Exit Counseling
<School Name/Conference Name>
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.
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
National Student Loan Data System
www.nslds.ed.gov.
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.
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.
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.
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.
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
150 Percent Subsidized Loan Limit
Example: Losing Interest Subsidy
Repayment Comparison
Mark
Ashley
$4,000
$4,000
$239.58
$0
$4,239.58
$4,000
Loan payment amount
$50 for 105 mos.
$50 for 98 mos.
Cumulative payments
$5,241.35
$4,875.74
Total interest paid
$1,241.35
$875.74
Total borrowed
Accrued interest (final nine months of program,
plus six-month grace period)
Outstanding balance at repayment
Loss of interest subsidy
cost Mark $365.
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.
Repayment
Grace and Post-Enrollment Deferment Periods
Grace Period
Subsidized and
 Single six-month period in which no payment is
Unsubsidized Loans
expected.
 First loan payment due within 30-45 days after
grace period ends.
 Interest subsidy applies.
Post-Enrollment Deferment
Grad PLUS Loans
 Renewable six-month period after borrower
ceases to be enrolled at least half time.
No penalty for early repayment.
Repayment
Method of Payment
 Online payments.
 Auto-debit.
– 0.25 percent interest rate
reduction.
 Coupon books.
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.
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).
Repayment
Plans
Standard Repayment
 Default repayment option.
 Payments of equal, monthly installments.
 Repayment period cannot exceed 10 years.
 Minimum payment of $50.
Repayment
Plans
 Example of a standard repayment schedule:
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
Plans
Graduated Repayment
 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.
Repayment
Plans
 Example of a graduated repayment schedule:
Unsubsidized Loan (6.8 percent)
Loan Amount
Payment Amount
Number of Months
$10,000
$79
24
$96
24
$117
24
$142
24
$173
24
Source: http://calculator.usafunds.org.
Repayment
Plans
 Example of a graduated repayment schedule:
Unsubsidized Loan (6.8 percent)
Loan Amount
Payment Amount
Number of Months
$50,000
$395
24
$480
24
$584
24
$710
24
$863
24
Source: http://calculator.usafunds.org.
Repayment
Plans
 Example of a graduated repayment schedule:
Grad PLUS Loan (7.9 percent)
Loan Amount
Payment Amount
Number of Months
$10,000
$84
24
$102
24
$124
24
$150
24
$181
24
Source: http://calculator.usafunds.org.
Repayment Plans
Graduated Repayment
 Example of a graduated repayment schedule:
Grad PLUS Loan (7.9 percent)
Loan Amount
Payment Amount
Number of Months
$50,000
$422
24
$511
24
$618
24
$749
24
$906
24
Source: http://calculator.usafunds.org.
Repayment
Plans
Extended Repayment
 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.
Repayment
Plans
 Example of an extended repayment schedule:
Unsubsidized Loan (6.8 percent)
Loan Amount
Payment Amount
Number of Months
$35,000
$243
300
$50,000
$347
300
Grad PLUS Loan (7.9 percent)
Loan Amount
Payment Amount
Number of Months
$35,000
$268
300
$50,000
$383
300
Source: http://calculator.usafunds.org.
Repayment
Plans
Income-Based Repayment
 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.
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.
Unsubsidized Loan (6.8 percent)
Loan
Amount
Pretax Monthly
Income Amount
Payment
Amount
Number of
Months
Rem.
Balance
$30,000
$3,000
$231
187
$0
$50,000
$3,000
$231
300
$45,756
Source: http://calculator.usafunds.org.
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.
Grad PLUS Loan (7.9 percent)
Loan
Amount
Pretax Monthly
Income Amount
Payment
Amount
Number of
Months
Rem.
Balance
$30,000
$3,000
$231
212
$0
$50,000
$3,000
$231
300
$60,031
Source: http://calculator.usafunds.org.
Repayment
Plans
Income-Sensitive Repayment – FFELP Loans
 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.
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.
Unsubsidized Stafford (6.8 percent)
Loan
Amount
Minimum
Payment
Maximum
Payment
Number of
Months
Rem.
Balance
$20,000
$113
$230
180
$0
$50,000
$283
$575
180
$0
Source: USA Funds finance department.
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.
Grad PLUS (8.5 percent)
Loan
Amount
Minimum
Payment
Maximum
Payment
Number of
Months
Rem.
Balance
$20,000
$142
$248
180
$0
$50,000
$354
$620
180
$0
Source: USA Funds finance department.
Repayment
Plans
Income-Contingent Repayment – Direct Loans
 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.
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.
Unsubsidized Loan (6.8 percent)
Loan
Amount
Pretax Monthly
Income Amount
Payment
Amount
Number of
Months
Rem.
Balance
$20,000
$2,500
$153
250
$0
$50,000
$2,500
$306
300
$725
Source: http://calculator.usafunds.org.
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.
Grad PLUS Loan (7.9 percent)
Loan
Amount
Pretax Monthly
Income Amount
Payment
Amount
Number of
Months
Rem.
Balance
$20,000
$2,500
$162
271
$0
$50,000
$2,500
$306
300
$28,642
Source: http://calculator.usafunds.org.
Repayment
Plans
Pay As You Earn
 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.
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.
Unsubsidized Loan (6.8 percent)
Loan
Amount
Pretax Monthly
Income Amount
Payment
Amount
Number of
Months
Rem.
Balance
$30,000
$3,000
$154
240
$24,561
$50,000
$3,000
$154
240
$73,076
Source: http://calculator.usafunds.org.
