Entrance Counseling
<School/Conference information>
Agenda
 Understand Your Commitment.
 Your Loan Terms.
 150 Percent Subsidized Direct Loan Limit.
 Repayment.
 Consequences.
 Affordability Analysis.
 Getting Help.
 Questions and Answers.
Understand Your Commitment
 Read all communication,
forms and documents
carefully.
 Understand the terms of
your student loan.
 Manage your money.
 Ask for help.
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.
 Separate MPNs.
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.
Understand Your Commitment
Effect on Other Aid
Borrowing loans may
affect your other aid,
and other aid may
affect your loans.
 Monitor award
notifications for updates.
 Contact financial aid
office with questions.
Understand Your Commitment
Enrollment Status and Withdrawal
Half-time Enrollment
 Required to receive:
– Direct Loan disbursements.
– In-school deferment.
 Definition:
– Undergraduates: schooldefined, within federal
requirements.
– Graduates: school-defined.
 Drop below half-time:
– Begin using grace period.
– May enter repayment.
Withdrawal
 No longer attending
scheduled classes.
 Contact us if you
withdraw.
 Exit counseling materials.
 Drop below half-time:
– Begin using grace period.
– May enter repayment.
Agenda
 Understand Your Commitment.
 Your Loan Terms.
 150 Percent Subsidized Direct Loan Limit.
 Repayment.
 Consequences.
 Affordability Analysis.
 Getting Help.
 Questions and Answers.
Your Loan Terms
Availability of Loan Types
Loan Type
Undergraduate
Students
Direct Subsidized
Loan
X
Direct Unsubsidized
Loan
X
Grad PLUS Loan
Graduate and
Professional
Students
X
X
Your Loan Terms
Interest Rates
Interest Rates
First
Disbursement
Undergraduate Borrowers
Subsidized
Graduate Borrowers
Unsubsidized Unsubsidized
Grad PLUS
7/1/14-6/30/15
4.66%
6.21%
6.21%
7.21%
7/1/13-6/30/14
3.86%
5.41%
5.41%
6.41%
7/1/12-6/30/13
3.4%
6.8%
6.8%
7.9%
Maximum
Rates
8.25%
8.25%
8.25%
9.0%
0.25 percent rate deduction with automatic payments.
Your Loan Terms
Interest Capitalization
 Interest that accrues will be capitalized.
 Payment of interest while in school saves money.
Borrower 1
Borrower 2
$3,500 unsubsidized loan at 6.8
percent fixed. Pays interest during in
school and grace period at $19.83
per month.
$3,500 unsubsidized loan at 6.8
percent fixed. Pays no interest during
in school or grace period. Interest
capitalized at repayment.
Total paid while enrolled $833
Total paid while enrolled
$0
Amount capitalized
$0
Amount capitalized
$833
Monthly payment
$50
Monthly payment
$51.07
Length of repayment
7.4 years
Length of repayment
10 years
Total cost
$4,450
Total cost
$6,128
Interest in repayment
$950
Interest in repayment
$2,629
Source: www.finaid.org Cost of Interest Capitalization Calculator.
Your Loan Terms
Fees
Origination Fees
First Disbursement
Subsidized and
Unsubsidized Loans
PLUS Loans
10/1/14 to 9/30/15
1.073%
4.292%
12/1/13 to 9/30/14
1.072%
4.288%
7/1/13 to 6/30/14
1.051%
4.204%
3/1/13 to 6/30/14
1%
4%
Agenda
 Understand Your Commitment.
 Your Loan Terms.
 150 Percent Subsidized Direct Loan Limit.
 Repayment.
 Consequences.
 Affordability Analysis.
 Getting Help.
 Questions and Answers.
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.
150 Percent Subsidized Loan Limit
Effect on Borrowers

Affected borrowers who reach or exceed the 150
percent limit may experience:
Loss of subsidy
on future loans
– They no longer qualify for
Direct Subsidized loans
beyond 150 percent of the
program length, unless
entering a longer program.
Loss of subsidy
on prior loans
– They no longer qualify for
interest subsidy on previously
obtained loans as of the date
attendance begins after
reaching the limit.
– Once interest subsidy is lost, it
cannot be regained.
– Borrower becomes responsible
for interest that accrues.
– Unpaid interest is capitalized.
150 Percent Subsidized Loan Limit
Definitions
Program length
Maximum Eligibility
Period
Subsidized Usage
Period
x 150 percent
= Maximum Eligibility Period
Days in loan period
Days in academic year
Maximum Eligibility Period
Remaining Eligibility
Period
– Subsidized Loan Eligibility Used
= Remaining Eligibility Period
Department of Education calculates periods using information reported
by schools.
3
Agenda
 Understand Your Commitment.
 Your Loan Terms.
 150 Percent Subsidized Direct Loan Limit.
 Repayment.
 Consequences.
 Affordability Analysis.
 Getting Help.
 Questions and Answers.
Repayment
Subsidized and Unsubsidized Direct Loans
 Repayment begins:
– After a six-month grace period that starts once no longer enrolled
at least half time.
– Immediately, if grace period expired previously.
 Interest subsidy applies.
– Eliminated for loans first disbursed July 1, 2012 – June 30, 2014.
 No penalty for early repayment.
Unless delayed or deferred, the borrower’s first payment
usually is due within 60 days of entering repayment.
Repayment
PLUS Loans
 Repayment begins when the loan is finally and fully
disbursed.
