Exit Counseling for Student Dentists,

Orthodontist, and Periodontist

Why You’re Here

• We’re here to help you:– Understand the agreement you made when you borrowed

your loans

– Know your options so you can succeed as you leave school and begin your career

Objectives

• Keep Track of Your Loans

• Review Federal Student Loans

• Plan for Repayment

• Know How to Get Help When You Need It

• Know the Consequences of Default

• Successfully Repay Your Debt

Keep Track of Your Loans

Know the Loans You Borrowed

• Loan Programs– Subsidized Loans

» Subsidized Federal Stafford

» Subsidized William D. Ford Federal Direct

» Federal Perkins

» Institutional (Health Professions)

Know the Loans You Borrowed (Continued)

• Loan Programs–Unsubsidized Loans

» Unsubsidized Federal Stafford

» Unsubsidized William D. Ford Federal Direct

» Federal Parent Plus

» Federal Grad Plus

» Private

Know the Loans You Borrowed (Continued)

• Loan Programs– Private Loans

» Funded by private companies

» Private loan combined billing

Know the Loans You Borrowed (Continued)

–Where Can You Find Your Loan Information• Your loan paperwork

• Your lender(s)

• Your school’s financial aid office

• Your credit report

• National Student Loan Data System (NSLDS)

Know Your Loan Servicers

– Servicing Agency (Primary)• FedLoan Servicing (PHEAA)www.myfedloan.org 1-800-699-2908

• Great Lakes Educational Loan Services, Inc.www.mygreatlakes.org 1-800-236-4300

• Nelnetwww.nelnet.com 1-888-486-4722

• Sallie Maewww.salliemae.com 1-800-722-1300

Know Your Loan Servicers (Continued)

– Servicing Agency (Secondary)• MOHELA

www.mohela.com 1-888-866-4352

• ESA/Edfinancial www.edfinancial.com/DL 1-855-337-6884

• CornerStone www.MyCornerStoneLoan.org 1-800-663-1662

• Aspire Resources Inc www.AspireResourcesInc.com 1-855-475-3335

• Granite State - GSMR www.gsmr.org 1-888-556-0022

Know Your Loan Servicers (Continued)

– Servicing Agency (Secondary)• OSLA Servicing

www.osla.org 1-866-264-9762

• VSAC Federal Loans www.vsacfederalloans.org 1-888-932-5626

– Guarantee Agency

– US Department of Education

– Lender

– Secondary Market

Know Your Loan Servicers (Continued)

• Your Loans may be transferred to other servicers by the Department of Education

• If you have multiple servicers, you’ll need to make multiple payments each month

• Read your mail carefully – you’ll receive notification by mail if your loans are transfered

NSLDS

• National Student Loan Data System (NSLDS)– www.nslds.ed.gov

– 1-800-999-8219

– SSN, Name, Birth date and FAFSA Pin #

– Central database for federal student loans• Loans are tracked until they are paid in full

• You can see how much you owe and to whom

• You can access your account with your ED PIN #

– Available 24/7

– NSLDS does not include nursing, medical, non-federal, or institutional loans (Health Professions)

Organizations to Know

• Loan Servicer– The organization the Department of Education may hire to

assist you during the repayment of your loans

• Federal Ombudsman– The office of the guarantor that helps it’s borrowers resolve

federal student loan issues

– Customer Service: (877) 557-2575

– http://ombudsman.ed.gov

Review Federal Student Loans

Master Promissory Note (MPN)

• The Master Promissory Note is your promise to repay your loan

• You singed an MPN before any federal student loans were disbursed

Master Promissory Note (MPN) (Continued)

• Your MPN will be revoked on the earliest of the following dates:– The date the lender received written notice from you that

no further loans will be disbursed under the note

– Twelve months after the date you sign the MPN, if there have been no disbursements during the 12-month period

– Ten years from the date you signed the MPN

Borrower Rights and Responsibilities

• Federal Borrower Rights– You may pre-pay your loan at any time without penalty

– Grace Periods and Deferments in certain circumstances

– Where to make payments

– Receive a copy of your MPN

– Know how much you borrowed (Disclosure Statement)

