Student Loan Exit Counseling – Direct Subsidized/Unsubsidized and PLUS Loans


Alright, how y'all doing today? Good, that's good My name is Brandon and I am the Student Loan Coordinator at Stanford

Within the next 30 minutes or so I'm going to help you manage your student loans So we're going to go over these six topics After these six topics, hopefully, you know, you'll be a little bit more educated on your federal loans So the first thing we're going to go over is terms First term is the master promissory note

That master promissory note, you do have to fill that out It is a legal document You do have to fill it out in order to receive your student loans Next is the direct subsidized loans You do have to have a financial need in order to take out the direct subsidized loans

Also, no interest will accrue on those on those loans while you are enrolled in school Next is the direct unsubsidized loan The direct unsubsidized loan, you do not have to show a financial need to take these out and interest will accrue while you are in school on your direct unsubsidized loan The next is the plus loan There's two types of PLUS loans

There is the Graduate PLUS loan and then there is the Parent PLUS loan So with the Graduate PLUS loan- my apologies, with both loans, I apologize, with both loans- the Graduate and the Parent PLUS loan It is the- it does go into repayment once it is fully dispersed or when you do receive the loans As far as the Parent PLUS loans, the Parent PLUS loan it can not be transferred into the child's name so it is the parent's total responsibility for the Parent PLUS loan Next is the grace period

The grace period is that six month period when you graduate or you withdraw or you enroll less than half time Your grace period will start then Also you can make payments while you are in your grace period so if you want to make payments definitely definitely make payments during that time Next is the repayment period Simply, the time that you have to make payments from beginning to end

That's pretty much the repayment period Discretionary income- that's the difference between your income and the poverty guidelines and you can go to the website ASPE to check the poverty guidelines Next is loan consolidation Loan consolidation is putting multiple loans together So if you have multiple servicers and you do not want to deal with all of them, consolidate, put them together, one servicer

Consolidation, it is free A lot of times you will be contacted by a third party and they will tell you, "Hey, we can consolidate for two hundred, three hundred dollars," but again it is free You can go to the website studentloansgov, consolidate your loans for free A couple pros about consolidation- again, one payment, one servicer

Just want to deal with one servicer? Consolidate More than likely you will have a lower payment when you do consolidate and also it is a way to avoid default Consolidation is a way to avoid default A couple negative things about it- when you do consolidate you will stretch out your terms; stretch out your terms, you will pay more, pay more interest Another thing is that if you are in the public or if you were looking into the public service loan forgiveness and you decide to consolidate, any payments that you made prior to, you will lose those payments

But we will discuss that public service loan forgiveness later The Federal Family Education Loan Program- this program is no longer available as of July of 2010 but what it was? It was basically where the private lenders gave students the loan and the government backed those student loans Your loan servicers- your loan servicer is pretty much that person that handles your loans, the person that you want to make the payments to, the person that puts the options on your account You can go to NSLDS, you can find your servicer there, and when you do find your servicer keep contact with your servicer That's the person that you want to contact about anything in regards to your student loans is your student loan servicer

Alright so next we're going to talk about some different repayment options So the first one is the standard repayment plan or a level- same thing standard or level repayment plan That is that default plan that your servicer will put you on It is the highest payment plan that you can be on It is 10 years, 30 years if you consolidate

Again consolidation stretches out your terms Those are the eligible loans and there's no requirement for that plan The next is the Graduated plan The Graduated plan is basically every two years your payments will increase until the loan is paid off It is a ten year plan

Again those are the eligible loans and you do have to request this plan from your student loan servicer Next is the Extended repayment plan The Extended repayment plan can be either fixed or graduated Again, payments increase every two years It is a 25 year repayment plan and those are the eligible loans

And you do have to have $30,000 or more in order to enroll in that Extended repayment plan Alright so these are the income- driven repayment plans There's the REPAYE, there's the PAYE, there's the IBR, and there's the Income Contingent So the first one is the Revised Pay as You Earn or "REPAYE" It is based off 10% of your discretionary income

