Loans 101Loans 101Loans 101Loans 101

presented by the Office of Financial presented by the Office of Financial

EducationEducationpresented by the Office of Financial presented by the Office of Financial

EducationEducation

About our officeAbout our officeAbout our officeAbout our office• The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates

so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to

ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills. ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills. 

• As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and

empower them to make wise financial decisions while attending school and beyond.empower them to make wise financial decisions while attending school and beyond.

• The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates

so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to

ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills. ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills. 

• As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and

empower them to make wise financial decisions while attending school and beyond.empower them to make wise financial decisions while attending school and beyond.

What is the cost of What is the cost of attendance at MSU?attendance at MSU?What is the cost of What is the cost of

attendance at MSU?attendance at MSU?

In-State Tuition=$6,705In-State Tuition=$6,705

w/ housing, books, misc. =$19,185w/ housing, books, misc. =$19,185

Out-of-State Tuition=$20,062Out-of-State Tuition=$20,062

w/ housing, books, misc. =$32,542w/ housing, books, misc. =$32,542

• 2012-2013 2012-2013 (http://www.montana.edu/opa/facts/quick.htm#Expenses)(http://www.montana.edu/opa/facts/quick.htm#Expenses)

Income SourcesIncome SourcesIncome SourcesIncome Sources

ParentsParents

SavingsSavings

Federal Grants (FAFSA)Federal Grants (FAFSA)

ScholarshipsScholarships

Earned Income (making tuition payments)Earned Income (making tuition payments)

Student Loans (federal, Perkins, and/or Student Loans (federal, Perkins, and/or

private)private)

Loan LimitsLoan LimitsLoan LimitsLoan Limits

Dependent students=$31,000Dependent students=$31,000

Independent students=$57,500Independent students=$57,500

Graduate students=$138,500Graduate students=$138,500

Types of Student Types of Student LoansLoans

Types of Student Types of Student LoansLoans

SubsidizedSubsidized

UnsubsidizedUnsubsidized

PerkinsPerkins

Parent PLUSParent PLUS

PrivatePrivate

Federal SubsidizedFederal SubsidizedFederal SubsidizedFederal Subsidized

Lender is Dept. of EducationLender is Dept. of Education

Stafford and DirectStafford and Direct

6.8% + 1% origination fee6.8% + 1% origination fee

During periods of deferment, interest is paid During periods of deferment, interest is paid

by federal governmentby federal government

Grace period=6 months after student Grace period=6 months after student

graduates/leaves schoolgraduates/leaves school

Federal Federal UnsubsidizedUnsubsidized

Federal Federal UnsubsidizedUnsubsidized

Lender is Dept. of EducationLender is Dept. of Education

Stafford and DirectStafford and Direct

6.8% + 1% origination fee6.8% + 1% origination fee

During periods of deferment, interest is NOT During periods of deferment, interest is NOT

paid by federal governmentpaid by federal government

Grace period=6 months after student Grace period=6 months after student

graduates/leaves schoolgraduates/leaves school

Perkins loansPerkins loansPerkins loansPerkins loans

Lender is Montana State University Lender is Montana State University

Current interest rate at 5% (subsidized)Current interest rate at 5% (subsidized)

Grace period=9 months after student Grace period=9 months after student

graduates/leaves schoolgraduates/leaves school

Can be consolidated with federal loansCan be consolidated with federal loans

PrivatePrivatePrivatePrivate

Private lender (ex. Wells Fargo, Sallie Mae)Private lender (ex. Wells Fargo, Sallie Mae)

Varying interest rates; can be fixed or Varying interest rates; can be fixed or

adjustableadjustable

May or may not have a grace periodMay or may not have a grace period

Cannot be consolidated with federal or Cannot be consolidated with federal or

Perkins loansPerkins loans

Use as a last resort and use sparingly!Use as a last resort and use sparingly!

National Student Loan Data National Student Loan Data SystemSystem

National Student Loan Data National Student Loan Data SystemSystem

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

You will need your PIN to log inYou will need your PIN to log in

If you donIf you don’’t have your PIN, visit t have your PIN, visit http:pin.ed.govhttp:pin.ed.gov to to ““Request A Duplicate PINRequest A Duplicate PIN””

Refer back to NSLDS once a yearRefer back to NSLDS once a year

Make sure information is accurate and up Make sure information is accurate and up to dateto date

Locate your loan servicer!Locate your loan servicer!

