Student Loans, Managing Your Debt & UCSF Need to Know s

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Student Loans,

Managing Your Debt &

UCSF “Need to Know’s”

Annie Osborne, MS, MA Resource Advisor

UCSF Student Financial Aid finaid.ucsf.edu

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Overview

• Reassess your loan portfolio

• Interest subsidy (and other) changes • Loan repayment options

- Loan forgiveness?

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Reassess Your Loan Portfolio

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UCSF Professional School Debt*

School Average Debt 2011

Repayment

Balance Standard Extended

Dentistry $164,000 $190,000 $2,200/mo $263K $1,300/mo $396K Medicine $102,000 $113,000 $1,300/mo $156K $800/mo $235K Pharmacy $102,000 $113,000 $1,300/mo $156K $800/mo $235K Nursing** $36,000 $40,000 $460/mo $55K $300/mo $83K

*UCSF Educational Debt Only

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What options will you have?

Repayment

• Standard 10-yr repayment

• “New” Income Based Repayment (15%) = $400-$500/mo.

– or “Pay as you Earn” (10%) - TBA • Extended 25-yr repayment

Forbearance

• both subsidized and unsubsidized accrue interest

Loan forgiveness programs

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Understand Each Loan

Loan portfolio can be complicated Terms & conditions consist of:

• Federal, institutional, or private • Subsidized or unsubsidized

• Interest rate – fixed or variable • Capitalization policy

• Borrower benefits • Loan servicer

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Who must you repay?

You must repay your current loan servicer/lender

Loan Type/

Account # Loan Servicer Lender

Stafford

Name: Name: Address: Address:

Phone Number: Phone Number: Website: Website:

PLUS

Name: Name: Address: Address:

Phone Number: Phone Number: Website: Website:

Information about the current loan holder/servicer of your Title IV federal student loans is stored in the NSLDS at:

www.nslds.ed.gov

Create a spreadsheet for ALL of your loans

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Finding Your Federal Loans

To access, provide: SSN

Date of Birth

First 2 letters of last name FAFSA PIN

(www.pin.ed.gov)

www.nslds.ed.gov

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Finding Federal Servicers

Contact FSA at:

1-800-433-7327

Or email:

fsa.customer.support@ed.gov

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UCSF (University) Loans

www.acs-education.com

ACS: CPS Division

Campus Based Student Loan Program & UCSF Student Accounting

finaid.ucsf.edu Subsidized vs. Unsubsidized

Subsidized

(underlying eligible subsidized loans)

*subsidy and deferment rights lost during consolidation

Unsubsidized

Unsubsidized Stafford Grad PLUS

Private Loans

Consolidation Loans

(underlying unsubsidized loans)

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Finding Other Loans

www.annualcreditreport.com

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Subsidized Loans

• No federal Stafford subsidized loans on or after July 1, 2012.

– Impacts all graduate students nationwide – Implemented to save PELL Grant Program

• Same Stafford loan limits

– Grad Academic, Nursing, & PT ($20,500)

– Most professional students ($33,000 – $47,167)

• If your ‘12-’13 academic year begins before 7/1/12:

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Subsidized Loans

Over 4-year period borrowing $8,500/yr annually

– Results in additional $6,100 in accrued interest

Existing subsidized loans

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Additional Changes

Direct Stafford Loans < July 1, 2012

– 1% origination fee

– 0.5% up-front rebate (net 0.5% origination fee) – 0.25% deduction for ACH

Direct Stafford Loans > July 1, 2012

- 1% origination fee - No rebate

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Additional Changes

Grad PLUS < July 1, 2012

– 4% origination fee

– 1.5% up-front rebate (net 2.5% origination fee) – 0.25% deduction for ACH

Grad PLUS > July 1, 2012

– 4% origination fee – No upfront rebate

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Grace Period

• Period of time following graduation when you are

not required to make payments on your loans

• Automatic – you do not have to apply

• Subsidized loans are interest free

• Unsubsidized loans continue to accrue interest

• Grace periods are loan specific

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Grace Period

• Direct or FFEL Stafford Loan – 6 months

• Direct or FFEL Grad PLUS – 6 mo. PED (contact)

• Health Professions Student Loan – 1 year

• Loan for Disadvantaged Students – 1 year

• Perkins – 9 months

• University Loan – 6 months

• Consolidated Loan – None

• Loan previously in RP - None

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Capitalization

Addition of unpaid interest to the principal

Principal

+

Interest

₌

Larger

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Determines payment amount and interest cost

 Standard (Level)  Graduated

 Income Contingent (Pay As You Earn)*  Income Based Repayment (IBR)

 Extended

Repayment Plans

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IBR Repayment Plan

Income Based Repayment (IBR)

Annual eligibility required - partial financial hardship Payment based on household income/family size Most affordable payments of all repayment plans Unpaid interest paid on subsidized loans (first 3 years)

www.IBRinfo.org

www.studentaid.ed.gov

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IBR

Approx. Maximum AGI Needed to Qualify for IBR at Specified Debt (2009 Poverty Guidelines)

Assumptions: - Interest rate = 6.8% ; Household size of 1 residing in 48 contiguous states

Debt AGI $5,000 $20,848 $10,000 $25,451 $15,000 $30,055 $20,000 $34,658 $25,000 $39,261 $30,000 $43,864 $35,000 $48,467 $40,000 $53,071 $45,000 $57,674 $50,000 $62,277 $55,000 $66,880 $60,000 $71,484 Debt AGI $65,000 $76,087 $70,000 $80,690 $75,000 $85,293 $80,000 $89,896 $85,000 $94,500 $90,000 $99,103 $95,000 $103,706 $100,000 $108,309 $105,000 $112,912 $110,000 $117,516 $115,000 $122,119 $120,000 $126,722 $125,000 $131,325

