Student Loans and Debt Management

(1)

Student Loans

and Debt Management

g

Exit Interview

Nicole Knight

AAMC

Spring 2014

Sp

g 0

(2)

(3)

(4)

Agenda

(5)

Class of 2013 Indebtedness

Refer to page 1

PUBLIC

PRIVATE

Median MD School Debt: $175,000

$

$168

168,,000

000 PUBLIC

PRIVATE

$190,000

(6)

Education Debt – Class of 2013

Refer to page 1

Quillen COM ETSU

Median Education Debt

Education Debt

$175,000

Non-Education Debt (avg)

$ 17,000

Refer to page 48

(7)

Have a Spending Plan

Refer to page 33-36

(8)

(9)

Finding Your Federal Loans

Refer to page 4

To access, provide:

SSN

Date of Birth

(10)

Subsidized vs. Unsubsidized

Refer to page 10

Subsidized Stafford

P ki

*

Unsubsidized Stafford

Di

t PLUS

Perkins*

Primary Care Loans

LDS Loans*

Direct PLUS

Private Loans

Institutional Loans

(some)

Institutional Loans

(some)

Consolidations Loans

(underlyng subsidized loans)

Consolidation Loans

(underlying unsubsidized loans)

Subsidized

Unsubsidized

(11)

During Medical School

I t

t R t

Refer to page 12

DIRECT

PLUS LOAN

Interest Rates

(before ’13-’14)

STAFFORD

LOAN

PERKINS

(12)

During Medical School

I t

t R t

Refer to page 12

DIRECT

PLUS LOAN

Interest Rates

(’13-’14 loans)

STAFFORD

LOAN

PERKINS

LOAN*

LOAN

(13)

Capitalization

Additi

f

id i t

t t th

i

l

Refer to page 12

Addition of unpaid interest to the principal

Principal

+

Interest

Larger

Principal

+

Interest

₌

g

(14)

Repayment Strategy

Refer to pg 11

Pay the interest on your loans

-before they capitalize!

before they capitalize!

Voluntary Payments

1) Send as a Separate Payment

(15)

(16)

Grace

(17)

Options During Residency

Pay

Not Pay

(18)

(19)

Postponement Options

(20)

Postponement Options

Refer to page 16

Medical Residency Forbearance

Postpone payments in annual increments

Interest accrues on all loans

Continuous periods avoids capitalization*

Continuous periods avoids capitalization

Request next increment 30-days before it is needed

Request next increment 30 days before it is needed

(21)

Forbearance

Dr Median’s situation after a 4 year residency

Balance

after

Residency

Post-Residency

Dr. Median s situation after a 4-year residency

(22)

Forbearance

Dr Median’s repayment of $248K after residency:

Dr. Median s repayment of $248K after residency:

(23)

Debt Fact

The lower the

monthly payment,

y p y

,

the higher the

interest cost

(24)

(25)

Monthly Payment Estimator

(26)

Repayment Plans

T diti

l

Refer to pgs 18-19

Traditional

Standard

$2,300

/mo

Monthly payments for the

Extended

$1,400

/mo

entire repayment term are

calculated up-front

and

disclosed to you.

Graduated

$1,100

/mo

(27)

Repayment Plans

I

D i

Refer to pgs 19-20

Income-Driven

Income-Contingent Repayment (ICR)

Monthly payments are

b

d

i

$660

/mo

Income-Based Repayment (IBR)

based on your income

and other factors

-recalculated annually

.

$420

/mo

Pay As You Earn (PAYE)

(28)

What’s the catch?

(29)

PAYE & IBR Eligibility

Partial Financial Hardship (PFH)

Standard

Partial Financial Hardship (PFH)

PAYE or

$2 300/

*

>

$420

**(IBR)* or**

Payment

IBR Payment

$2,300/ mo *

$

(

)

$280

(PAYE)*

>

Must have PFH for first year in IBR or PAYE

• Can remain in IBR or PAYE in subsequent years,

even without a PFH

(30)

PAYE Eligibility

Refer to page 21

N

t t

di

l

Additional requirements for PAYE

• No outstanding loans

on October 1, 2007

(or paid-off all outstanding loans

(

p

g

(31)

IBR and Pay As You Earn

Determine

A

t b

Amount by

Calculating with

aamc org/FIRST

Online

Calculators

aamc.org/FIRST

studentloans.gov

15% (IBR) or 10% (PAYE)

of income that exceeds

nslds.ed.gov

of income that exceeds

150% of the poverty line

for a borrower’s family

size

(32)

Benefits of PAYE/IBR

Benefits

Refer to pgs 20-21

IBR

Benefits

Pay As You Earn

• Low payments

• Partial subsidy

($2,100)

A

i

t

• Lowest payments

• Partial subsidy

($2,500)

• A maximum payment

• Forgiveness

(25-Yr/ PSLF)

• Delayed capitalization

• A maximum payment

• Forgiveness

(

20-Yr/ PSLF)

(33)

Pay As You Earn & IBR

To enter Pay As You Earn or IBR you must

Refer to pgs 20-21

To enter Pay As You Earn or IBR, you must

Meet eligibility requirements

Contact each servicer individually to request

Give access to household AGI* (

tax records

)

Annually inform servicer(s) of family size

(34)

Pay As You Earn & IBR

Dr Median’s Post Residency balance:

$228K

$236K

Dr. Median’s Post-Residency balance:

$236K

Monthly Total

Total

$228K

Plan

Yrs

Payment

Interest

Repayment*

Forgiven

PAYE

15 $1,800-2,300

$210K

$385K

$0K

2,300

IBR

₁₂

_$2,300

_$177K

_$352K

_$0K

(35)

The FIRST Stop…

Medloans

®

Organizer and Calculator

A tool for graduates!!

Refer to page 3

(36)

(37)

Loan Forgiveness

Refer to pgs 41-42

Eligible Loans

Qualifying Payments

Q alif ing Work

+

Qualifying Work

+

(38)

Dr. Median and PSLF

Dr Median pursues Public Service:

Dr. Median pursues Public Service:

Pediatrician at a community health center

IBR for 10 years, 3 during residency, 7 after

Has PFH for the all 10 years

(39)

Loan Forgiveness (PSLF)

Dr Median’s loans after 10 years of public service:

Dr. Median s loans after 10-years of public service:

Total Paid (IBR)………...

$160K*

Total Forgiven (IBR)………...

g

(

)

$186K

Total Paid (PAYE)………...

$107K*

Total Forgiven (PAYE)

$223K

Total Forgiven (PAYE)………...

$223K

(40)

Loan Forgiveness (PSLF)

Want to know more?

Refer to pgs 41-42

Want to know more?

(41)

(42)

(43)

Should You Consolidate?

(44)

Taxpayer Relief Act of 1997

F ll D d

ti

Partial

NO D d

ti

Refer to page 48

Full Deduction

Partial

Deduction

NO Deduction

Single

$60,000 or less

$60,001 to

$74 999

$75,000 or

more

,

$74,999

more

Married

filing

Jointly

$120,000 or

less

$120,001 to

$149,999

$150,000 or

more

Jointly

,

Limited To: First 60 months of repayment

Student loan interest deduction max: $2,500/year

May be eligible: Voluntary payments & capitalization

(45)

The Next Steps – page 51

(46)

“

An investment in knowledge always

g

y

pays the best interest

”

(47)

Questions?

FIRST@

[email protected]

Follow us on Twitter: @AAMCFIRST

Like us on Facebook: facebook.com/AAMCFIRST

(48)

Support Along the Way

studentaid.ed.gov/repay-loans/disputes

Refer to page 6

www aamc org/FIRST