Now the repayment terms are 20 years if you have undergraduate loans If you have undergrad and grad loans it is- or just graduate loans- it is 25 years After those years the loan may be forgiven and it may be taxed A reason I say maybe is because you never know what the Department of Education is going to do with student loans Those are the eligible loans and you do have to recertify for your income-driven repayment plans

All of them you have to recertify yearly What that means is that you have to send in your proof of income and you do have to send in your family size and based on that information they will give you a monthly payment Also for your REPAYE plan for the first three years the government will satisfy the interest of that accrues on your subsidized loans After those three years the government will satisfy half of the interest that accrues As far as your unsubsidized loans, while you are under plan half of your interest will be satisfied

The next plan is the PAYE It goes off of 10% of your discretionary income 20 years after that it may be forgiven, may be taxed Those are the eligible loans and again you do have to recertify and the government will satisfy for the first three years the interest on your subsidized As far as the unsubsidized, you are responsible

Again after those three years you're responsible for the interest on the subsidized as well Next, Income-Based Income-Based repayment plan- it goes off of fifteen percent or ten percent based on when you took out your loan Also depending on when you took out the loan, it can either be a twenty-five year or twenty year repayment plan Again it can be forgiven or taxed

Those are the eligible loans and as you can see it does include the federal family education loan program loan And again you do have to recertify and the government will satisfy the interest for the first three years on the subsidized loan Again you're responsible for the unsubsidized interest And then the last is the Income-Contingent where it goes off of 20% of your discretionary income Again it's a 25 year term and then those are the eligible loans

And this is the only plan- this is the only income term repayment plan that allows for the Parent PLUS loan But that Parent PLUS loan has to be consolidated in order for it to qualify for the Income Contingent repayment plan That has to be consolidated And you are solely responsible for all of the interest that accrues on the Income Contingent repayment plan Alright so this is just an example

I'll just go over a couple of them The first one- $10,000 If you've got a $10,000 loan, your monthly payment would be $111, for a total payment altogether for $13,322 Next would be the Graduated plan Your payments will be between $63 and $193

Again, every two years the payments will increase for a total payment of $14,212 And then again, it's not applicable for the extended because you do have to have $30,000 Also the $50,000 plan If you- if you were on the Standard plan, $555 for a month Total would be $66, 612

The graduated difference between- the payments will be between $317 and $952 for a total of the $71,060 And if you were on the extended plan and if it was a fixed payment, because again it gets extended can be either fixed or graduated, if you were on the extended plan the monthly payment would be $322 for a total payment of $96,645 And and then here is the income-driven repayment plan So the income- driven repayment plans, they're based off a couple of factors They're based off of your family size, they're based off of your income, they're based off of if you have any additional student loan debt, and they're also based off if you are supporting anyone more than 50% in your household

So those are the factors that are included with the income-driven repayment plans So here's an example This example is just for presentation purposes only I mean things are going to change, things may change, more than likely will change in your lifetime but this is just a constant so let's go through a couple of them For the REPAYE plans initial payment would be $143, final payment $606

Time of repayment 22, 22-23 years Total payment $90,000 No forgiveness amount Next is the PAYE Again the same payment $143, final payment $507

20 years total payment $71,171 And then a forgiveness amount of $20,000 and more than likely that $20,000 may be taxed Alright so the next thing is the Forgivenesses and the Discharges So the first one is the Teacher Loan Forgiveness So with the Teacher Loan Forgiveness you do have to teach five complete and consecutive years at a low income school and so in order to figure out if you work or if you're going to work at the low income school you can go to the website TCLI and they will have all the listed schools

Alright as far as these schools for the Bureau of Indian Education those schools do qualify They do count as low income schools They will qualify Another is the forgiveness amount So if you were looking for a forgiveness amount of $17,500 you do have to be a highly qualified teacher in science, math, or special education

