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