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MONEY MATTERS

Carla A. Lord-Hardy

Coordinator of Debt Management

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Money Matters

Student LoansState Aid, ScholarshipsLoan Processing & ProceduresDocument/Paperwork FlowHow It All Comes TogetherLoan Cancellation/ForgivenessStudent Rights and ResponsibilitiesDebt ManagementRepayment

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Money Matters

What is Financial Aid?

Who is eligible for aid?

What are the types of aid available?

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Money Matters

$ Financial Aid“Free Money” – Money that a student

receives from the State that is not required to be paid back.SEOGFRAGPELLFSAG

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Money Matters

STUDENT LOANS

Stafford Subsidized & Unsubsidized Loans

Health & Human Services Loans (HHS)

Perkins Loans

Private Loans

FINANCIAL AID

State Aid – FRAG, SEOG, PELL, FSAG

Scholarships – Internal & External

Grants

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Money Matters

Other Forms of Aid Pell - Need-based gift aid available to undergraduate students who demonstrate financial need. FSEOG - Administered by the financial aid office to UG students. Limited funding.FWS - Federal Work-study is a need based program that lets a student earn money and work experience while they are in school.

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Money Matters

Other Forms of Aid Parent Loans/Student Loans - Certain federal education loans are available to parent of undergraduate students.Federal Perkins Loans - Funded by the federal government. Available only to the neediest of students. 5% fixed interest, 10 yr pay-off and 9 month grace.

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Money Matters

Other Forms of Aid Scholarships- Internal & External www.usafunds.collegeanswer.com, www.fastweb.com, www.nova.edu/cwis/finaid

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Money Matters

Who is eligible for Federal Financial Aid?

Citizens

Eligible non-citizens

Students who have not “Defaulted” on a prior school loan.

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Money Matters

What steps need to be taken to apply for financial aid? All federal student aid begins with the FAFSA. The student will need his/her current year’s income tax

return in order to complete the application. Ample time needs to be set aside, regardless of whether

the form is completed online or on paper. www.fafsa.ed.gov For questions or problems with completing the FAFSA,

the student can call 1-800-4FED-AID. A student must re-apply each year aid is needed.

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Money Matters

What steps need to be taken to apply for financial aid? After a few weeks, the student will receive a Student

Aid Report (SAR), which will state the student’s expected financial contribution (EFC) to his/her education. The same information is sent to the school electronically.

The financial aid office will compare the student’s EFC against the school’s cost of attendance to determine financial need. An award is then generated and may include scholarships, work-study, & loans.

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Money Matters

Budgeting of the Award

Students are sent their award notice via mail or e-mail. Award information can also be reviewed on their Webstar account. The notice states the type of aid offered, the amount of aid, and how the aid is disbursed. Students should only borrow the amount necessary to complete their education.

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Money Matters

Budgeting for School Cost of attendance in GTEP program for two years - $13,500

Cost of attendance in Dr. Ed. Leaders program for three years - $37,000

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Money Matters

GTEP/C.O.A = $13,500

Student borrows = $46,250 (average)

Dr. Ed. Leaders/C.O.A = $37,000

Student borrows = $74,000 (average)

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Money Matters

What did I borrow and where did the money go?

DEL/DOL – 3 yrs

Sub = $34,000

Unsub = $40,000

Total = $74,000

Standard monthly payment on loans with 4% interest (10 yrs)

$749.00 monthly

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Money Matters

What did I borrow and where did the money go?

DEL/DOL – 3 yrs

Sub = $17,000

Unsub = $20,000

Total = $37,000

Standard monthly payment on loans with 4% interest (10 yrs)

$378.00 monthly

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Money Matters

What did I borrow and where did the money go?

GTEP – 2 yrs

Sub = $8,500

Unsub = $5,000

Total = $13,500

Standard monthly payment on loans with 4% interest (10 yrs)

$137.00 monthly

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Money Matters

What did I borrow and where did the money go?

GTEP – 2 yrs

Sub = $21,250

Unsub = $25,000

Total = $46,250

Standard monthly payment on loans with 4% interest (10 yrs)

$447.00 monthly

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Money Matters

Students who borrow the maximum amount allowed run the risk of reaching their aggregate borrowing limits before completing their education.

UG Limits

Sub – $23,000

Unsub – $23,000

Total – $46,000

Grad Limits

Sub – $65,500

Unsub – $73,000

Total – $138,500

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Money Matters

Once I start loan repayments, are there any programs that would reduce or eliminate any of my debt?

Loan Cancellations

Loan Forgiveness

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Money Matters

Loan CancellationPerkins Loans – A student is entitled to have up to 100 percent of the original principal cancelled. A student will need to perform qualifying services in certain areas after the enrollment period covered by the loan.

Teaching – Full-time teacher/special education teacher in a public or other nonprofit elementary or secondary school.Early Intervention Services – Full-time qualified professional provider of early intervention services in a public or other nonprofit program.

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Money Matters

Loan Cancellation Child or Family Service Agency – Full-time employee of an eligible public or private nonprofit child or family service agency who is directly providing or supervising the provisions of services to high-risk children.

