Student Loans: What You
Need to Know About
Successful Repayment
March 17, 2015
1
Loan Repayment
Create a
budget
Pay on-time
with autodebit
Access
servicer
account online
2
Do exit
counseling for
all loans
Select your
repayment
plan
Worcester Polytechnic Institute
First Steps
• Create a budget, track your spending, set limits
• Complete required exit counseling for each of your
loans
─ For Direct Loans, go to www.studentloans.gov and use
FAFSA PIN to complete
─ For Perkins Loan, Massachusetts No Interest Loan, WPI Ward
and Institute Loans, servicer ECSI Heartland will email your
WPI email address with exit counseling instructions
• Identify your servicer – see your personal loan history
sheet
• Explore which repayment plan is most suitable
• Update your contact information with your servicer
• Establish an online account
• Enroll in auto-debit payments
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Worcester Polytechnic Institute
National Student Loan Data
System
• Review your all of federal student loans on the National
Student Loan Data System (NSLDS) www.nslds.ed.gov
using your Federal Student Aid PIN; click “Financial Aid
Review” for loan listing and servicer
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Worcester Polytechnic Institute
Know ALL of Your Loans
• Confirm with your servicer when repayment
begins. What is the length of your grace period?
─ Direct Loans = 6 months
─ Perkins and WPI Loans = 9 months
─ Private loans = varies
• Prepare for repayment during your grace period
and even make payments to save you money
later!
• Be aware of any private loans you have borrowed
and their specifications.
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Worcester Polytechnic Institute
Direct Loan Exit Counseling
• It’s required by law if student drops below half-time
status, ceases attendance, withdraws, or graduates
• Done online at www.studentloans.gov and provides
important information you will need to repay your
loans
• Review your rights and responsibilities as a borrower
• Information on hand to complete counseling
─ Your federal loan balances at www.nslds.ed.gov/nslds_SA/
─ Names, addresses, email addresses & phone numbers for
 Your next of kin
 Two references who live in the U.S.
 Your employer or future employer
• Select repayment plan
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Worcester Polytechnic Institute
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Loan Servicer
Contact
Aspire Resources Inc.
1-855-475-3335
CornerStone
1-800-663-1662
ESA/Edfinancial
1-855-337-6884
FedLoan Servicing (PHEAA)
1-800-699-2908
Granite State – GSMR
1-888-556-0022
Great Lakes Educational Loan
Services, Inc.
1-800-236-4300
MOHELA
1-888-866-4352
Navient (formerly Sallie Mae)
1-800-722-1300
Nelnet
1-888-486-4722
OSLA Servicing
1-866-264-9762
VSAC Federal Loans
1-888-932-5626
Fed Loan Servicers
• Your Direct Loan has been
assigned to a servicer by the
Department of Education
• What do they do?
• Collect payments
• Respond to customer
service inquiries
• Provide repayment
options
• Help to change repayment
plan
• Assist if difficulty paying
• Want to see you repaying
successfully
Worcester Polytechnic Institute
Standard Repayment
Eligible Loans
Monthly Payment
and Time Frame
Quick Comparison
• Direct Subsidized
and Unsubsidized
Loans
Payments are a fixed
amount of at least
$50 per month.
• Subsidized and
Unsubsidized
Federal Stafford
Loans
Up to 10 years
You’ll pay less
interest for your loan
over time under this
plan that you would
under other plans
• All PLUS Loans
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Worcester Polytechnic Institute
Graduated Repayment Plan
Eligible Loans
Monthly Payment
and Time Frame
Quick Comparison
• Direct Subsidized
and Unsubsidized
Loans
Payments are a lower
at first and then
increase, usually
every two years.
You’ll pay more for
your loan over time
than under the 10year standard plan.
Up to 10 years
The minimum
payment equals the
amount of interest
that accrues monthly.
• Subsidized and
Unsubsidized
Federal Stafford
Loans
• All PLUS Loans
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No one payment will
be more than three
times greater than
any other payment.
Worcester Polytechnic Institute
Extended Repayment Plan
Eligible Loans
• Direct Subsidized
and Unsubsidized
Loans
• Subsidized and
Unsubsidized
Federal Stafford
Loans
• All PLUS Loans
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Monthly Payment
and Time Frame
Quick Comparison
Payments may be
fixed or graduated of
at least $50 per
month.
