Exit Counseling

1. Exit Counseling <School Name/Conference Name>

2. Agenda • Understand Your Commitment. • 150 Percent Subsidized Loan Limit. • Repayment. • Repayment Plans. • Consolidation. • Repayment Relief. • Consequences. • Money Management. • Tax Benefits. • Getting Help. • Questions and Answers.

3. Understand Your Commitment Read all communication, forms and documents carefully. Understand the terms of your student loan. Manage your money. Ask for help.

4. Understand Your Commitment National Student Loan Data System www.nslds.ed.gov.

5. Understand Your Commitment Loan Types • Federal loans: • Federal Family Education Loan Program or Direct Loan Programs. • Subsidized or unsubsidized loans. • Grad PLUS loan. • Consolidation loan. • Other federal loans. • Perkins loan. • Health-related program loan. • Non-federal education loans: • Also known as “private” or “alternative” loans.

6. Understand Your Commitment Master Promissory Note • Master Promissory Note: • Must be signed in order to receive loan funds. • Legally binding document. • Specifies your rights and responsibilities. • MPN multi-year feature: • Sign once. • You can “opt out” and sign a new MPN for each loan. • Some schools do not use this feature. • May expire in certain cases. • Borrower’s Rights and Responsibilities Statement. • Expect a “Plain Language Disclosure” for any subsequent loans.

7. Understand Your Commitment Master Promissory Note • You promise to repay your loan, even if you: • Don’t complete your program of study at all or within the regular time frame for completion. • Are unable to locate employment after completing your program. • Are dissatisfied with or don’t receive services purchased from the school. • Don’t receive payment coupons or notifications from your loan servicer.

8. Agenda • Understand Your Commitment. • 150 Percent Subsidized Loan Limit. • Repayment. • Repayment Plans. • Consolidation. • Repayment Relief. • Consequences. • Money Management. • Tax Benefits. • Getting Help. • Questions and Answers.

9. 150 Percent Subsidized Loan Limit • Limits Direct Subsidized loans for “first-time borrowers.” • Limited to 150 percent of published length of student’s current educational program. • Definition of first-time borrower: • No outstanding principal balance as of July 1, 2013. • Repaid all prior loans before July 1, 2013 before borrowing again.

10. 150 Percent Subsidized Loan Limit • Affected borrowers who reach or exceed the 150 percent limit may experience: Effect on Borrowers They no longer qualify for Direct Subsidized loans beyond 150 percent of the program length, unless entering a longer program. They no longer qualify for interest subsidy on previously obtained loans as of the date attendancebegins after reaching the limit. Once interest subsidy is lost, it cannot be regained. Borrower becomes responsible for interest that accrues. Unpaid interest is capitalized.

11. 150 Percent Subsidized Loan Limit Definitions 3 Department of Education calculates periods using information reported by schools.

12. 150 Percent Subsidized Loan Limit Example: Losing Interest Subsidy 13 Repayment Comparison

13. Agenda • Understand Your Commitment. • 150 Percent Subsidized Loan Limit. • Repayment. • Repayment Plans. • Consolidation. • Repayment Relief. • Consequences. • Money Management. • Tax Benefits. • Getting Help. • Questions and Answers.

14. Repayment Grace and Post-Enrollment Deferment Periods • No penalty for early repayment.

15. Repayment Method of Payment Online payments. Auto-debit. • 0.25 percent interest rate reduction. Coupon books.

16. Repayment Plans • Use a loan calculator to compare repayment options: • calculator.usafunds.org. • As a student loan borrower you may: • Prepay your student loans without penalty. • Use an accelerated repayment option resulting in less interest. • Change repayment plans to accommodate your situation.

17. Repayment Plans Standard. Graduated. Extended. Income-related plans: • Income-based repayment. • Income-sensitive (FFELP only). • Income-contingent (DL only). • Pay As You Earn (DL only).

18. Repayment Plans • Default repayment option. • Payments of equal, monthly installments. • Repayment period cannot exceed 10 years. • Minimum payment of $50.

19. Repayment Plans • Example of a standard repayment schedule: Source: http://calculator.usafunds.org.

20. Repayment Plans • Payments increase over time. • Repayment term cannot exceed 10 years. • Monthly payment amount: • Must cover accruing interest. • Will not have a single payment more than three times the amount of another.

21. Repayment Plans • Example of a graduated repayment schedule: Source: http://calculator.usafunds.org.

22. Repayment Plans • Example of a graduated repayment schedule: Source: http://calculator.usafunds.org.

23. Repayment Plans • Example of a graduated repayment schedule: Source: http://calculator.usafunds.org.

24. Repayment Plans Graduated Repayment • Example of a graduated repayment schedule: Source: http://calculator.usafunds.org.

25. Repayment Plans • Borrowers with $30,000 or more in FFELP or DL student loans. • Totals from FFELP and DL may not be combined to equal $30,000. • Maximum repayment period of 25 years. • Length of repayment is tied to the amount borrowed.

26. Repayment Plans • Example of an extended repayment schedule: Source: http://calculator.usafunds.org.

27. Repayment Plans • Partial financial hardship exists if annual payments exceed discretionary income: • Borrowers prior to July 1, 2014: 15 percent. • New borrowers on or after July 1, 2014: 10 percent. • Payment amount may be reduced or eliminated. • Remaining amounts may be forgiven after: • Borrowers prior to July 1, 2014: 300 qualifying payments over 25 years. • New borrowers on or after July 1, 2014: 240 qualifying payments over 20 years.

28. Repayment Plans • Example of an income-based repayment schedule: • Annual pretax adjusted gross income: $36,000. • Family size: 1 (single, no dependents). • Residence: continental U.S. • Increase in annual income: 2.5 percent. Source: http://calculator.usafunds.org.