– Where to write or call with questions

– Receive an interest subsidy at certain times

– Have your loan cancelled under certain circumstances

Borrower Rights and Responsibilities (Continued)

• Federal Borrower Responsibilities– Complete loan exit counseling

– Repay your loan, even if you• Don’t complete your degree

• Aren’t happy with your education

• Can’t find a job in your field

• Didn’t complete your program within the regular completion time

– Notify your lender if you change your name, address, or telephone number

– Contact your lender if you cannot make a payment

Different Loans = Different Terms

Loan Type Interest Rate Grace Period Term

Federal Perkins 5% 9 months 10 years

Federal Health Professions 5% 12 months 10 years

Federal Stafford 6.8% 6 months 10 years

Federal Direct 6.8% 6 months 10 years

Federal Grad Plus (Before 7/1/2008)

8.5% None 10 years

Federal Grad Plus (After 7/1/2008) 8.5% 6 months 10 years

Federal Direct Grad Plus 7.9% 6 months 10 years

Federal Consolidation Varies None Varies

Private Varies None Varies

Student Loan Details

• All student loans– Are reported to the national credit bureaus

– Impact your credit score

– Must be repaid!

• Consider creating a budget to track income and expenses

Plan for Repayment

Standard Repayment

– Equal monthly payments

– Payment term of 10 years

– Minimum Payment of at least $50 a month

– ¹An unsubsidized Stafford/Direct loan at 6.8%, with amortized repayment plan.

Loan Amount

Monthly Payment

Total Interest

PaidTotal Paid¹

(Loan + Interest)

$150,000 $1,726 $57,144 $207,144

$200,000 $2,301 $76,193 $276,193

Graduated Repayment

– Monthly payments start low and increase over time

– Repayment term of 10 years

– ¹Payment amounts under graduated plans vary from lender to lender. Your lender will determine the exact payments if you choose this plan.

– ²An unsubsidized Stafford/Direct loan at 6.8% interest, with a 10-year amortized repayment plan.

Loan Amount

Beginning Monthly Payment

Ending MonthlyPayment¹

Total Interest

PaidTotal Paid²

(Loan + Interest)

$150,000 $850 $2,337 $70,977 $220,977

$200,000 $1,133 $3,116 $94,636 $294,636

Income-Sensitive Repayment

– Monthly payments adjust each year based on your total monthly gross income

– Must reapply each year

– Must provide current year’s income tax return or W-2 statements to apply

– Each year you decrease your monthly payments, your monthly payments for the remaining years will increase proportionately

Income-Sensitive Repayment (Continued)

• Assumes a gross monthly income of $3,750

¹Payment amounts under income-sensitive plans vary. Your lender will determine the exact payments if you choose this plan.

²An unsubsidized Stafford/Direct loan at 6.8% interest, assuming your monthly payment is based on 10% of the gross monthly income

Payment Plan

Loan Amount

Four years/First 40 Months

Six years/Last 80 Months

Total Interest

PaidTotal Paid²

(Loan + Interest)

Income-Sensitive

$200,000 $375 $4,097 $113,021 $313,021

Graduated $200,000 $1,133 $3,116 $94,636 $294,636

Standard $200,000 $2,301 $76,193 $276,193

Monthly Payment¹

Income-Based Repayment

• New repayment option available as of July 1, 2009.

• You can participate if you have partial financial hardship

• Monthly payment is 15% of the difference between your Adjusted Gross Income (AGI) minus 150% of the monthly poverty level in your state of residence applicable to family size.

• Must reapply each year and submit tax return for verification

• Payment term is 10 years, but repayment period can go up to 25 years

• Can return to standard repayment plan

• Any remaining balance may be forgiven after 25 years

and 300 payments

Income-Based Repayment (Continued)

• If monthly payment amount is not enough to pay accrued interest– Subsidized Stafford/Direct Loans: The Department of Education will

pay the remaining interest for up to three years

– Unsubsidized Stafford/Direct, Grad Plus, or Consolidation Loans: The interest will accrue and be capitalized at the end of income-based repayment.