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Money Matters

Loan Cancellation Nurse or Medical Technician – Full-time nurse providing health care services.

Law Enforcement or Corrections Officer – Full-time enforcement officer for an eligible local, state, or federal law enforcement agency.

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Money Matters

Loan Forgiveness

Stafford Loans

For Teachers – Certain elementary and secondary teachers who teach for at least five consecutive years in schools serving low-income students may qualify to receive up to $5,000.00 in loan forgiveness on their Federal Stafford loans or on the outstanding portion of a consolidation loan.

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Money Matters

Loan Forgiveness For Child-Care Providers – Subject to annual appropriations approved by Congress, the US. Department of Education will repay up to 100 percent of an eligible child-care provider’s Stafford-loan obligations.

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Money Management & Repayment

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Preparing to Pay Back School Loans

Q1. When do I have to start repaying my student loans?

A. Immediately upon graduationB. After I receive my inheritanceC. Never – I took out a Stafford

ScholarshipD. Six months after I graduate or leave

school

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Preparing to Pay Back School Loans

Q2. Will I be able to afford the monthly repayments? What will my monthly payments be? www.usafunds.org/direct/index.html www.paycheckcity.com

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Repayment Plans

Standard Repayment Fixed monthly payment (minimum of $50) Payable over 10 years

Income-Sensitive Adjusted yearly for up to 10 years Based on annual income and the amount of the

loan Graduated Repayment

Begins with smaller monthly payments that gradually increase every 2 years

Repayment period varies from 12 to 30 years

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Repayment Plans cont’d

Extended Repayment A new option if you were a first time

borrower on or after October 7, 1998 Your debt must be in excess of $ 30,000 You may take up to 25 years to repay

your loans using either Standard or Graduated Repayment Plan

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Consolidation

Depending on the loan amount, a Federal Consolidation Loan extends your repayment and offers smaller monthly payments.

You may consolidate while you are in repayment or in grace.

After receiving a Federal Consolidation Loan you have 180 days (approx. 6 months) to add new loans.

A consolidation loan cannot be reversed.

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Eligible Loans for Consolidation

Federal Subsidized and Unsubsidized Stafford Loans Federal PLUS Loans Guaranteed Student Loans Direct Consolidation Loans and Federal

Consolidation Loans Federal Insured Student Loans Federal Perkins Loans National Defense Student Loans Health Professions Student Loans Loans for Disadvantaged Students Nursing Student Loans

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Married Borrowers

Married borrowers are eligible for joint consolidation.

If one spouse dies or becomes permanently disabled, the other spouse is still responsible for repayment of the entire consolidation loan.

In case of divorce, both parties are still accountable until the loan is paid in full.

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Should You Consolidate?

Does consolidation offer you a lower rate? What consolidation benefits do your

current lenders offer? Are your monthly payments manageable? How much are you willing to pay over the

long term? Extending the years of payment increases the total amount you have to repay.

If you are already in repayment, how many payments do you have left on your loans?

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Benefits of Consolidation

Lower interest rate One lender and one monthly payment Reduced monthly payments Four different repayment plans Deferment options

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Disadvantages of Consolidation

Extended repayment (30 years) adds more interest expense.

Interest rate may be higher than the original amount.

Federal Perkins loan borrowers may lose eligibility for different types of cancellations.

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Consolidation Agencies

Federal Direct Loan Consolidation800-557-9372www.ed.gov/DirectLoan

Nelnet 866-4CONSOL (426-6765)www.consolidation.nelnet.net

Sallie Mae 800-448-3533www.salliemae.com

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Deferment

A deferment allows you to postpone your monthly payments. No interest accrues during deferment. With Federal Subsidized Stafford Loans, the government

pays the interest during the deferment period . Obtaining a deferment requires you to:

Submit an application with supporting documents and Secure approval from the lender. Note: Until the approval is given, you MUST continue to

pay on your current repayment plan. There are different types of deferments. One type,

an Economic Hardship deferment, may be renewed for a max of 3 years.

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Forbearance

A forbearance allows you to delay or reduce payments, usually for 3-12 months at a time

Interest will continue to accrue No application is required It can be renewed yearly for a max of 5

years If your Federal Stafford Loan debt exceeds

20% of your monthly income, lenders are required to honor your request

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Default

When you fail to make payments on your student loans for 270 days (approx. 9 months), you are in DEFAULT!

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Consequences of Default

Your entire loan will become immediately due You may be forced to pay attorney’s fees, court costs,

and other expenses if the lender employs a collection agency to recover the debt

You will not be able to obtain future deferments or forbearances

You will not be able to obtain additional financial aid Your tax return refund may be withheld to pay the

debt Your wages may be garnished Your professional license may be revoked Your default will be on your credit report for 7 years

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Tips on Lowering Your Interest Rates

Most lenders offer incentives to help you reduce your student loan

Pay on timeSet up automatic deduction

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Conclusion

Wrap-upQuestionsCommentsContact Information

Carla Lord-Hardy, Coordinator of Debt ManagementPhone: 954-262-7421Email: lordcarl@nova.edu