Residency Loans Residency Living Student Loans October 6, 2008.

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Residency Living Student Loans October 6, 2008

Transcript of Residency Loans Residency Living Student Loans October 6, 2008.

Residency Living

Student Loans

October 6, 2008

Interest Rate

Grace

Forbearance

Repayment

The interest rate on your loan will be based on one of following financial indexes

Prime Rate that US banks lend money +/- percentage

points

LIBOR London Interbank Offered Rate + percentage

points

Interest rate will be a variable interest rate for the life of the loan

May not be a cap on the interest rate

Rate is based on your credit score

Repayment begins when you are no longer a full-time student

Grace period varies by lender-check promissory note

Forbearance options also vary by lender-check promissory note

Interest continues to accrue during grace and forbearance

The calculations assume the loan is taken in October of the M4 year and is followed by a 3 year residency in which a forbearance is granted.

10 Year Loan Repayment

5%Interest Rate

11.75%Interest Rate

Loan Amount $6,000 $6,000

Principal at Repayment $7,125 $8,644

Finance Charges Over Life of Loan

$3,069 $8,732

Monthly Payment $76 $123

Repayment Terms 120 120

10 Year vs 25 Year Loan Repayment

5%Interest Rate

11.75%Interest Rate

Loan Amount $6,000 $6,000 $6,000 $6,000

Principal at Repayment $7,125 $7,125 $8,644 $8,644

Finance Charges Over Life of Loan

$3,069 $6,496 $8,732 $20,831

Monthly Payment $74 $41 $123 $89

Repayment Terms 120 300 120 300

The calculations assume the loan is taken in October of the M4 year and is followed by a 3 year residency in which a forbearance is granted.

•Average expenses between $3,500-$5,000•Stay with family and friends•Room with other students interviewing in same area•Schedule interviews in one location at same time•Contact program for interview if already going to be in area•Rent a car to check out the area•Take a cab so you don’t get lost

© AAMC 2008. May not be reproduced without permission.

Your good credit is one of the most valuable

assets you own

A good score can mean that “life” will cost you less, and thus you can afford more:

Better loan terms (student, auto, mortgage)

Lower Interest rates on credit cards

Faster credit approvals

Reduced security deposits on rentals

© AAMC 2008. May not be reproduced without permission.

Each of the three credit reporting agencies are required by law to provide one free credit report to you annually

Equifax Experian TransUnion

This is the site to obtain your free copy www.annualcreditreport.com

Regularly monitor your financial information (every 4 months)

Verify that the information contained in the report is correct

Report any discrepancies to the credit agency

Clean up any negative reporting

The number one indicator of your financial health

Range is 300-850 (the higher, the better)

Shows a lender your credit worthiness

Determines the cost of your debt

Named after the company, Fair Isaac Corporation, that produces the score

© AAMC 2008. May not be reproduced without permission.

35%

30%

15%

10%

10%

Payment history

Amounts owed

Length ofcredit history

New credit

Type of credit used

© AAMC 2008. May not be reproduced without permission.

Home Price: $250,000Loan: 30-year Fixed Rate

FICO Interest Rate Payment 760+…………...………6.106%………...……….$1,819 700-759………….…....6.328%…………………$1,862 660-699……………….6.612%………………....$1,918 620-659……………….7.422%………………....$2,082 580-619……………….9.452%…………………$2,512 500-579…………...…10.311%………….……..$2,702

Residency Living

Annual Monthly

Residency Stipend $46,000 $3,833

Payroll Taxes $12,132 $1,011

Net Spendable Income

$33,868 $2,822

Monthly Gross Pay $3,833

Federal Withholding $537Social Security $238Medicare $56Nebraska Withholding $181

Net Spendable Income

$2,822

www.payroll-taxes.com/calculators.htm

CategorySuggested Percentage

Monthly Amount

Housing 36% $1,016

Food 12% $339

Auto 12% $339

Insurance-Health, Life 5% $141

Debt 5% $141

Entertainment/Recreation 6% $169

Clothing 5% $141

Savings 5% $141

Medical/Dental Expenses 4% $113

Miscellaneous 5% $141

Investments/Retirement 5% $141

Net Spendable Income $2,822

www.crown.org/tools/calculators

Take advantage of pre-tax deductions to

increase your take home pay

CategorySuggested Percentage Monthly

Amount

Housing 36% $1,016

Food 12% $339

Auto 12% $339

Insurance-Health, Dental, Life 5% $141

Debt 5% $141

Entertainment/Recreation 6% $169

Clothing 5% $141

Savings 5% $141

Medical/Dental Expenses 4% $113

Miscellaneous 5% $141

Investments/Retirement 5% $141

Net Spendable Income $2,822

Savings from Pre-Tax Deductions

Monthly Gross Wages $3,833 $3,833

Federal Withholding $537 $445

Social Security $238 $238

Medicare $56 $56

Nebraska Withholding $181 $157

Health Insurance $115

Medical/Dental $113

Retirement $141

Net Pay $2,822 $2,569

Savings from Pre-Tax DeductionsMonthly Gross Wages $3,833 $3,833

Taxes $1,012 $896

Health Insurance $115

Medical/Dental $113

Retirement $141

Post Tax Payments $369

Spendable Income Balance

$2,453 $2,569

Student Loans

A student loan portfolio can be complex

Each loan type has its own set of terms and conditions to consider

Understanding your loan portfolio is the first step in effectively managing its repayment

TIP: Know who your servicer is.

© AAMC 2008. May not be reproduced without permission.

All federal loans can be found at www.nslds.ed.gov

All federal, private and institutional loans can be found on your credit report

www.annualcreditreport.com

In school, Grace and Deferment

Forbearance,Repayment

Stafford Loans(disbursed on or after 7/1/06)

6.8% Fixed

6.8%Fixed

Stafford Loans*(disbursed between 7/1/98 and 6/30/06)

3.61%Variable

4.21%Variable

Grad PLUS Loans**

8.5%Fixed

8.5%Fixed

Perkins Loan / PCL / LDS 5.0% Fixed

5.0% Fixed

Private Loans Typically Variable – Check the Promissory Note

Institutional Loans Varies by Loan – Check the Promissory Note

Consolidation Loan Fixed rate based on weighted average interest rate of underlying loans rounded up to nearest one-eighth of a

percent (capped at 8.25%)

* Variable, changes every July 1 based on the 91-day treasury bill

** Interest rate for Direct Grad PLUS Loans 7.9%

© AAMC 2008. May not be reproduced without permission.

There are many options with student loans during residency and beyond:

To Postpone Payments Grace Deferment Forbearance

To Reduce Payments Interest Only Payments Change the Repayment Plan

© AAMC 2008. May not be reproduced without permission.

Standard (Level) Repayment

◦ 10 year repayment with a fixed monthly payment

Graduated Repayment

◦ 10 year repayment with smaller early year payments

Extended Repayment

◦ 25 year repayment with a fixed monthly payment

Income Sensitive Repayment (FFEL) /Income Contingent Repayment (DL)

◦ Payment is 20% of difference of Adjusted Gross Income less 100% poverty level

◦ Balance remaining after 25 years is forgiven-the amount of debt forgiven is treated as taxable income

Income-Based Repayment

◦ Payment is 15% of difference of Adjusted Gross Income less 150% of poverty level

◦ Balance remaining after 25 years is forgiven-the amount of debt forgiven is treated as taxable income

◦ Public Service Loan Forgiveness available

Karen MalloyFinancial Aid Coordinator

Creighton University402.280.2666

[email protected]