– No grace period.
 May qualify for a post-enrollment deferment period.
– Payment of principal begins six months after borrower ceases to
be enrolled at least half time.
– Renewable.
 No penalty for early repayment.
Unless delayed or deferred, the borrower’s first payment
usually is due within 60 days of entering repayment.
Repayment
Standard
Graduated
 Default repayment plan.
 Generally results in lowest interest cost.
 Minimum payment: $50/month.
 Payments increase over time.
 No payment will exceed three times any other
payment.
 Borrowers with $30,000 or more in FFEL or DL
Extended
student loans.
 Longer repayment period.
Repayment
Income-Driven Plans
Income-based
 Must have a partial financial hardship.
 Minimum payment: $0/month.
 Forgiveness available after 25 years.
Income-sensitive
(FFELP)
 Payment amount based on annual income.
 Must re-apply each year.
Income-contingent
(DL)
 Payment amount based on annual income.
 Minimum payment: $5/month.
 Must re-apply each year.
Pay as You Earn
(DL)
 Must have a partial financial hardship.
 Minimum payment: $0/month.
 Must re-apply each year..
Repayment
Standard Repayment
 Example of a standard repayment schedule:
Direct Unsubsidized Loan (6.8 percent)
Loan Amount
Payment Amount
Number of Months
$10,000
$115
120
$50,000
$575
120
Grad PLUS Loan (7.9 percent)
Loan Amount
Payment Amount
Number of Months
$10,000
$121
120
$50,000
$604
120
Source: http://calculator.usafunds.org/.
Repayment
Relief Options
 Consolidation.
 Deferment.
 Forbearance.
 Discharge and
forgiveness.
Agenda
 Understand Your Commitment.
 Your Loan Terms.
 150 Percent Subsidized Direct Loan Limit.
 Repayment.
 Consequences.
 Affordability Analysis.
 Getting Help.
 Questions and Answers.
Consequences
Delinquency
 Lender has not received
payment by the stated
due date.
 Late charges may be
assessed.
 Negative mark on your
credit record.
Delinque
ncy
Consequences
Default
No loan payments for 270 consecutive days or more
 Lose eligibility for future federal financial aid.
 Lose eligibility for flexible loan repayment options.
 Adverse credit reports.
 State-issued licenses can be withdrawn or denied.
 Income tax refunds can be withheld.
 Wages can be garnished.
 Federal benefit payments can be confiscated.
 Interest continues to accumulate.
 Federal debt collection procedures, including fees and
fines.
 Legal action.
Agenda
 Understand Your Commitment.
 Your Loan Terms.
 150 Percent Subsidized Direct Loan Limit.
 Repayment.
 Consequences.
 Affordability Analysis.
 Getting Help.
 Questions and Answers.
Affordability Analysis
 How much income will you
have?
 How much of your income
are you willing to spend on
your loans?
 How much can you
borrower before your loans
are no longer affordable?
www.usafunds.org: Search for “Student Loan Affordability Analysis”
Agenda
 Understand Your Commitment.
 Your Loan Terms.
 150 Percent Subsidized Direct Loan Limit.
 Repayment.
 Consequences.
 Affordability Analysis.
 Getting Help.
 Questions and Answers.
Getting Help
National Student Loan Data System
www.nslds.ed.gov.
Getting Help
Difficult Situations
 If you cannot make a student loan payment:
– Your loan holder.
– Your school.
– Department of Education.
 If you have an unresolved issue:
– Department of Education
Ombudsman:
 Phone: (877) 557-2575
 E-mail: fsaombudsmanoffice@ed.gov.
 www.ombudsman.ed.gov.
Agenda
 Understand Your Commitment.
 Your Loan Terms.
 150 Percent Subsidized Direct Loan Limit.
 Repayment.
 Consequences.
 Affordability Analysis.
 Getting Help.
 Questions and Answers.
Review
Q: What legally binding document must you sign before
you can receive your subsidized, unsubsidized or Grad
PLUS loan funds?
A: A Federal Master Promissory Note.
Review
Q: Do you have to repay your Direct Loans if you don’t
finish your program of study?
A: Yes. By signing a Master Promissory Note, you are
promising to repay your student loan even if you
don’t finish your program, you are dissatisfied with
your educational experience, or you cannot find a
job.
Review
Q: When will repayment begin on your subsidized,
unsubsidized loan or Grad PLUS loan?
A: After you no longer are enrolled at least half time in
a degree or certificate program, you will have one
six-month grace period (or post-enrollment
deferment period for Grad PLUS loans) before
repayment begins. The first payment is due within
30-45 days after the repayment period starts.
Review
Q: Which of the following statements about defaulting on
your student loan is false?
a. Default means no payment was made for 270 days.
b. Default usually results in additional fees and collection
costs.
c. Defaulted loans are not reported to consumer reporting
agencies.
d. Defaulted loans must be returned to good standing in
order to get future federal financial aid.
Review
Q: List at least one way to get help regarding your student
loan if you need it.
A: Your resources include:
– Your loan servicer.
– Your school.
– U.S. Department of Education.
– U.S. Department of Education Ombudsman.
Questions and Answers
Resources
 www.usafunds.org.
 www.nslds.ed.gov.
 www.studentaid.ed.gov.
 www.ombudsman.ed.gov.
A nonprofit corporation, USA Funds® works to enhance
postsecondary education preparedness, access and success
by providing and supporting financial and other valued services.