Your monthly
payments would be
lower than the 10year standard plan.
Up to 25 years
You’ll pay more for
your loan over time
than under the 10year standard plan.
Limited those with
more than $30,000 in
Direct Loans with
other criteria.
Worcester Polytechnic Institute
Income-Based Repayment Plan
(IBR)
Eligible Loans
• Direct Subsidized
and Unsubsidized
Loans
• Subsidized and
Unsubsidized
Federal Stafford
Loans
• All PLUS Loans
made to students
• Consolidation
Loans that do not
include PLUS Loans
made to parents
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Monthly Payment
and Time Frame
Quick Comparison
Your monthly max will • You must have a
be 15% of
partial financial
discretionary income,
hardship
the difference between your
• Your monthly
Adjusted Gross Income and
payments will be
150% of the poverty guideline
for your family size and state of
lower than
residence.
payments under
the 10-year
• Payments will
standard plan.
change as your
• You’ll pay more for
income changes.
your loan over time
than you would
Up to 25 years
under the 10-year
standard plan.
Worcester Polytechnic Institute
Pay As You Earn Repayment Plan
Eligible Loans
• Direct
Subsidized and
Unsubsidized
Loans
• All PLUS Loans
made to
students
• Direct
Consolidation
Loans that do
not include
PLUS Loans
made to
parents
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Monthly Payment
and Time Frame
Quick Comparison
• Your monthly
• You must have a partial
max will be 10%
financial hardship
of discretionary
• Your monthly payments
income, the
will be lower than
difference between your
payments under the 10Adjusted Gross Income
year standard plan.
and 150% of the poverty
guideline for your family
• You’ll pay more for your
size and state of
loan over time than you
residence; other
conditions apply.
would under the 10-year
• Payments will
standard plan.
change as your
• Possible forgiveness of
income changes.
balance after 20 years of
payments
Up to 20 years
• Forgiven amount taxable.
Worcester Polytechnic Institute
Income-Contingent Repayment
Plan (ICR)
Eligible Loans
• Direct Subsidized
and Unsubsidized
Loans
• Direct PLUS Loans
made to students
• Direct
Consolidation
Loans
Monthly Payment
and Time Frame
• Payments are
calculated annually
and are adjusted
based on your
Adjusted Gross
Income, family
size, and the total
amount of your
Direct Loans.
• Your payments will
change as your
income changes.
Up to 25 years
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Quick Comparison
•
•
•
You’ll pay more for
your loan over time
than you would under
the 10-year standard
plan.
If you do not repay
your loan after making
the equivalent of 25
years of qualifying
monthly payments,
the unpaid portion will
be forgiven
You may have to pay
income tax on the
amount that is
forgiven.
Worcester Polytechnic Institute
Income-Sensitive Repayment Plan
Eligible Loans
Monthly Payment
and Time Frame
• Subsidized and
Unsubsidized
Federal Stafford
Loans
• Your monthly
payment is based
on annual income.
• FFEL PLUS Loans
• FFEL Consolidation
Loans
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• Your payments
change as your
income changes.
Up to 10 years
Quick Comparison
•You'll pay more for
your loan over time
than you would under
the 10-year standard
plan.
•Each lender’s
formula for
determining the
monthly payment
amount under this
plan can vary.
Worcester Polytechnic Institute
Repayment Plan Example #1
Sam Sample has borrowed $35,000 in Direct Loans at
an interest rate of 4.66%. He is single, earns $30,000
and lives in Indiana. His income rises 5% annually.
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Worcester Polytechnic Institute
Repayment Plan Example #2
Gompei Graduate has borrowed $37,000 in Direct Loans at
an interest rate of 4.81%. He is single, earns $62,509
and lives in MA. His income rises 5% annually.
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Worcester Polytechnic Institute
Studentloans.gov
• Do Direct Loan exits and sign up for IBR, Pay As
You Earn or ICR at www.studentloans.gov!
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Worcester Polytechnic Institute
Estimate your student loan payments
Visit studentloans.gov
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Worcester Polytechnic Institute
Federal Direct Loan Consolidation
Stafford
PLUS
Direct
Sub.
Consol.
Direct
Unsub.
Consol.
