March 21, 2012

Managing College Debt In a Healthy Way

Discussion Topics

Budget– In-school Budget– After-school Budget

Student Loan Types– Federal Loans– Private Loans

Keep Track of Your Loans– National Student Loan Data Service (NSLDS)

Repayment Options– Repayment Plans and Consolidation– Deferment and Forbearance

Communicate– Stay in Contact with Your Lenders/servicers

Questions?

In-School Budget

Develop an In-School Budget– Talk with Your Family– Search Internet for Budget Calculator– Create a Spreadsheet

• Weekly, Monthly, Yearly• Estimate Expenses and Sources of Income• Track Actual Expenses

List Expenses– What You Expect to Spend for the Semester/year

• Tuition• Room and Board• Books and Supplies• Personal Expenses

– Clothing– Transportation– Food – Above the Meal-plan Cost– Entertainment – Movies, Restaurants, Clubs, I-Apps, etc.– Existing Bills

Expenses

Sources of Income

List Sources of Income– Funds You Expect to Receive

• Scholarships• Grants• Outside Resources

– 529 College Savings Plan– Tuition Benefits– Parent Contribution– Financial Gifts from Family

Budget Example

How Much Do You Need?

Total Est. Expenses Minus Total Est. Income Equals Income Needed for Period

Total Est. Expenses50,932

Total Est. Income 35,260

Total Income Needed15,672

**Please Note, Financial Aid Cannot Exceedthe Cost of Attendance for the Year

Visit the Financial Aid and Billing page, or visit the Office of Student Financial Services, for More Information

After-School Budget

Develop an After-School Budget– Similar to In-School– Talk with Your Family– Search Internet for Budget Calculator– Create a Spreadsheet

• Weekly, Monthly, Yearly• Estimate Expenses and Sources of Income• Track Actual Expenses

List Potential Expenses– What You Can Expect to Spend

• Rent/Mortgage• Bills – Car Payment, Cell Phone, Electric, Etc.• Clothing• Transportation• Groceries• Entertainment – Movies, Restaurants, Clubs, I-Apps,

etc.

After-School Expenses

Estimate Potential Income AFTER Graduation– Ithaca College Career Services Career Guide:

www.ithaca.edu/sacl/careers/docs/Guides/IC_Career_Guide/

– Bureau of Labor Statistics:www.bls.gov/oco/

– O*NET:www.onetonline.org/

After-School Income

Estimated Salary

Below is an Example of Salary for a Kindergarten Teacher (Except Special Education) from O*NET

Budget Example

How Much Can I Pay?

Total Est. Income Minus Total Est. Expenses Equals Discretionary (available) Income

Total Est. Income31,700

Total Est. Expenses 25,540

Total Annual Discretionary Income 6,160

Break This Down Into 12-Months and the Monthly Discretionary Income is $513

Meet with Someone in the Office of Student Financial Services to Discuss Your Potential Loan DebtCreate a SpreadsheetUse Loan Calculators to Estimate Payments

• Gather Interest Rate Information on Each of Your Loans• Examples of Available Loan Calculators

– Direct Loan Calculator

http://www2.ed.gov/offices/OSFAP/DirectLoan/calc.html

– FinAid.Org – Loan Calculator

http://www.finaid.org/calculators/loanpayments.phtml

Estimate Loan Debt

Types of Loans at Ithaca College

Federal Direct Loans

– FFELP Stafford Loans• Related to the Direct Loan Program

• Federal Loans Disbursed Through Banks and Private Institutions

• Program Eliminated in 2010; However, You May Have FFELP Stafford Loans as well as Direct Loans

Federal Perkins Loan

Federal Direct PLUS Loans– Parent PLUS

– Graduate PLUS

Alternative/Private Loans

Federal Direct Loans

Direct Student Loans are Loans Made Directly from the U.S. Department of Education– Loans are Awarded by Ithaca College, but They are

Repaid to the Federal Government

There are Two Types of Direct Loans:– Direct Subsidized – Need-based

– Direct Unsubsidized – Not Need-based

Annual Loan Limits are Determined by Grade Level in College (as Combined with Direct Subsidized Loan)

Repayment Grace Period is 6-months from the Time the Student Drops Below Half-time, Withdrawals, or Graduates

Direct Subsidized

Need-based, Determined by the Information in Your FAFSA

Interest is Paid by the Government While You are:– In School at Least Half-time

– Deferment Periods - Changing

Current Loan Fee is 1.0%

Interest Rate– Determined by Date of First Disbursement

• 2011 – 2012 Interest Rate 3.4%

• 2012 – 2013 Interest Rate 6.8%

Graduate Students are Not Eligible for Direct Subsidized Loans After July 1, 2012