As far as a forgiveness amount of $5,000 you just have to be a highly qualified teacher in education or secondary education Those are direct loans and FFELP loans are qualified And your PLUS loans- they are not eligible And if you were teaching at multiple schools, if you taught at five different schools for five years that will be acceptable You just need five different applications from those different schools

(Audience question) "So it says science, math, or special education Science- does that only include natural sciences or also behavioral sciences?" Anything that's considered science What will happen is you- there's an application Application, take it to your school, your principal or your administrator fills it out and if it's like, if it says science, then you put science If it is chemistry, if it's anything related to science, physics, science

Anything related to science- it qualifies (Unintelligible audience question) So what'll happen is during your grace period, during your grace period maybe like the fifth month you actually receive a notification from your student loan servicer and they will let you know that, hey, you're on the standard plan, this is how much, this is the payment If you're not comfortable with that payment, with their plan, contact them Let them know, "Hey, I can't afford this amount," and what they'll do is they'll work with you They'll put you on or you- I apologize- they will not put you on but you can say, "Hey I want to look into the income-driven repayment plan," they'll tell you those numbers

"I want to look into a graduated payment plan," and they'll let you know those numbers So definitely if you're not comfortable with it contact your servicer They'll let you know Alright as far as the the next one is the Public Service Loan Forgiveness With the Public Service Loan Forgiveness you do have to make 129 consecutive payments

Also you do have to be employed with a qualified employer and usually it is a public servicer Or they can be, I do believe it's a 501(c)(3) tax-exempt corporation Also the qualifying- the qualifying repayment plans for this Public Service Loan Forgiveness or your income-driven repayment plans is also a ten year standard plan After you make those 129 qualifying payments the loan will be forgiven and that amount is not considered tax Direct Loans, your Grad PLUS loans qualify and in order for your Parent PLUS loan to qualify the parent has to be the one eligible for the Public Service Loan Forgiveness

More about the Public Service Loan Forgiveness so if you were a teacher and you did these five years, those five years that you use towards the Teacher Loan Forgiveness cannot be used towards the Public Service Loan Forgiveness So it would be Teaching Loan Forgiveness- five years Public service – 120 payments You cannot put those five years with those- with the public service The private loans are not eligible and again if you do consolidate, if you were making payments towards the public service and you decide to consolidate, any payments made prior to your consolidation will not count because when you consolidate it becomes a new loan

It starts over, starts from scratch Here are some discharges- the first one is Closed School (Audience question) "To the last comment you just said- if you consolidate first, and then do the repayment will it still count towards that?" Yeah, yeah so That's why I always tell people if you if you were if you were looking in the Public Service Loan Forgiveness and then you're thinking about consolidating go ahead look into consolidation If you comfortable with it, consolidate Then look into one of the income-driven repayment plans because those are the only plans that you can be on when you do consolidate

Right right Okay so again the discharges Closed school basically is when school closes and you're not able to complete your program, you may be eligible for a discharge of your student loans Next is the Total and Permanent Disability where if you are not able to work again your loans may be discharged Death-if you pass away your family members what they would do is they will send your death certificate to your loan servicer and if is acceptable your loans will be discharged

And then there's Borrower Defense to Repayment where if a school lied to you or misled you in any way stating that, "Hey I can guarantee you a job after you graduate" or anything- what you would do is you fill the application out, send it to the Department of Education, the Department of Education will look further into it If they say, "Hey we see the same thing you see," loans may be discharged Alright, a couple of suspension of your payments the first one is deferment Deferment is an entitlement given to you by the Department of Education and no interest will accrue on your subsidized loans while you are on a deferment

A couple of the most common deferments that are available or that you may have heard of is economic hardship You do have to be in a period of financial difficulty in order to qualify for a economic hardship However there is only three years for the life of the loan for the economic hardship deferment that's available to you The next one is the in-school, in-school deferment So you do have to be enrolled in school at least half time in order for your for your loans to be placed in an in-school deferment

