Navigating Educational Navigating Educational LoansLoans

Kevin SingerKevin Singer

Assistant Director of Financial AidAssistant Director of Financial Aid

Hope College, HollandHope College, Holland

Student LoansStudent Loans

► Some Facts:Some Facts: The non-profit American Student Assistance The non-profit American Student Assistance

reports the following reports the following (http://www.asa.org/policy/resources/stats)(http://www.asa.org/policy/resources/stats)

►Yearly, close to 20 Million individuals attend collegeYearly, close to 20 Million individuals attend college►Of that, 12 Million borrow annually to cover costsOf that, 12 Million borrow annually to cover costs

60% of those that attend college60% of those that attend college►Close to 37 Million borrowers with outstanding debtClose to 37 Million borrowers with outstanding debt

29 and under: 14 Million29 and under: 14 Million 30-39: 10.6 Million30-39: 10.6 Million 40-49: 5.7 Million40-49: 5.7 Million 50-59: 4.6 Million50-59: 4.6 Million 60 and over: 2.2 Million60 and over: 2.2 Million

► As of the 1As of the 1stst Quarter of 2012 Quarter of 2012

Various Kinds of Student Various Kinds of Student LoansLoans

► Federal Direct LoansFederal Direct Loans Subsidized & UnsubsidizedSubsidized & Unsubsidized

► Federal Perkins LoanFederal Perkins Loan► Federal Parent PLUS LoanFederal Parent PLUS Loan

Undergraduate & GraduateUndergraduate & Graduate

► Alternative/Private Educational LoansAlternative/Private Educational Loans► Institutional LoansInstitutional Loans►Other Outside LoansOther Outside Loans

Federal Direct LoansFederal Direct Loans

►One Loan – Two OptionsOne Loan – Two Options Subsidized (subsidy) – Interest that the student Subsidized (subsidy) – Interest that the student

is responsible for begins accruing once the loan is responsible for begins accruing once the loan is placed into repaymentis placed into repayment►Repayment begins 6 months after the date of the Repayment begins 6 months after the date of the

student’s last class – regardless of completion of student’s last class – regardless of completion of programprogram

Unsubsidized – Interest that the student is Unsubsidized – Interest that the student is responsible for begins accruing once the loan is responsible for begins accruing once the loan is released to their schoolreleased to their school

►Eligibility for Direct Subsidized LoanEligibility for Direct Subsidized Loan► Interest RatesInterest Rates

Federal Direct Loan - Federal Direct Loan - AmountsAmounts

► Annual Loan Limits – Dependent Students:Annual Loan Limits – Dependent Students: Freshman: $5,500 ($3,500 maximum subsidy)Freshman: $5,500 ($3,500 maximum subsidy) Sophomore: $6,500 ($4,500 maximum subsidy)Sophomore: $6,500 ($4,500 maximum subsidy) Junior/Senior: $7,500 ($5,500 maximum subsidy)Junior/Senior: $7,500 ($5,500 maximum subsidy)

► Annual Loan Limits – Independent Students:Annual Loan Limits – Independent Students: Freshman: $9,500 ($3,500 maximum subsidy)Freshman: $9,500 ($3,500 maximum subsidy) Sophomore: $10,500 ($4,500 maximum subsidy)Sophomore: $10,500 ($4,500 maximum subsidy) Junior/Senior: $12,500 ($5,500 maximum subsidy)Junior/Senior: $12,500 ($5,500 maximum subsidy)

►Graduate Level Students: $20,500 (no subsidy)Graduate Level Students: $20,500 (no subsidy)►Overall Loan Limits/AggregatesOverall Loan Limits/Aggregates

Federal Direct Loan Federal Direct Loan RequirementsRequirements

►EnrollmentEnrollment Degree SeekingDegree Seeking At least half time enrollmentAt least half time enrollment

►Typically 6 credits per termTypically 6 credits per term

►Entrance CounselingEntrance Counseling Electronic Session with QuizElectronic Session with Quiz

►Master Promissory NoteMaster Promissory Note

Federal Perkins LoansFederal Perkins Loans

► EligibilityEligibility Aid eligibility as determined by student’s FAFSAAid eligibility as determined by student’s FAFSA

►Exceptional Financial NeedExceptional Financial Need

School ParticipationSchool Participation At least half-time enrollment At least half-time enrollment

►Typically 6 credits per termTypically 6 credits per term

► AwardsAwards Amount of Institutional FundingAmount of Institutional Funding Maximum Award Amounts ($5,500 – UG; $8,000 – Maximum Award Amounts ($5,500 – UG; $8,000 –