Direct Unsubsidized

NOT Need-based

Interest Accumulates from the Date of the First Loan Disbursement

Current Loan Fee is 1.0%

The Interest Rate is Fixed at 6.8%

Federal Perkins Loan

Low-interest Loans for Undergraduate Students with the Greatest Financial Need

Awarded by and Repaid to Ithaca College

No Loan Fees Associated with Federal Perkins Loans

The Interest Rate is Fixed at 5.0%

Repayment Grace Period is 9-months from the Time the Student Drops Below Half-time, Withdrawals, or Graduates

Direct PLUS Loans

Low-interest Federal Loans– Parent Can Obtain for Dependent Undergraduate

Students– Graduate Students

The Interest Rate is Fixed at 7.9%

Loans are Awarded by Ithaca College, but They are Repaid to the Federal Government

May Borrow Up to the Cost of Attendance Minus Other Aid, Each Academic Year.

Current Loan Fee Associated with Direct PLUS Loan is 4.0%

Direct PLUS Loans (cont.)

For Parents, Only One Parent Can Borrow (per Application)Borrower Must Not Have Adverse Credit History to Participate in This Program

– If Direct PLUS is Denied:• Borrower May Request a Review of Credit Check by

Contacting the Direct Loan Servicer at 1-800-557-7394

• Provide an Endorser that Must Pass a Credit Check by Contacting the Direct Loan Servicer at 1-800-557-7394

• Not Pursue the PLUS Loan, No Further Action is Need at that Time

• Dependent Student May be Eligible to Borrow Additional Direct Unsubsidized Loan IF Parent is Denied PLUS Loan

Alternative/Private Loan Options

Private Loans are Not Guaranteed by the Federal Government– Ithaca College Requires an Official Loan Approval and Request

for Loan Certification, Directly from the Individual Lender

Private Loans Options Tend to be More Stringent with Respect to Qualifying Criteria and Credit Standards

You May be Required to Have a Co-signer

Fees and Interest Rates Vary from Lender to Lender

Private Loan Interest Accrues Once the Loan Has Been Disbursed

Alternative/Private Loan Options (cont.)

Processing Time of Private Loans Can Take As Long As 30 Days, Depending on Response Time of Student, Parent, Endorser, and Lender

– If Private Loans are an Option You Would Like to Exercise, the Office of Student Financial Services Has Compiled a List of Preferred Private Lenders. However, the Choice of Lender(s) is Yours to Make. You are Not Required to Use a Preferred Lender, Nor Will Ithaca College Penalize You Should You Choose a Different Lender. You Must Check with the Lender to Ensure that They Will Certify a Loan for Ithaca College, As Some Lenders Prefer to Work Within Certain Regions and with Specific Institutions.

Know Your Rights and Responsibilities– Complete Entrance and Exit Counseling

• Required for Federal Direct Loans and Federal Perkins Loans

– Review All Information Received– Submit All Information Requested

Ask Questions– Visit the Office of Student Financial Services– Contact Your Lender or Servicer

Understand Your Rights and Responsibilities

Monitor Federal Loans Using NSLDS for Students– www.nslds.ed.gov/nslds_SA/

Monitor Alternative/Private Loans by Reviewing Your Student Account, Online Services Provided by Your Lender, etc.

Monitor Your Loans

Repayment Options – Federal Loans

Federal Loans – Subsidized, Unsubsidized, PLUS– Standard Repayment

• Payment is Fixed• Monthly Payments Will be at Least $50• 10-years to Repay Loan

– Extended Repayment• Have to Have More Than $30,000 in Direct Loan Debt• Must Not Have an Outstanding Balance• Up to 25-years to for Repayment

– Fixed Payments – Same Each Month– Graduated Payments – Start Low and Increase Every Two-years

– Graduated Repayment• Payments Start Low and Increase Every Two-years• 10-years to Repay Loan

Repayment Options – Federal Loans (cont.)

