communicating with your lender

• Program your lender’s contact information into your cell phone and be sure to notify of any changes in your telephone number, current address, and e-mail.

• Start a folder and label it “Student Loan Information.” Keep all loan documents from your lender in a safe place.

• When speaking with your lender always write down • Name of whom you spoke with• Date and time of call• Confirmation number of your call if available

Staying on Track• Make your monthly payments

• On time (on or before due date)• To the correct address• Whether or not you received a bill

• Sign up for automatic withdrawal if this option is offered

Getting Help When You Cannot Pay

If you are unable to make your scheduled payments,contact your lender to discuss your options

Some of the common options include:• Deferment• Forbearance• Consolidation

Deferment• Deferments are granted for specific situations and have

certain time limitations and eligibility conditions. Common deferment situations:

• Enrollment in school (at least half-time) • Study in a graduate fellowship program • Rehabilitation training program for disabled individuals • Unemployment • Economic hardship • Military service

Forbearance• Forbearance is a postponement or reduction of

your monthly student loan payment and is granted at the discretion of the lender

Consolidation• Consolidation allows you to combine multiple

student loans into one new student loan

Delinquency• If you are ONE day late on your student loan

payment, you are considered delinquent

Default• If you have not made payments for 270

days or 9 months, you will be considered in default status

Penalties of DefaultIf you default on your loan(s):

• You will owe the entire balance immediately

• You will lose your eligibility for interest rate reductions

• You will not be eligible for deferments or forbearances

• You may not be eligible for additional student financial aid

• You will lose your positive credit rating on your credit report

More Penalties of Default

• Your loan(s) may be assigned to a collection agency

• You will pay collection costs and fees

• Your state and federal income tax refunds may be offset

• Your wages may be garnished

• Your Florida lottery winnings may be offset

More Penalties of Default

• The guaranty agency may file a civil suit against you

• Your loan(s) may be transferred to the U.S. Department of Education for collection

• Your academic transcripts will be held as required by Florida Statute 1009.95

Cancellation of Your Student loan Debt

There are situations in which a student loan may be discharged:

• Death• Disability• School Closure• Identity Theft• False Loan Certification• Failure of a school to pay a refund if you withdraw• Bankruptcy (in rare cases)

Saving Money • Tax deductions are available to help you with

your loan repayment: The American Opportunity Tax CreditLifetime Learning Credit www.irs.gov/publications/p970

• Loan Forgiveness Programs are career specific and may pay for or even cancel all of your student loans. Information can be found at www.studentaid.ed.gov

Resolving DisputesIf you and your lender do not agree on the status of your loan or the loan balance, use the following steps to resolve the issue:• Download the “Self-Resolution Checklist” and proceed through the

recommended steps at http://studentaid.ed.gov/sites/default/files/ombudsman-self-resolution-checklist.pdf

• Read about common issues and how to resolve them at www.studentaid.ed.gov/repay-loans/disputes

• As a LAST RESORT, contact the Federal Student Aid Ombudsman (advocate) office: http://studentaid.gov/repay-loans/disputes/prepare 1-877-557-2575FSA Ombudsman Group, 830 First Street, NE, Mail Stop 5144, Washington, DC 20202-5144

For Further AssistanceContact Florida Department of EducationOffice of Student Financial Assistance Customer Service Unit • 1-800-366-3475 • www.FloridaStudentFinanciaAid.org

Navigating Your Financial Future

OSFA offers a series of educational materials regarding debt management for students and borrowers. For more information, please visit www.navigatingyourfuture.org.

Questions?

Thanks for attending today’s presentation!