Next is the unemployment deferment Unemployment basically is if you were unemployed or working less than 30 hours your loans can be placed in an unemployment deferment With the unemployment deferment again you only have three years for the life of the loan and they are used by six-month increments The next is the Graduate- graduate fellowship where basically if you are in a graduate program, fill the application out, send it to your servicer you can have that deferment placed on your account

Next is the post-enrollment And so the post-enrollment deferment is only for Parent PLUS and Graduate PLUS loans It's basically those six months after you- that's those six months you get when you graduate or withdraw or drop down less than half time on your PLUS or your Parent PLUS or your graduate PLUS loans Next is the military deferment And so with the military deferment you do have to be in active duty in order to have that deferment placed on your account

Alright the next one is forbearance The forbearance- the forbearance- on a forbearance the interest will accrue So you are solely responsible for all of the interest that accrues on a forbearance And so just a couple of the more more common forbearances is a general forbearance With the general forbearance you only have 36 months for the life of your loan but a lot of times the servicer will let you use it in different increments

Some may let you use it for 12 but a lot of them that I've noticed they let you use it for like 3 months, 2- 3 months at a time And that is really to help you out because on the forbearance all of the interest will accrue and you will be responsible for it It will be added to your balance Once that forbearance has ended that interest will be added to your balance Next is the internship residency where you do have to be in a medical or dental residency

You just fill the application out, send it to your servicer, have that forbearance placed Next is the teacher loan forgiveness forbearance And so with the teacher loan forgiveness forbearance if the expected forgiveness amount will satisfy the anticipated outstanding balance at the end of the fifth year of qualifying service you may qualify for that teacher loan forgiveness forbearance So basically what that is saying is that if you have a balance of $10,000 and after five years including interest if it's under the forgiveness amount on the teacher loan forgiveness if it's under $17,500 your loan would be placed on that teacher loan forgiveness forbearance Now if you have a $10,000 balance and you only apply for the $5,000 teacher loan forgiveness then you would not get that teacher loan forgiveness forbearance

Right, next to the loan debt burden forbearance where basically if your student loan monthly payment is greater than twenty percent you do have a option to place that option- I mean if to place that loan with that forbearance on your account And the last one is the emergency disaster where basically if there is a emergency or natural disaster in your area you can have a forbearance placed You can go to the website FEMA and you can see if there is a natural disaster or anything happening in your area If so contact your servicer and say, "Hey you know there's a disaster or you know there's a state of emergency in my area, I'd like to have a forbearance placed on my account" They'll look it up

They'll say, "Okay, yeah I see it 90 days on the account" But a lot of times your servicer may automatically place that option on the account So and when when they do place that automatically they will let you know They will send you a notice or if you don't want it on your account just tell them, "Hey I don't want a forbearance on my account" and they'll remove it for you

Not a problem Next one is delinquency So with delinquency, deliquency first day after your due date so If your due date's on the 15th, the 16th That's one day delinquency

After 90 days of delinquency, at the end of the month you will be reported negatively to the credit bureaus and every 30 days after that until the account is brought current You can bring the account current with a deferment or a forbearance Default- so when your loan reaches 270 days of delinquency it is labeled default Your loan is labeled default But you still have 90 days

You still have 90 days to actually do something in regards to you know getting your loan out of default Once the loan hits 360 days that's when your loan will actually be transferred to the Department of Education From the Department of Education it will go to a collection agency Once it hits the collection agency they will try to work with you If you're still not making payments with the agency that's when your wages get garnished

That's when your taxes get taken And that's when your bank accounts All the negative stuff that you hear, that's when that starts to happen But you do have an option You do have an option after deferment, I mean, after default- I apologize

You do have an option after default So you can rehabilitate your loan So basically what will happen is if you are in collections you do have to- you have to make nine consecutive payments Once you make nine consecutive payments the collection agency will send you a letter saying, "Well hey, you made these payments Do you want to have your loans rehabbed?" Say yes, say no

I would say yes Once you -once those loans are rehabbed that default status will be removed and you will be eligible to take out additional student loan debt Now the only thing is you can rehabilitate a defaulted loan only once Now that's not saying you can only rehabilitate one time That's only saying one loan, one rehabilitation