29. Repayment Plans • Example of an income-based repayment schedule: • Annual pretax adjusted gross income: $36,000. • Family size: 1 (single, no dependents). • Residence: continental U.S. • Increase in annual income: 2.5 percent. Source: http://calculator.usafunds.org.

30. Repayment Plans • Payments relate to FFELP borrower’s annual income. • Repayment period may exceed 10 years, depending on borrower’s income and amount borrowed. • Borrowers must re-apply each year.

31. Repayment Plans • Example of an income-sensitive repayment schedule: • Annual pretax adjusted gross income: $24,000. • Residence: continental U.S. • Desired income percentage: 4 percent. • Assumes interest-only payment for first five years then standard repayment for the remaining term. Source: USA Funds finance department.

32. Repayment Plans • Example of an income-sensitive repayment schedule: • Annual pretax adjusted gross income: $24,000. • Residence: continental U.S. • Desired income percentage: 4 percent. • Assumes interest-only payment for first five years then standard repayment for the remaining term. Source: USA Funds finance department.

33. Repayment Plans • Payments relate to DL borrower’s annual income and family size. • Minimum payment of $5. • Any remaining balance due after 25 years will be forgiven. • Borrowers must re-apply each year.

34. Repayment Plans • Example of an income-contingent repayment schedule: • Annual pretax adjusted gross income: $30,000. • Family size: 1 (single, no dependents). • Residence: continental U.S. • Increase in annual income: 2.5 percent. Source: http://calculator.usafunds.org.

35. Repayment Plans • Example of an income-contingent repayment schedule: • Annual pretax adjusted gross income: $30,000. • Family size: 1 (single, no dependents). • Residence: continental U.S. • Increase in annual income: 2.5 percent. Source: http://calculator.usafunds.org.

36. Repayment Plans • Partial financial hardship exists if annual payments exceed discretionary income by 10 percent. • Consistent with “new borrowers” under IBR. • Payment amount may be reduced or eliminated. • Remaining amounts may be forgiven after 240 qualifying payments over 20 years. • Consistent with “new borrowers” under IBR.

37. Repayment Plans • Example of an Pay As You Earn repayment schedule: • Annual pretax adjusted gross income: $36,000. • Family size: 1 (single, no dependents). • Residence: continental U.S. • Increase in annual income: 2.5 percent. Source: http://calculator.usafunds.org.

38. Repayment Plans • Example of an Pay As You Earn repayment schedule: • Annual pretax adjusted gross income: $36,000. • Family size: 1 (single, no dependents). • Residence: continental U.S. • Increase in annual income: 2.5 percent. Source: http://calculator.usafunds.org.

39. Repayment Plans Comparison • Total unsubsidized loan amount = $50,000.

40. Agenda • Understand Your Commitment. • 150 Percent Subsidized Loan Limit. • Repayment. • Repayment Plans. • Consolidation. • Repayment Relief. • Consequences. • Money Management. • Tax Benefits. • Getting Help. • Questions and Answers.

41. Repayment Consolidation • Eligible loans: • FFELP and Direct Subsidized and Unsubsidized loans. • FFELP and Direct PLUS loans. • Consolidation loans. • Federal Perkins loans. • Federal Nursing Student Loans. • Health Professions Student Loans. • Health Education Assistance Loans. • Certain other education loans. A new loan that pays off existing loans and carries new terms.

42. Repayment Consolidation

43. Repayment Consolidation: Maximum Repayment Periods

44. Repayment Consolidation: Interest Rates 17 • Fixed interest rate based on loans being consolidated. • Weighted average, rounded up to nearest one-eighth of one percent. • No longer capped at 8.25 percent, for new applications filed on or after July 1, 2013.

45. Agenda • Understand Your Commitment. • 150 Percent Subsidized Loan Limit. • Repayment. • Repayment Plans. • Consolidation. • Repayment Relief. • Consequences. • Money Management. • Tax Benefits. • Getting Help. • Questions and Answers.

46. Repayment Relief Direct Loans have repayment options to assist borrowers who need help: Deferment. Forbearance. Cancellation. Forgiveness.

47. Repayment Relief Deferment • Postpone repayment for borrowers who qualify. • Entitlement for eligible borrowers. • Suspend payment of principal and interest: • Interest subsidy resumes. • Interest accrues on unsubsidized portion. • Some deferments must be updated at least annually. • Can apply retroactively. • Borrowers must request deferment. • Once repayment resumes, first payment usually due within 60 days.

48. Repayment Relief • Half-time enrollment. • Time limit: none. • Financial difficulty making loan payments. • Time limit: 36 months. • Not working at least 30 hours per week in work that will last at least three moths. • Actively seeking employment. • Time limit: 36 months. Deferment Types In-School Unemployment Economic Hardship

49. Repayment Relief • Participating in a qualifying vocational or health-related rehabilitation program. • Time limit: none. • Participation in a full-time graduate fellowship for at least six months. • Time limit: none. • Serving on active duty for other than training purposes. • Time limit: none. • Students enrolled at least half time within six months of activation. • Time limit: 13 months. Deferment Types Rehabilitation Training Graduate Fellowship Military Service Post Active-Duty Student

50. Repayment Relief Forbearance • Generally granted at the discretion of the lender. • Forbearance may include any of following changes to repayment agreement: • No monthly payment. • Interest-only payments. • Lower payment. • Other arrangements. • Can be applied retroactively for up to 12 months. • Interest subsidy is not available. • Any unpaid interest may be capitalized. • Lender required to inform borrower of status, obligations and associated costs.