GR)GR)►Common Award AmountsCommon Award Amounts

Federal Perkins Loans Federal Perkins Loans (continued)(continued)

►Overall Loan Amounts/Aggregates ($27.5-UG; Overall Loan Amounts/Aggregates ($27.5-UG; $60K-GR) $60K-GR)

► Interest RateInterest Rate► RepaymentRepayment►Disclosure Statement/Master Promissory NoteDisclosure Statement/Master Promissory Note► Loan Forgiveness OptionsLoan Forgiveness Options

Teacher service at low-income schools and under Teacher service at low-income schools and under certain other circumstances specified in the law certain other circumstances specified in the law ((HEAHEA) )

Federal PLUS LoansFederal PLUS Loans

►Loan considers Student’s Dependency Loan considers Student’s Dependency Status Status

►Undergraduate StudentsUndergraduate Students Application done by parent of studentApplication done by parent of student

►Graduate StudentsGraduate Students Application done by studentApplication done by student

Federal PLUS Loans Federal PLUS Loans (continued)(continued)

► EligibilityEligibility Creditworthy Loan – eligibility determined at time Creditworthy Loan – eligibility determined at time

of application submissionof application submission►Co-Signer/Endorser OptionCo-Signer/Endorser Option►Loan Denial OptionsLoan Denial Options

Student needs to be enrolled at least half-time Student needs to be enrolled at least half-time (typically 6 credits)(typically 6 credits)

► AwardsAwards Eligible Amount = Costs – Other Financial AidEligible Amount = Costs – Other Financial Aid

► RepaymentRepayment►Master Promissory NoteMaster Promissory Note► Borrower NotesBorrower Notes

Repayment Options – Direct/PLUS Repayment Options – Direct/PLUS LoansLoans

►6 Options:6 Options: StandardStandard GraduatedGraduated ExtendedExtended Income-SensitiveIncome-Sensitive Income-ContingentIncome-Contingent Income-BasedIncome-Based

►Direct Loans – Exit CounselingDirect Loans – Exit Counseling

Alternative/Private LoansAlternative/Private Loans

► Loans available through Financial InstitutionsLoans available through Financial Institutions Banks, Credit Unions, etc.Banks, Credit Unions, etc.

► EligibilityEligibility Creditworthy Loan – eligibility determined at time of Creditworthy Loan – eligibility determined at time of

application submissionapplication submission► Traditional age students typically will need a creditworthy co-Traditional age students typically will need a creditworthy co-

signer signer Enrollment Requirements – Lender will determineEnrollment Requirements – Lender will determine

► AwardsAwards Eligible Amount = Costs – Other Financial AidEligible Amount = Costs – Other Financial Aid

► Interest RatesInterest Rates Variable (Prime/Libor)Variable (Prime/Libor)

► RepaymentRepayment

Institutional & Outside LoansInstitutional & Outside Loans

►Loans available through your Loans available through your individual school or outside non-profit individual school or outside non-profit organization organization Availability dependent on awarding entityAvailability dependent on awarding entity

►EligibilityEligibility►Award AmountsAward Amounts► Interest RatesInterest Rates►RepaymentRepayment

What students should What students should consider…consider…

► What are my education costs for this year?What are my education costs for this year? What specific cost do I need financial assistance?What specific cost do I need financial assistance? Consider borrowing only what is needed for these Consider borrowing only what is needed for these

costscosts►Rather than all offered to youRather than all offered to you►Specific Costs-Grant/Scholarship Aid = Balance?Specific Costs-Grant/Scholarship Aid = Balance?

► The Project on Student DebtThe Project on Student Debt reports that the reports that the average amount of student loan debt for the average amount of student loan debt for the Class of 2011 was $26,600Class of 2011 was $26,600 Equates to a monthly payment of $306 over 10 years Equates to a monthly payment of $306 over 10 years

►Considers Standard Repayment Plan OptionConsiders Standard Repayment Plan Option

Contact InformationContact Information

►Kevin SingerKevin Singer Assistant Director of Financial AidAssistant Director of Financial Aid

►Hope CollegeHope College

E-mail:E-mail:►singer@hope.edu►ksinge04@yahoo.com

Phone:Phone:►(616) 570-3554(616) 570-3554

Navigating Educational Navigating Educational LoansLoans

Kevin SingerKevin Singer

Assistant Director of Financial AidAssistant Director of Financial Aid

Hope College, HollandHope College, Holland