2014 Counselor Training

Paying For College Strategiesafter all of the student’s “free” money has been exhausted

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OASFAA is a non-profit organization

OASFAA has provided the information today as a free service

to access staff and high school counselors

You have permission to copy and distribute these materials to your students and families. Charges may not be assessed for the material or for the

information presented. Permission must be granted for other use of this information or these materials. Contact the Outreach Chairperson listed on the

OASFAA web site or e-mail: outreach@oasfaa.org

Agenda

Counseling Framework Federal Student Loans After Stafford or Gap Financing

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How does America pay for college?Sources of Funds for College by Percentage

Source: Sallie Mae “How America Pays for College,” 2009

“There are only 3 Ways To Pay for College”

Before Savings from Summer Job

Income protection allowance - $6,260 Gifts – Holidays, birthdays… Summer classes at CC after Senior Year Parents - planning opportunity – 529

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“There are only 3 Ways To Pay for College”

During - Families are not in this alone! File the FAFSA to find out eligibility for

Grants (federal and state) and Scholarships (from the school "outside“)

Work study Summer classes, summer jobs

Parents – Tuition Payment Plans Tax credits (Consult your tax advisor)

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“There are only 3 Ways To Pay for College”

After Federal Student Loans

Perkins Direct Subsidized and Unsubsidized Loans (aka

Stafford) Parent PLUS versus Private Loans Other financing

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Perkins Loans, 2014-2015 Eligible students (priority to exceptional need)

Undergraduate or graduate students Must file the FAFSA

Annual and aggregate loan limits up to $5,500 annually for undergraduates

(actual awards, if any, will vary between schools) $27,500 aggregate for undergraduates

Interest rate: 5% (fixed) during repayment Interest subsidized during in-school and nine-month grace

period Deferment and cancellation provisions available

Direct Loans, 2014-2015

Direct Subsidized and Unsubsidized Loans are two separate, unique types of loans that are awarded separately.

*Interest rates recalculated annually and are effective July 1st based on the 10-year Treasury note index plus 2.05%, capped at 8.25%

Subsidized UnsubsidizedNeed based Not based on financial need

Interest is fixed at 3.86% for new undergraduate loans disbursed

during 2013-14*. Interest is subsidized while the student is in

school and during deferment.

Interest is fixed at 3.86% for all new loans disbursed during 2013-14*. Interest accrues from time

of disbursement of the funds.

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Direct Loans, 2014-2015

Independent Students and Dependent Students whose parents have been denied the PLUS Loan are eligible for additional

Unsubsidized Stafford Loans ($4,000 as Freshmen and Sophomores and $5,000 as Juniors and Seniors)

Class Year Base AmountAdditional

Unsubsidized Amount

Total Available to Borrow

Freshman $3,500 $2,000 $5,500

Sophomore $4,500 $2,000 $6,500

Junior $5,500 $2,000 $7,500

Senior $5,500 $2,000 $7,500

Direct Loans, 2014-2015

• Subsidized and Unsubsidized Loans• 1.072% origination fee.• Parent and Graduate PLUS• 4.288% origination fee.

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Direct Loans, 2014-2015

FAFSA Follow instructions at school attending Entrance Counseling

MPN Disbursement to student account

Notification of servicer (instruct students to

watch and save email/snail mail)

IBR – Income Based Repayment Available to federal loan borrowers experiencing financial

hardship Borrower qualifies if annual monthly student loan

payments exceed 15% of “discretionary income” If eligible for IBR, borrower’s monthly payment will be

determined by a formula that takes into account household size and adjusted gross income. Increases in income will impact the required monthly payment amount

Unpaid balance may be forgiven after 25 years of scheduled monthly payments (taxable event)

Pay As You Earn Available to new Direct loan borrowers (except Parent PLUS)

experiencing financial hardship No loan balance as of October 1, 2007, and Received a Direct loan on or after October 1, 2011

Borrower qualifies if annual monthly student loan payments exceed 10% of “discretionary income”

Similar to IBR, borrower’s monthly payment will be determined by a formula that takes into account family size and adjusted gross income. Increases in income will impact the required monthly payment amount

Unpaid balance may be forgiven after 20 years of qualifying repayment (which is a taxable event)

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Public Service Loan Forgiveness

120 qualifying payments on Direct Loans while on qualified repayment plans while working at a qualified employer.• Borrower must also be employed by a

qualifying organization at the time that the borrower applies for and receives PSLF• According to the IRS, the forgiven amount is

not treated as taxable incomeSource: Slide 39, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”

Public Service Loan Forgiveness

Qualifed employer: Any government organization 501(c)3 not-for-profit organization Other not-for-profit organizations providing specific

qualifying services

Borrower can work at multiple organizations Does not matter what the borrower’s job duties

are

Source: Slide 43, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”

Public Service Loan Forgiveness

Qualified Repayment Plans 10 year standard ICR IBR Pay As You Earn Others>= 10-Year Standard (Any other Direct

Loan Repayment Plan, but only payments that are at least equal to the standard payment)

Source: Slide 41, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”

IBR and PSLF FAQ’s

Federal Student Aid Public Service Loan Forgiveness Frequently Asked Questions• http://

studentaid.ed.gov/sites/default/files/public-service-loan-forgiveness.pdf

Income-Based Repayment Program Questions and Answers• http://

studentaid.ed.gov/sites/default/files/public-service-loan-forgiveness.pdf

Student Loan Calculators

Department of Education• http://

studentaid.ed.gov/repay-loans/understand/plans/income-based/calculator

IBRinfo.org• http://www.ibrinfo.org/calculator.php

“After Stafford” or Gap Counseling

Parent PLUS Home Equity Line of Credit

Retirement Plan Loans Roth IRA 401(k)

Private Student Loans Importance of Providing Planning Framework

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Parent PLUSParent PLUS Loans Loans to parents of dependent students. Loan limits are up to the cost of education less any

financial aid received. Interest rate is 6.41% fixed* for 13-14. Repayment begins within 60 days of full

disbursement. Payments may be deferred while the student is in school.

FAFSA completion is required.

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*Interest rates recalculated annually and are effective July 1st based on the 10-year Treasury note index plus 4.60%, capped at 10.50%

Private Loans

Private Loans (sometimes called Alternative Loans) are credit based loans from a bank or credit union. More thorough underwriting process than PLUS to

include debt to income and credit score analysis Students often require a cosigner Rates and fees, if any, are set based on the credit

worthiness of borrower and/or cosigner

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Education Financial Planning

Best Practices Develop a 4 year plan Families often focus just on the upcoming

semester Connect your plan to expected future income

and future student loan payments

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Questions?

Thank you for attending!

John Brown: JBrown@glhec.org

Jeff Johnston: jeff.johnston@salliemae.com

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