– Income Contingent Repayment• Only for Direct Loans• Not Available for PLUS Loans• Monthly Payments are Calculated on Adjusted Gross Income

(AGI), Family Size, and the Total Amount of Your Direct Loans• Payment Will be Lesser of the Two:

– Amount If You Paid Your Loan in 12-years Multiplied by Income Percentage Factor that Varies with Your Annual Income

– 20% of Your Monthly Discretionary Income

– Income-Based Repayment• Payment Will be Based in Your Income During Any Period You

Have a Partial Financial Hardship• Payments May Exceed 10-years

Repayment Options – Alternative/Private

Alternative/Private– Can Vary by Lender

– Private Student Loan Repayment Terms• Depending on the Total Amount Borrowed, Repayment Terms

Range from 10 - 25 Years

– Full Deferral• No Principal or Interest Payments are Due While Enrolled in

School (up to Four Consecutive Years)

• Payment of Principal and Interest Will Begin 6 Months After Graduation, or If Enrollment Drops Below Half Time

• Interest Will Continue to Accrue During the Deferment Period and Will be Capitalized (added to the Loan) at the Time of Repayment.

Repayment Options – Alternative/Private (cont.)

– Interest Only• Pay Only Accrued Interest While Enrolled in School (up to

Four Consecutive Years)

• Payment of Principal and Interest Will Begin Either 45 Days After Graduation, or If Enrollment Drops Below Half-Time

– Immediate Repayment• Payment of Principal and Interest Typically Begins

Immediately After the Loan is Fully Disbursed

– Read Your Application and Promissory Note Carefully for Details of the Loan

Combining Loan Debt for a Single Monthly Payment – Cannot Combine Federal and Private Loans Together

• One Payment for Federal Loans

• One Payment for Alternative/Private Loans

Consolidation Resets the Term of the Loan

Longer Loan Term, More Interest to Pay

Federal Loans– Visit Direct Consolidation Loans for More Information

• http://loanconsolidation.ed.gov/

Alternative/Private– Contact Your Lender for More Information on Consolidation

Loan Consolidation

Deferment

A Postponement of Payment on a Loan, – During Which Interest Does Not Accrue if the Loan is a Federal

Subsidized Loan

– Alternative/Private Principal and Interest Payments May be Deferred While the Borrower is Continuously Enrolled Up to a Maximum of 48 Months

You May Qualify for a Deferment While You Are:– Enrolled at Least Half-time in an Eligible Postsecondary School

– Studying Full-time in a Graduate Fellowship Program or an Approved Disability Rehabilitation Program

– Unemployed or Meet Rules for Economic Hardship

• Limited to 3 Years for Federal Loans

Contact Your Lender/Servicer for More Information on Deferment

Allows You to Temporarily Stop Making Payments on Your Loan, Temporarily Make Smaller Payments, or Extend the Time for Making Payments

Common Reasons for Getting a Forbearance– Illness

– Financial Hardship

– Serving in a Medical or Dental Internship or Residency

See Your Copy of the Borrower's Rights and Responsibilities Statement for More Examples

Contact Your Lender/Servicer for More Information on Forbearance

Forbearance

Failure to Make Payments on Your Student Loan According to the Terms of Your Promissory Note

Consequences of Default:– Credit Rating will Suffer– Ineligible for Additional Federal Student Aid– Wage Garnishment– State and Federal Income Tax Refunds can be Seized– You can be Sued– Late Fees and Collection Costs

Default

Things to Remember

Try to Keep Your Loan Debt Down– Do Not Borrow More Than You Need

– If You Have a True Credit Balance on Your Student Account, Request It be Returned to a Loan of Higher Interest

– Visit the Office of Student Financial Services for Assistance

– Ask Questions

Track Your Loans In-School and After-School– Use NSLDS for Federal Loan Information

– Know Your Level of Indebtedness and Interest Rates

Things to Remember (cont.)

Make Payments On-time

– Inquire About On-time Repayment Incentives

– Contact Lender If You Cannot Make Payments On-time

Stay in Contact with Your Lenders and Servicers

– Consider and Discuss Repayment Options

– Update Your Contact Information as it Changes, Address, Phone, etc.

Avoid Default

Ask Questions

General Loan Contact Information

Student Financial Services– Toll Free: 1-800-429-4275– www.ithaca.edu/finaid/

Direct Loan Servicing– Toll Free: 1-800-557-7392– www.myedaccount.com

Federal Student Aid Information Center– Toll Free: 1-800-433-3243

Federal Perkins Loan Servicing for Ithaca College– ECSI Toll Free: 1-866-841-3274– www.ecsi.net

Alternative/Private Lenders– Varies by Lender, Keep Contact Information

My Contact Information

Denise FullertonAssistant DirectorStudent Financial ServicesIthaca Collegedfullerton@ithaca.edu

800.429.4275 (phone)607.274.1895 (fax)www.ithaca.edu/finaidsfs@ithaca.edu

Questions?