Student LoansThe Comics of a Debt Revolution

LOAN AGENDA

1. What are Student Loans?

2. Loan Terminology3. Types of Loan4. FAFSA5. Student Loan

Database6. Repayment

Options

Student Loans: Simply Stated

• Student loans are monies borrowed from the government and other entities to pay for educational expenses which include:

1)Tuition2) Room & Board3) Books & Supplies 4) Fees (parking, online charges)5) Equipment and Room Materials (laptop)6) Travel and Miscellaneous Expenses (clothing and phone)

Loan Terminology:

Term Definition

Capitalization Adding unpaid interest to the amount borrowed

Consolidation Combining multiple loans into one

Credit Summary of your financial strength

Default Failure to repay a loan

Deferment Postponement of loan payments under authorized conditions . Interest does not accrue for subsidized loans.

Expected Family Contribution (EFC) Index that determines eligibility for federal student aid

Forbearance Period in which loan payments are temporarily suspended or reduced. Based off certain financial hardships.

Grace Period Time period between last day of enrollment and repayment begins

Interest Loan expense charged by lender at a rate.

WOW!

Types of Loans

Loan Program Loan DescriptionFederal Perkins • University is lender

• 9 month grace period• Interest doesn’t accrue until repayment• Need based

Subsidized Stafford • Government is lender• Interest doesn’t accrue until repayment• Need based

Unsubsidized Stafford • Government is lender• Interest accrues immediately after disbursement• Can pay interest while in college (not required)• Capitalization occurs (increases principal balance

with additional interest)• Need based

Direct Plus • Government is lender• Interest accrues immediately after disbursement• Credit based• Amount determined by schools cost of attendance

minus other aid

Private • Any creditor can be a lender• Repay loans immediately• Credit based

FAFSA: The purpose of FAFSA is to determine how much aid a student is eligible for.

What you need:• Income tax return• Drivers license• SSN Number• W-2’s• FAFSA is free, do not

pay!

fafsa.ed.gov

National Student Loan Data System:

Provides personalized information regarding your:• Loan Type• Loan Disbursement schedule• Loan disbursement location• Principle Balances• Interest Accrued to Date• Loan Eligibility as a

Percentage• Contact info for Lenders• Grant Disbursement

http://www.nslds.ed.gov/nslds_SA/

These apply to Federal Student Loans only!

Repayment Options:

Repayment Plan Description

Standard • Automatic plan• Monthly payment of at least $50

Graduated • Start off with lower payments• Monthly payment increases every two years• ***will increase the cost of the loan in interest

Extended • Fixed or graduated• Requires loan principal to be at least $30,000• Payment will likely be less than the standard repayment

Income-Sensitive Repayment Plan • Monthly payment is based off income• Usually less than 10% of gross income (before taxes)• Can increase or decrease in accordance to income

Income-Contingent Repayment Plan • Based off annual income• Must pay on time for 25 years, the balance will be forgiven• Forgiven portion will be considered income and will be taxed.

Income-Based Repayment • Based off income• Capped at 15% of discretionary income• Must display financial hardship• Must pay on time for 25 years, the balance will be forgiven• Forgiven portion will be considered income and will be taxed

Don’t become the Class of IOU’s!!!

Questions? Don’t Wait!

Learning Assistance Programs

(573)-651-2273Student Financial

Services (573) 651-2253

Financial Literacy Project

(573) 651-2861

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