Understanding Student Loans

2018

Student Loan HeadlinesHas Student Loan Debt Reached A Crisis Point?

Beyond the Headlines: Is Student Debt Strangling Millennials' Chances for Success?

Student Loan Debt In 2017: A $1.3 Trillion Crisis

Student debt isn't just annoying — it can impact your health in truly terrifying ways

Mike Meru Has $1 Million in Student Loans. How Did That Happen?

Student Loan Stats

• Have the 2nd highest student loan delinquency rate in the nation at 16.38% - Dec 2017

• Last year have the highest student loan default rate in the nation at 18.3%

Student Loan Stats

• 2017 graduates nationwide had average student loan debt of $39,400 *

• 2016 graduates in WV had an average student loan debt of $27,872**

* Student Loan Hero**lendedu

Things you need to Know

• What loans do I have?• Who has my loans?• How much do I owe?• When will I begin repayment?• What are my options for repaying my

loans?

Types of Loans

• Direct Stafford Loans (Subsidized/Unsubsidized)

• Perkins Loan• Nursing Student Loan• Private Student Loan• Loan Consolidation

General Information on Loans

• Interest rates (variable-fixed)– Subsidized vs. Unsubsidized

• Loan fees• Grace period

Grace Period

Enrolled

Grace

Repayment

Direct Loan & FFEL Repayment Plans

Standard Graduated

Extended Income-Based

Repayment Plans

• Standard – up to 10 years• Graduated – up to 10 years• Extended – up to 25 years• Income Based – 20-25 years• (IBR, PAYE, REPAYE, ICR, ISR)• Loan Consolidation – up to 30 years

Repayment Plan Summary

Repayment Plan

Initial Payment

Final Payment

Total Paid Total Paid in Interest

Total Time in

Repayment

Forgiveness

10-Year Standard

$366 $366 $43,934 $8,934 10 years -

Graduated $206 $619 $46,212 $11,212 10 years -

Extended $199 $199 $59,561 $24,561 25 years -

Extended Graduated

$137 $332 $65,102 $30,102 25 years -

Income-Based

$156 $366 $53,706 $18,706 15 yr., 5. mo. $0

Pay As You Earn

$104 $361 $50,699 $28,620 20 years $12,920

Income-Contingent

$240 $315 $49,347 $14,347 15 yr., 5. mo. $0

John Smith has $35,000 in Direct Loan debt at an interest rate of 4.66%. His income is $30,000, he is single, and he lives in Indiana. His income increases at a rate of 5% per year.

Deferments

In-school Graduate Fellowship

Disability Rehabilitation

Unemployment Economic Hardship

Military Service Post-Active Duty Student

Deferred Interest Accrual

Forbearance

• Stop or reduce payment for up to 12 months– Financial hardship– Illness

• Interest will continue to accrue

Loan ForgivenessTeacher Loan Forgiveness Program

Public Service Loan Forgiveness Program

Civil Legal Assistance Attorney Student Loan Repayment Program

Service in Areas of National Need Loan Forgiveness Program

Teacher Loan Forgiveness

• Teach full-time for 5 complete and consecutive years in a – Title I school– More than 30% of the total enrollment

qualify for services under Title I– Listed in the annual directory of low-

income schools

Teacher Loan Forgiveness

• Receive up to $5,000 if a highly qualified full-time elementary or secondary teacher

• Receive up to $17,500 if highly qualified math or science teacher in a secondary school or highly qualified special education teacher

Public Service Loan Forgiveness

120 qualifying payments

On Direct Loans

On qualifying repayment plans

While working full-time at qualifying 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 income• Details about the program: StudentAid.gov/public service

Public Service Loan Forgiveness

• $350 million set aside for those who were in the wrong repayment plan

• Submitted the Public Service Loan Forgiveness: Application for Forgiveness and had that application denied because some or all of the payments were not made under a qualifying repayment plan for PSLF

• Worked at least 10 years of full-time employment with a qualifying employer, certified by the employer, and approved by the Department

• Made 120 qualifying monthly payments under the new requirements for the TEPSLF opportunity while working full-time for a qualifying employer or employers

Public Service Loan Forgiveness

• Complete the Employment Certification form as soon as possible and every year and every time you switch employers to ensure you are on track to receive forgiveness

• After 120 qualifying payments, you need to submit the PSLF application to receive the forgiveness

Public Service Loan Forgiveness

• If you consolidate your federal loans, you have to start over on your 120 payments

• Defaulted loans are not eligible for forgiveness

Loan Forgiveness

– Check with employer if they offer assistance toward student loans

– Nurse Corps Loan Repayment Program• www.hrsa.gov

– Perkins Loan

Taxpayer Relief

• There is a tax deduction for any interest that you pay on student loans on your federal tax return

Delinquency and Default

• Delinquency begins on the day after due date when full payment not made

• Loan servicers will begin activities to try to prevent default, including contacting references and sending notices

• Loan servicers always try to keep the borrower making payments because it will save the borrower time and interest payments in the long run

• Servicers will provide deferment and forbearance options if needed• Default occurs after 270 days of delinquency

Consequences of Default

Reported to credit bureaus

No more eligibility for federal student aid

Loan immediately due and payable in full

Lose eligibility for repayment plans and deferment or forbearance options

Collection agencies will contact borrower

Administrative wage garnishment

Garnishment of tax refunds

Resolving a Default

• Pay the loan off in full• Six consecutive, full, voluntary

payments on time– Becomes eligible for FSA funds but still in

default• Nine full, voluntary payments on time

within 10 consecutive months• Loan Consolidation

Loan Servicer

• Fed Loan Servicing• Great Lakes• Navient• Nelnet

• Cornerstone• Granite State• HESC/Edfinancial• MOHELA• OSLA Servicing

Loan Servicer

• Contact them:– If you have questions– If your address or telephone changes– If you cannot make a payment

Be Careful

• There are companies that prey on people with student loans

• You should not pay for the benefits that come with federal student loans

Discharge

DeathTotal and

Permanent Disability

Bankruptcy

School ClosureFalse Certification or Unauthorized Disbursement by

School

False Certification

Due to Identity Theft

Unpaid Refunds by School to Loan

Holder

Early Intervention

Stay in touch with servicer

Create an online account on servicer’s website

Sign up for automatic-debit

Understanding temporary solutions vs. long term solutions

Choosing the right option and using the assistance appropriately

#1 – NOT BEING AFRAID TO CONTACT YOUR SERVICER IF YOU NEED ASSISTANCE!

What are some of the keys to successful repayment of student loans?

Contact Information

• Federal – 1-800-433-3243

• State – 1-877-987-7664

Brian Weingart, Senior Director of Financial AidDivision of Financial Aid

West Virginia Higher Education Policy Commission1018 Kanawha Boulevard East, Suite 700, Charleston, WV 25301

(304) 558-4618• brian.weingart@wvhepc.edu www.wvhepc.edu

Contact Information