Loan servicersLoan servicersLoan servicersLoan servicers

Identifying Your Loan Identifying Your Loan Servicer Servicer

Identifying Your Loan Identifying Your Loan Servicer Servicer

Servicer for Perkins Loans is Montana Servicer for Perkins Loans is Montana

State UniversityState University

Contact the Perkins & Nursing Loan Contact the Perkins & Nursing Loan

Servicer at (406)994-2702Servicer at (406)994-2702

Identifying Your Loan Identifying Your Loan Servicer Servicer

Identifying Your Loan Identifying Your Loan Servicer Servicer

Servicers for all other federal loans:Servicers for all other federal loans:

FedLoan Servicing (PHEAA)FedLoan Servicing (PHEAA)

NelnetNelnet

Great Lakes Educational Loan ServicesGreat Lakes Educational Loan Services

Sallie MaeSallie Mae

About Loan ServicersAbout Loan ServicersAbout Loan ServicersAbout Loan Servicers

Make payments Make payments

Choose a payment planChoose a payment plan

Request a deferment or forbearanceRequest a deferment or forbearance

Making PaymentsMaking PaymentsMaking PaymentsMaking Payments

6 month grace period from the time you 6 month grace period from the time you

graduate or leave school; 9 month grace graduate or leave school; 9 month grace

period for Perkins loansperiod for Perkins loans

You can make payments any time...even You can make payments any time...even

while youwhile you’’re still in school!re still in school!

Payment PlansPayment PlansPayment PlansPayment Plans

Standard-automatically enrolled; 10 yearsStandard-automatically enrolled; 10 years

Extended: 25 years; smaller payments, Extended: 25 years; smaller payments, pay more interest over timepay more interest over time

Graduated: 10 or 25 years; payment Graduated: 10 or 25 years; payment amount increases every 2 yearsamount increases every 2 years

Various Income-based Repayment: 20-25 Various Income-based Repayment: 20-25 years; based on your annual incomeyears; based on your annual income

Avoid Default!!!Avoid Default!!!Avoid Default!!!Avoid Default!!!

Default=non-payment for 270 days (9 months)Default=non-payment for 270 days (9 months)

Potential consequences include:Potential consequences include:

Loan becomes due in full immediatelyLoan becomes due in full immediately

Collection fees of up to 24% Collection fees of up to 24%

Garnished wages, seized tax refundsGarnished wages, seized tax refunds

Negatively affect credit scores and reportsNegatively affect credit scores and reports

State licenses could be suspendedState licenses could be suspended

Always stay in contact with your loan servicer!Always stay in contact with your loan servicer!

Minimize Loan Debt Minimize Loan Debt NowNow

Minimize Loan Debt Minimize Loan Debt NowNow

Budget loan refunds...pay back what you Budget loan refunds...pay back what you

dondon’’t needt need

Make payments now! Even small amounts Make payments now! Even small amounts

here and there help.here and there help.

Consider working while in school to help Consider working while in school to help

reduce need for loans.reduce need for loans.

General Debt RepaymentGeneral Debt RepaymentGeneral Debt RepaymentGeneral Debt Repayment

• If you have a variety of debt, ideally pay off whatever has the If you have a variety of debt, ideally pay off whatever has the

highest interest firsthighest interest first

• However, you can also create a However, you can also create a ““debt snowballdebt snowball”” by paying off by paying off

the smallest debt you have first and then rolling the momentum the smallest debt you have first and then rolling the momentum

from that onto other debt loadsfrom that onto other debt loads

• You wonYou won’’t save as much on interest perhaps, but it may have t save as much on interest perhaps, but it may have

enough impact to get you to stick to the planenough impact to get you to stick to the plan

• Once youOnce you’’ve repaid one debt, you can just roll the money from ve repaid one debt, you can just roll the money from

those payments over to your next debt categorythose payments over to your next debt category

For More InformationFor More InformationFor More InformationFor More Information

National Student Loan Data System: National Student Loan Data System:

http://nslds.ed.govhttp://nslds.ed.gov

Federal Student Aid: Federal Student Aid: http://studentaid.ed.govhttp://studentaid.ed.gov

Get Money Smarts: Get Money Smarts: http://www.getmoneysmarts.orghttp://www.getmoneysmarts.org

General debt repayment calculator: General debt repayment calculator:

http://www.youcandealwithit.com/borrowers/calculatorhttp://www.youcandealwithit.com/borrowers/calculator

s-and-resources/calculators/debt-repayment-s-and-resources/calculators/debt-repayment-

calculator.shtmlcalculator.shtml

Thank you!Thank you!Thank you!Thank you!

•Any questions?Any questions?