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.
Grad PLUS Loan (7.9 percent)
Loan
Amount
Pretax Monthly
Income Amount
Payment
Amount
Number of
Months
Rem.
Balance
$30,000
$3,000
$271
161
$0
$50,000
$3,000
$271
240
$48,196
Source: http://calculator.usafunds.org.
Repayment Plans
Comparison
 Total unsubsidized loan amount = $50,000.
Initial
Monthly
Payment
Highest
Monthly
Payment
Interest
Paid
Total
Amount
Paid
Years in
Repayment
Standard
$575
$575
$19,044
$69,048
10
Graduated
$395
$863
$22,778
$72,778
10
Extended
$347
$347
$54,112
$104,111
25
IBR
$154
$224
$44,924
$44.924
20
ICR
$406
$422
$34,150
$84,150
17
ISR
$283
$575
$36,048
$86,048
15
Pay As
You Earn
$154
$224
$44,924
$44,924
20
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.
Repayment
Consolidation
A new loan that pays off existing loans
and carries new terms.
 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.
Repayment
Consolidation
Advantages
 Combines several loans into




one new loan.
One lower monthly payment.
Interest rate is fixed.
Interest subsidy still applies,
but only to subsidized loans.
No fees or prepayment
penalties.
Disadvantages
 Increases interest charges due
to longer repayment period.
 Reduced options for
cancellation and forgiveness.
 May lose benefits; varies by
lender.
 May lose remainder of grace
period.
Repayment
Consolidation: Maximum Repayment Periods
Sum of Consolidation Loans and
Other Education Debt
Maximum Term
Less than $7,500
10 years
$7,500 - $9,999.99
12 years
$10,000 - $19,999.99
15 years
$20,000 - $29,999.99
20 years
$40,000 - $59,999.99
25 years
$60,000 or more
30 years
Repayment
Consolidation: Interest Rates
 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.
17
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.
Repayment Relief
Direct Loans have repayment options to assist borrowers
who need help:
 Deferment.
 Forbearance.
 Cancellation.
 Forgiveness.
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.
Repayment Relief
Deferment Types
In-School
 Half-time enrollment.
 Time limit: none.
 Not working at least 30 hours per week in work
Unemployment
Economic
Hardship
that will last at least three moths.
 Actively seeking employment.
 Time limit: 36 months.
 Financial difficulty making loan payments.
 Time limit: 36 months.
Repayment Relief
Deferment Types
Rehabilitation
Training
Graduate
Fellowship
 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
Military Service
Post Active-Duty
Student
purposes.
 Time limit: none.
 Students enrolled at least half time within six
months of activation.
 Time limit: 13 months.
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.
Repayment Relief
Forbearance Types
 Lender believes borrower is willing but unable
Discretionary
Mandatory
Administrative
Mandatory
Administrative
to make payments.
 Time limit: up to 12 months.
 Internship/Residency.  DoD repayment.
 National service.
 High debt.
 Loan forgiveness.
 Active duty.
 Overdue payments under certain
circumstances.
 Disaster, national emergency or military
mobilization.
 Processing periods.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
If the borrower dies, the
government discharges the
remaining loan amount.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
The government
discharges loans when a
student cannot complete a
program due to the school
closing.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
Loan discharge is available
if the school improperly
certified a loan for the
borrower.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
If the borrower can prove in
court that he or she was the
victim of identity theft, the
loan may be cancelled.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
Available when the
borrower is unable to earn
sufficient income due to
illness or injury expected to
continue indefinitely or
result in death.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
If court finds that repayment
of student loan will cause
undue hardship to the
borrower, cancellation may
be available.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
Failure to receive a student
loan refund may qualify the
borrower for discharge.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
Forgiveness available for
up to $17,500, depending
on type of teaching
position.
Repayment Relief
Cancellation, Discharge and Forgiveness
 Death of borrower.
 School closure.
 False certification.
 Identity theft.
 Total and permanent
disability.
 Limited bankruptcy.
 Unpaid refund.
 Teacher loan forgiveness.
 Public service loan
forgiveness.
Discharge remaining debt
after 10 years of qualifying
payments.
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.
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.
 150 Percent Subsidized Loan Limit.
 Repayment.
– Repayment Plans.
– Consolidation.
 Repayment Relief.
 Consequences.
 Money Management.
 Tax Benefits.
 Getting Help.
 Questions and Answers.
Money Management
 Identify your financial goals.
 Develop a realistic monthly
budget.
 Pay your bills prior to the
due date.
 Keep accurate and
well-organized records.
 Save for the future.
https://www.mint.com.
Money Management
What would you do with $780?
Latte
Days per week
Weekly cost
$3.00
Loan balance
$20,000
5
Repayment term
10 years
$15.00
Regular payment
amount
$230.16
x
x 52
Extra monthly
payment
$65.00
x 52
Yearly cost
Cost over 10 years
Source: www.finaid.org.
$780
$7,800
Yearly cost
$780
Savings over 10
years
$2,543.59
Reduction in term
2.8 years
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.
Tax Benefits
 There are a variety of tax credits, deductions and
savings plans available to assist with higher education
expenses:
–
–
–
–
American Opportunity Tax Credit.
Hope and Lifetime Tax Credit.
College Tuition and Fees Deduction.
Student Loan Interest Deduction.
 See www.irs.gov for more information.
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.
Questions and Answers
Resources
 http://calculator.usafunds.org.
 www.nslds.ed.gov.
 www.mint.com.
 www.finaid.org.
 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.