• Visit www.StudentLoan.gov for payment calculator

Adjusted Gross Income (AGI)

• Borrower who files married/joint: Consider both spouse’s AGI in determining payment

amount

• Borrower who files married/separate: Consider only the borrower’s AGI and debt in determining

payment amount

Income-Based Repayment (Continued)

Borrower 1 Borrower 2 Borrower 3 Borrower 4

Family Size 1 2 3 4

Monthly AGI* $3,600 $3,600 $7,200 $7,200

150% of Poverty Level

$1,355 $1,821 $1,821 $2,289

X $2,245 $1,779 $5,379 $4,911

15% of X $337 $267 $807 $737

Loan Amount Standard Monthly Payment

Borrowers who Qualify for IBR

$150,000 $1,726 All four borrowers

$200,000 $2,301 All four borrowers

Income-Based Repayment (Continued)

Monthly Payments

Loan Amount Income-based Repayment

Years 1-2

Standard Payment

Years 3-10

TotalInterest

Paid

Total Paid (Loan + Interest)

$200,000 $340 $2,596 $57,418 $249,258

Pay As You Earn

• Only available for Direct Loans

• Payments capped at 10% of discretionary income

• Forgiveness after 20 years of on-time payments

• Uses same application as IBR and is presented as first option to be considered if qualifications are met

Extended Repayment

• You are eligible for extended repayment if you received loans after 10/07/98 and have over $30,000 in federal student loan debt

• Your repayment term may be as long as 25 years

• Minimum payment of at least $50 a month, depending on your loan balance

• Monthly payments may be fixed or graduated

Extended Repayment(Continued)

Loan Amount

Monthly Payment

Years in Repayment

Total Interest Paid

Total Paid¹ (Loan + Interest)

$150,000 $1,041 25 $162,333 $312,333

$200,000 $1,388 25 $216,442 $416,442

• ¹An unsubsidized Stafford/Direct loan at 6.8%, with a 25-year amortized repayment plan.

Loan Repayment Examples

Payment Plan Amount Borrowed¹

Term Total Interest Paid

Total Amount Paid

Standard $200,000 10 years $76,193 $276,193

Graduated $200,000 10 years $94,636 $294,636²

Income-sensitive

$200,000 10 years $117,322 $317,322²

Income-based $200,000 10-25 years X $X³

Extended $200,000 25 years $216,442 $416,442

• ¹Unsubsidized Stafford/Direct loan at 6.8% interest, with a 10-year amortized repayment plan.

• ²Payment amounts under graduated and income-sensitive plans vary. Your lender will determine the exact payments if you choose this plan.

• ³the total amount paid depends upon the borrower’s annual salary and family size. The unpaid balance may be forgiven after 25 years of repayment (300 payments).

Keep in Mind

• You should select the repayment plan that fits your repayment goals

• You pay the lowest amount of interest under standard 10-year repayment

• There is no penalty to pre-pay your student loans, so if you’re able, pay more than the minimum as often as you can – this will save you interest in the long run.

• Choose an alternative payment plan if you have cash flow problems early on

• Talk to your lender about changing plans at any time

Repayment Tips

• Let your lender or servicer know if:– You change your name, address, or telephone number

– You want to switch to a different payment plan after repayment begins

– You want to change your payment due date because the date assigned doesn’t work for you

– You think you’re going to have trouble making your student loan payment

Money Saving Tips

– Sign up to make your monthly payment via automatic debit (ACH) instead of by check

– Find out if your lender has a program that rewards your for paying on time

– Deduct all of the interest that you pay – explore the education tax benefits that are available by visiting www.studentaid.org or www.irs.gov (search for Publication 970)

Estimated Monthly Payments

• You can estimate your monthly student loans payments using the Repayment Comparison Calculator at www.studentaid.ed.gov

Unsubsidized Stafford/Direct – 6.8%

Debt Term Monthly Payment

Total Interest Paid

Total Paid

$150,000 10 years $1,726 $57,144 $207,144

$200,000 10 years $2,301 $76,193 $276,193

Grad Plus – 7.9%

Debt Term Monthly Payment

Total Interest Paid

Total Paid

$150,000 10 years $1,812 $67,440 $217,440

$200,000 10 years $2,416 $89,920 $289,920

Know How to Get Help When You Need It

• Contact your Lender of Loan Service Agent if anything effects your ability to pay your loan– You may be eligible for a:

• In-School Deferment

• Unemployment Deferment

• Cancellation Services Deferment

• Grad Fellowship, Rehab, Training

Deferment• Postpones your federal loan payment if you meet one of the

following criteria:• Enrolled in school at least half-time

• Enrolled in a graduate fellowship or approved rehabilitation training program

• Unable to find full-time employment

• Suffer economic hardship

• Serving in military or active duty

• To request a deferment, you have to apply to your lender or servicer – you may be asked to complete a deferment form, or you may be able to apply electronically or over the phone

• There are limits to the number of months many deferments

can be used

Impact of Deferment

• If you have a subsidized Stafford/Direct loan, the government will pay the interest during deferment

• If you have an unsubsidized Stafford/Direct loan or a Grad Plus loan, you are responsible for the interest• You can pay the interest during your deferment, or

• You can let the interest accrue and it will be added to your loan balance following the deferment

Cost of Deferring Interest

• Assumes a $150,000 Grad Plus loan at 8.5% with a 10-year repayment and a 12 month deferment

Making Interest Payments

Deferring Interest Payments

Interest Paid $12,750 $0

Interest Accrued $0 $13,162

Total Interest Paid $85,924 $105,919

Total Amount Paid $235,924 $255,919

Forbearance

• Temporarily postpones or reduces your monthly federal student loan payments

• Generally granted at your lender’s discretion

• Interest accrues on all of your loans during the forbearance period – even on your subsidized Stafford/Direct loans.

Mandatory Internshipand Residency Forbearance

• Mandatory forbearances are granted for participation in a medical or dental internship/residency program

Financial Impact of the Forbearance

• $150,000 of student loans place in forbearance for 48 months

• Additional interest will be $56,343

• Monthly payment after forbearance will increase from $1,726 to $2,195– 10 year repayment period

– 6.8% interest

Consolidation

• Combines two or more federal loans into a single loan

• Pays your existing loans in full and replaces them with a new loan

• Your new loan will have a new interest rate – the weighted average of your loans, rounded up to the nearest 1/8 percent

• Your repayment term may increase up to 30 years, depending on your loan balance

Consolidation (Continued)

• Explore all of your options before deciding on consolidation

• Talk to your lender about extended or income-based repayment plans as alternatives

• Be way of consolidating federal student loans into a private loan as you will lose all federal benefits

• Remember that private loans can’t be consolidated into a federal loan

Consolidation Example

Loan Type Loan Amount

Interest Rate Loan Term Monthly Payment

Total Interest

Paid

Total Paid

Stafford/Direct Loans

Subsidized $23,000 Variable 4.41% 10 years $237 $5,484 $28,484

Subsidized $42,500 Fixed 6.8% 10 years $489 $16,190 $58,690

Unsubsidized $34,000 Variable 4.41% 10 years $356 $8,227 $42,727

Unsubsidized $124,000 Fixed 6.8% 10 years $1,427 $47,240 $171,240

Grad Plus Loan

$75,000 Fixed 8.5% 10 years $929 $46,586 $111,586

Totals

$299,000 $3,439 $113,729 $412,729

Consolidation Example (Continued)

Loan Type

and Plan

Loan Amount

Interest Rate

Loan Term

Monthly Payment

Total Interest

Paid

Total Paid

Consolidation Loan

Extended $299,000 6.875% 30 years $1,964 $408,119 $707,119

Graduated Income-Sensitive

$299,000 6.875% 30 years$1,713$2,295

$457,544 $756,544

Would You Consolidate?