So just a couple couple tips- get organized Use the NSLDS Use everything, use everything that you have Compare the different repayment plans Call your servicer

Look into those plans because they were the one to actually give you the numbers, the actual numbers Budget Get a get a budget for yourself If you say that you can afford $200 subtract $50 from that because life happens Things happen, you know

So you don't want to spend all your money (Audience question) "If you signed up for a specific repayment plan but for some reason you had money over, like you signed up for a job and you got a bonus or something, can you try and pay off more or do you have to stick to the repayment plan?" No, no not at all So if your monthly payment was $200 and you say, "Hey, I can afford $500" You're more than welcome to send in $500, $1,000, whatever you want to spend- send in as long as it's that $200 And also when you do send in more if you have multiple loans you can decipher how much you want to go to the different loans

So if you want to just pay one loan off faster than others no problem doing it But yeah as long as you satisfy that monthly bill you're fine with sending in more And again, budget Make a budget for yourself Know the eligibility for the forgivenesses and the discharges

Again, things change So what I told you now may change next month or next year So contact your servicer and ask them about the eligibility (Audience question) "With the current Department of Education looking at changing this, if we chose one of these repayment plans would that be our payment plan even if there's the changes? Or would it be like this change comes in- now we have to choose that plan" So a lot of times what happens is when you do pick a repayment plan you're grandfathered in A lot of times, hey, you chose this plan so as long as you stick to that plan at that time you're-you'll get the same you know rules and regulations of the plan at that time But once you change to a different one, that's when you go through the new rules and regulations of that plan

Next is make payments Make payments doing a deferment or forbearance It just saves that that interest, you know, because once that deferment or forbearance ends that interest will be added to your balance and it will it will make your balance higher Make payments on time If you were in the public service loan forgiveness you definitely want to make those payments on time

Set up automatic payments When you do set up automatic payments you will receive a 25 interest rate reduction and that will pay your loans off faster Even though a lot of people say, "Hey, that's so small" It helps

Every little bit helps Also you can receive a tax deduction from the interest paid You can receive a 1098E form If you pay $600 or more they will automatically send their form to you Anything below that amount just call them, just call them and request it and they will send that information to you

Again, $600 or more-it will be sent to you Anything below that call them and they can get that to you You are able to change your plan and your due date but again contact your servicer because different rules and regulations for different servicers They'll let you know how to go about changing your plan If you have any difficulties, questions, or concerns contact your servicer

I mean, like i said, I can't stress that enough Contact your servicer They will be the ones to help you Any any questions contact your servicer And if you have any questions in regard to your servicer, any problems, you can go to the Ombudsman group

They are like a mediator between you and your servicer So here's all the, again, the links- studentloansgov, you go to nslds and then the the lender websites Alright so that concludes my presentation Any questions or comments at this time? (Audience question) "For the Grad PLUS loans does the 6 month deferment automatically take place or do you have to call your service provider?" You do, you do have to contact your servicer

There's an application There's an application you have to fill out and you will see it on application say "post-enrollment," check "post-enrollment," send it back to you, they'll place those six months on your account (Audience question) "So on one side it said that if you consolidate your loans you'll pay more but what about the individual payments? Wouldn't I have to pay more in individual payments if I have five different loans then if I only have one paymentlike, would I have like 5 payments of $100 dollars or would I have or would like with the five loans together the payments like the sum of it, would it be more or less than if I consolidate those five loans?" So if you if you do not consolidate what will happen is your loans will be paid off within 10 years Those are those are the plans unless you go on an income-driven repayment plan If you do not consolidate loans will be paid off within 10 years When you consolidate the loan will be paid off in 25 years so stretch it out, more interest That's why you'll pay more

(Continued question) "But the individual payments would be- so the payments month to month would be smaller if you consolidate?" Right, right But you can always, like you say, you can always pay more to pay it to pay it off More than welcome to pay more

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