Direct
Consolidation
Loan
Perkins
In-School
Components
End Result
• Interest rate is weighted average of consolidated loans
• Interest rate is rounded up to nearest higher 1/8 of 1%
• No interest rate cap
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Worcester Polytechnic Institute
Federal Student Loan
Consolidation
+ BENEFITS
- DRAWBACKS
• Repayment period up to
30 years means lower
monthly payments
• If consolidation occurs
during grace, you forfeit
any remaining grace
• Any variable interest
rate loans switch to a
weighted-average fixed
interest rate
• Extending repayment
period means paying
more interest, so paying
more in aggregate
• Simplification: one
payment to one holder
• Possible forfeit of
benefits: rate discounts,
principal rebates,
cancellation benefits
• It’s free to consolidate
your federal student
loans
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• Cannot undo
consolidation
Worcester Polytechnic Institute
Deferment and Forbearance Reasons
• Deferment/forbearance are periods during which repayment of
interest and principal is temporarily delayed.
• You will need to submit a request to your servicer with
documentation.
• There are time limits; neither counts toward repayment.
Deferment
•
•
•
•
•
•
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Unemployment
Economic hardship
Graduate fellowship
Rehabilitation training program
Military
In-school
Forbearance
• Medical/dental internship
residency
• Student loan debt burden
• AmeriCorps
• Teacher Loan Forgiveness
• DOD Student Loan Repayment
Program
• National Guard
• Medical/other acceptable
reasons
Worcester Polytechnic Institute
Discharge, Forgiveness,
Cancellation
Death (DL, FFEL, Perkins)
Disability (DL, FFEL, Perkins)
Public Service (DL)
Teaching (DL, FFEL, Perkins)
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Worcester Polytechnic Institute
Forgiveness Programs
• Teacher Loan Forgiveness: If you teach full-time for
five complete and consecutive academic years in
certain elementary and secondary schools and
educational service agencies that serve low-income
families, and meet other qualifications, you may be
eligible for forgiveness of up to a combined total of
$17,500 on certain federal student loans.
• Public Service Loan Forgiveness: If you work full-time
in certain public service jobs you may qualify for
forgiveness of the remaining balance of your Direct
Loans after you’ve made 120 qualifying payments on
those loans—that’s usually about 10 years of
payments. Serving in the Peace Corps or AmeriCorps
is considered qualifying employment.
─ Details: www.studentaid.gov/publicservice
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Worcester Polytechnic Institute
Delinquency and Default
• Your loan is considered delinquent the first day after you
miss (or fail to make) a payment that is due.
• A loan that is delinquent for 270 days = 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
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Worcester Polytechnic Institute
Facing Financial Hardship?
• Switch your repayment plan
─ Lower your monthly payments, but be aware that you
may pay more over the life of the loan.
─ Contact your servicer
• Ask servicer for deferment or forbearance
─ Temporary postponement or reduction in payments
─ Contact your servicer and follow through with forms
• Consider consolidation
─ Combines multiple federal loans into a single loan
─ Beware that payment may be lower, but by extending
your repayment, you will pay more over the life of the
loan
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Worcester Polytechnic Institute
Do you have any Private Loans?
• Know your loan rates, terms, and details
─ Some variable interest rates up to 18%
• Not subsidized loans – you pay the interest
• Cannot be consolidated into a Direct Consolidation
Loan
• May not offer forbearance of deferment options
• Any prepayment penalty fees?
• Loan forgiveness programs unlikely
• Consult your lender for repayment options
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Worcester Polytechnic Institute
Next Steps
• Complete exit counseling for each type of loan
borrowed
• Check your email for servicer outreach
• Create on-line account
• Utilize auto-debit – track balance and payments
• Pay on time and pay more than minimum if
possible
• Keep your loans in good repayment standing
• Stay in touch with your servicer ahead of trouble
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Worcester Polytechnic Institute
Resources
• https://www.mappingyourfuture.org/money/budg
etcalculator.cfm - create a budget and reevaluate
• www.studentloans.gov - Direct Stafford Loan exit
counseling, search for Repayment Estimator and
income-based repayment application
• www.nslds.ed.gov - centralized database of your
federal student loans
• www.financialaidtoolkit.ed.gov - information on
loan repayment basics
• https://studentaid.ed.gov/es/sites/default/files/lo
an-exit-counseling.pdf - review the online federal
exit counseling guide
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Worcester Polytechnic Institute