Loan Repayment

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The Formula for Financial Success
Handling Educational Debt
Presented by: Linda Wargel and Mike Fox
How Much Will My
Payments Be??
It Depends:
•The Amount Borrowed
•The Interest Rate
•The Repayment Period (how long
it takes you to pay it back)
Amount Borrowed
• Federal Programs
– Perkins Loans
– Stafford (Direct) Loans – subsidized and
unsubsidized
– GRAD PLUS Loans
– Health Education Assistance Loans
– Consolidation Loans
• Private Loans
• Credit cards
Interest Rates
• Federal Programs
– Perkins Loans – 5%
– Stafford (Direct) Loans – subsidized and
unsubsidized – 6.8%
– GRAD PLUS Loans – 7.9%
– Health Professions Loans – 5%
• Private Loans - ?? Variable or fixed?
• Credit cards - ??
Federal Programs
• Repayment Period
– Standard – 10 years (120 payments)
– Extended – 12 to 25 years depending on
balance.
• Repayment Plan
– Fixed payment amount
– Graduated payment – amounts start smaller
and increase over time
– Income Based Repayment – amount based on
income and family size
How much do I have to pay?
Example : $50,000 debt at 6.8% interest rate
•Standard repayment: $575.40 monthly for
120 payments
•Extended repayment:
•Fixed Payments: $373.04 monthly for 300
payments
•Graduated Payments: Start at $283.33
and increase every two years to a
maximum of $495.75 for 300 payments
How much do I have to pay?
Example : $100,000 debt at 6.8 interest
rate
• Standard repayment: $1150.80
monthly for 120 payments
• Extended repayment:
– Fixed Payments: $694.07 monthly for
300 payments
– Graduated Payments: Start at $566.67
and increase every two years to a
maximum of $991.50 for 300 payments
How much do I have to pay?
Example : $150,000 debt at 6.8%
interest rate
• Standard repayment: $1726.20
monthly for 120 payments
• Extended repayment:
– Fixed Payments: $694.07 monthly for
300 payments
– Graduated Payments: Start at $566.67
and increase every two years to a
maximum of $991.50 for 300 payments
How much do I have to pay?
Income Based Repayment
Example: Family size – 2
Income - $35,000
Debt
Payment Amount
$50,000
$161.69
$100,000
$161.69
$150,000
$161.69
When Do I Start Repaying?
• At the end of your Grace Period.
– A Grace period is six months after you
drop to less than half time enrollment
status.
• If you have already consolidated you
may not have a Grace Period.
– Contact your lender if you are not ready
to start paying.
Where is my Loan?
If you are not sure:
• Contact US Department of
Education’s Central Database at
www.nslds.ed.gov
• You will need your SSN, first two
letters of your last name, your date of
birth and your Federal PIN number (if
you don’t remember it you can
retrieve it at http://pin.ed.gov)
WHERE DID I
SPEND
THAT
MONEY?
Monthly Budget
Month One
Planned
Income
Savings
Financial Aid
Total
Fixed Expenses
Rent
Utilities
Credit Cards
Car Payment
Auto Insurance
Renters Insurance
Flexible Expenses
Groceries
Eating out
Clothing
Gasoline/travel
Entertainment
Total
Actual
Month Two
Planned
Actual
BUDGET BUSTERS
Item & Frequency
Price
Soda (1 per day)
.65
Savings/Year
$237.25
Candy Bar (1 per day) .75
$273.75
Potato Chips (1 per day) .99
$361.35
Cigarettes (1 per day)
2.50
$912.50
Movie (2 per month)
14.00
$336.00
Beer (6 per week)
2.50
$780.00
More Budget Busters
•
•
•
•
•
•
•
Birthdays
Taxes
Car Repair
Insurance
Vacation
Holidays
Gifts
Many Ways to Pay
• Automatic Bank Draft
• Mail in a payment
• Make a payment by phone
(beware of fees)
• On-line (beware of fees)
Alternatives to Payment
• Can’t pay when the payment is
due? You have options
– Deferments: Periods of time when
you don’t have to make your
payments. The government pays the
interest on subsidized loans during
these periods
• Enrolled in school half time or greater
• While unemployed and actively seeking
employment
• During period of economic hardship
Alternatives to Payment
• Forbearance:
Periods of time
when you don’t
have to make your
payments and you
don’t qualify for a
deferment. There
are no interest
subsidies during
periods of
forbearance
Alternatives to Payment
• Forgiveness
– Death
– Total and Permanent Disability
– Teaching in designated low income
schools
– Department of Defense
reimbursement
– Americorp
Default
• 270 days past due
• Consequences
– Credit Rating – Lowest possible rating
– Collection costs – 25% of outstanding debt
– Tax Refunds – State and Federal seized
and applied to debt
– State, City, County employment in SC
prohibited
– No additional financial aid – not eligible for
deferments or forbearance
– Transcript holds requested
Ways to Avoid Default
• Report all name, address, phone
and email changes
• Read and respond to all documents
you receive regarding your loan
Ask for help
Contact Information
• SC Student Loan Corporation
– Phone 800-347-2752 – automated
account information 24/7 – business
hours 8:00 am to 9:00 pm
– On line www.scstudentloan.org –
Account information, application status,
name and address changes
– Mail – SC Student Loan Corporation
PO Box 21487
Columbia, SC 29221
– Fax – 803-772-9410
Can’t Get No
Satisfaction?
US Department of Education
FSA Ombudsman
830 First Street, NE
Fourth Floor
Washington, DC 20202-5144
877-557-2575
Fax 202-275-0549
debra_wiley@ed.gov
Questions???
Linda Wargel
Mike Fox
SC Student Loan
SC Student Loan
803-612-5010
803-612-5070
lwargel@scstudentloan.org mfox@scstudentloan.org
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