Loan Type Loan Amount Interest Rate

Stafford Loan $20,000 Variable Rate

Direct Loan $50,000 6.8% Fixed

Consolidation Loan $60,000 3.25% Fixed

Health Professions Loan $30,000 5% Fixed

Perkins Loan $5,000 5% Fixed

What Happens if You Don’t

Loan TypeLoan

AmountInterest

RateLoan Term

Monthly Payment

Total Interest

Paid

Total Paid

Stafford $20,000 4.41% 10 years $206 $4,769 $24,769

Direct $50,000 6.8% 10 years $575 $19,048 $69,048

Consolidation $60,000 3.25% 25 years $292 $27,717 $87,717

Health Professions

$30,000 5% 10 years $318 $8,184 $38,184

Perkins $5,000 5% 10 years $53 $1,363 $6,363

Totals

$165,000 $1,445 $61,081 $226,081

What Happens if You Do

Loan Type and

Plan

Loan Amount

Interest Rate

Loan Term

Monthly Payment

Total Interest

Paid

Total Paid

Consolidation Loan

Extended $165,000 4.875% 30 years $873 $149,348 $314,348

Graduated Income-sensitive

$165,000 4.875% 30 years$670

$1,077$174,054 $339,054

Consolidation (Continued)

• Keep in mind that you:– Could lose your grace period

– Will lose your Perkins benefits

– Are not required to extend your repayment term

– Consolidation lenders are limited

Federal Loan Discharge

• Loans are discharged, or canceled, if:– You die or become totally and permanently disabled

– Your school closed before you could complete the program

– Your loan was falsely certified by an eligible school

– Your loan was falsely certified because of identity theft

Public Service Loan Forgiveness

• New program for federal student loan borrowers who work in certain kinds of jobs– Are employed by any nonprofit, tax-exempt 501©(3)

organization

– Are employed by the federal government, a state government, local government, or tribal government (this includes the military and public schools and colleges); or

– Serve in a full-time AmeriCorps or Peace Corps position

• Debt will be forgiven after 10 years of eligible employment and qualifying loan payments

National Health Service Corps (NHSC)

• Part of the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services

• National Health Service Corps (NHSC) provides team-based primary health care to the nation’s underserved

• Offers a Loan Repayment Program (LRP)

NHSC Loan Repayment Program

– A competitive program that makes contract awards to clinicians who agree to provide primary care at approved sites in designated Health Professional Shortage Areas (HPSAs) of greatest need

– In return for this service, awardees receive money to repay their outstanding qualifying educational loans

– For more information, visit www.nhsc.bhpr.hrsa.gove/join_us/lrp.asp

National Institute of Health (NIH)

– Part of the U.S. Department of Health and Human Services

– Primary federal agency for conducting and supporting medical research

– Offers five loan repayment programs to attract health professionals to careers in clinical, pediatric, health disparities, or contraception and infertility research

NIH Loan Repayment Program

– In exchange for a two or three-year commitment to a research career, NIH will repay up to $35,000 per year of your qualified educational debt

– Basic Eligibility requirements:• Doctoral-level degree

• Government research funding (federal, state, or local) or domestic nonprofit research funding

• Student loan debt equal to at least 20% of annual salary

• U.S. Citizen

– For more information, visit www.lrp.nih.gov

Know the Consequences of Default

Delinquency

• A loan is considered delinquent when one payment is missed

• Delinquent loans are listed on your credit report

Default

• Failure to repay your federal student loan for 270 days results in default

Default (Continued)

• If you default on a federal student loan:– You may have a lower credit score for at least seven years

– Your federal tax refunds may be applied to your loan

– You’ll pay a collection fee of up to 24% on each payment

– A portion of your paycheck may be applied to your loan

Default (Continued)

• If you default on a federal student loan:– You will lose eligibility for deferments, forbearances, or

future federal financial aid

– Your state may revoke your professional licensure

– Your school may withhold institutional services such as transcripts and letters of recommendation

– The federal government may pursue delinquent debt collection procedures and litigation against you.

Successfully Repay Your Debt

Manage Your Loans

• Save your loan records, correspondence, and payment receipts until all loans are paid in full

• Pay your loans on time

• Keep in touch with your lender

• Ask for help if you need it

Remember Your Loans

• It’s important to know what types of loan you have how they will impact your financial future

• Remember that each loan you borrow will have a different term, interest rate, and monthly payment

Online Exit Counseling

www.studentloans.gov

Completion of the online Exit Counseling is Friday, April 18, 2014.

Questions?

Thank you for participating in this Federal Government requirement!