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IBR

Approx. Maximum AGI Needed to Qualify for IBR at Specified Debt (2009 Poverty Guidelines)

Assumptions: - Interest rate = 6.8%

- Household size of 1 residing in 48 contiguous states

Debt AGI $130,000 $135,929 $135,000 $140,532 $140,000 $145,135 $145,000 $149,738 $150,000 $154,341 $155,000 $158,945 $160,000 $163,548 $165,000 $168,151 $170,000 $172,754 $175,000 $177,357 Debt AGI $180,000 $181,961 $185,000 $186,564 $190,000 $191,167 $195,000 $195,770 $200,000 $200,374 $205,000 $204,977 $210,000 $209,580 $215,000 $214,183 $220,000 $218,786 $225,000 $223,390

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IBR Plan

Estimated PFH Monthly Payment in 2011

AGI Monthly Payment _{HH Size = 1} Monthly Payment _{HH Size = 2}

$0 $0 $0 $10,000 $0 $0 $20,000 $46 $0 $30,000 $171 $99 $40,000 $296 $224 $50,000 $421 $349 $60,000 $546 $474 $70,000 $671 $599 $80,000 $796 $724 $90,000 $921 $849 $100,000 $1,046 $974

Assumes you reside in 48 states

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Repayment Plans

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Consolidation

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Consolidation

‘09 – ’10 (2nd _Year)

FFEL Stafford sub/unsub (6.8%) FFEL Grad Plus (8.5%)

Servicer: Great Lakes (DOE/Great Lakes) Lender: Discover (SOLD to DOE)

‘10 – ’11 (3rd _Year)

Direct Stafford sub/unsub (6.8%)

Direct Grad Plus (7.9%) Servicer: DOE/Great Lakes Lender: Department of Education ’08 –’09 (1st _Year) FFEL Stafford sub/unsub Rate: 6.8%

Servicer: Student Loan Corp Lender: Citibank

’11 –’12 (4th _Year)

Direct Stafford sub/unsub (6.8%)

Direct Grad Plus (7.9%) Servicer: DOE/Great Lakes Lender: Department of Education 2008 – 2012 (Years 1-4) Institutional Loans Perkins (sub) 5% HPSL/LDS (sub) 5% University (sub) 5% Servicer: ACS (CPS) Lender: UCSF

* Example is fictitious and not based on any individual student’s loan portfolio ** Estimates from Dept. of Ed.

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“Normal” 4th _{Yr Loan Portfolio}

Loan Servicers (4) Grace Periods (4)

(1) Student Loan Corp Stafford/Un. Loans (6 months)

(2) Great Lakes Cons. (none)

(3) DOE/Great Lakes Perkins (9 months)

HPSL/LDS (1 year)

UCSF Loan Servicer:

(4) ACS (CPS)

Lenders (3) Interest Rates (3)

Dept. of Ed. (Direct) Stafford >’06: 6.8%

Citibank Grad PLUS: 8.5% & 7.9%

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Consolidation Special

• Servicer contacts you • Select group of loans • Entered RP, Grace, FB,

or deferment

• Deadline June 30th

• 0.25% rate reduction on FFEL loans only

• 0.25% rate reduction (ACH)

• Loss of grace period

Traditional

• Initiated by borrower

– Loanconsolidation.ed.gov

• You determine loans consolidated

• Time consolidation – 2-3 mo. prior to repayment • Weighted average

rounded up 1/8th_%

• Loss of grace period

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“Special” Direct Consolidation

Available January, 2012 thru June 30, 2012

Must have loans owned by Direct Loans

Must have loans owned by a FFEL lender

Do NOT initiate a consolidation online

Federal servicers will contact eligible borrowers

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Traditional Consolidation

When to consider consolidation:

Variable rates are low

Multiple servicers to repay

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Loan Forgiveness

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New Loan Forgiveness

“Public Service Loan Forgiveness”

Must make 120 payments to Direct Loans Must work 10 years in Public Service

Does not have to be continuous work

www.IBRinfo.org

www.studentaid.ed.gov

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Public Service Loan Forgiveness

What is considered Public Service?

501(c)3 non-profit employers

Federal, state, or local government Military Service

Public schools and colleges

www.IBRinfo.org

www.studentaid.ed.gov

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Public Service Loan Forgiveness

Available on:

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Position Yourself Wisely

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While You Are a Student…

• Borrow only what you need

• You may decline loans that exceed your need • Develop and stick to a budget

• Beware of hidden fees, annual fees, late fees

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Borrow Wisely

Perkins Loans and Grants Stafford Loans

Grad PLUS Loans Private

Loans

Credit Card

finaid.ucsf.edu 35% 30% 15% 10% 10% Payment history

Utilization rate (amount owed) Length of

credit history New credit

Type of credit used

Build Your Credit Score

myfico.com

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Improve Your Credit Score

To improve your score, be sure to:

Pay bills on time

Pay down debt on credit cards

Apply for credit sparingly

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Preparing to Graduate…

• Find your student loans & identify all loan servicers

– Federal loans - nslds.ed.gov

– Institutional loans – ACS & UCSF Student Accounting

– www.acs-education.com

– Perkins/University Loans/HPSL/LDS

– Private loans, consumer debt – annualcreditreport.com

• Register online with servicer & update contact info

– Balance, accrued interest, interest rates, grace period – When does repayment begin?

• If possible, pay off accrued interest before repayment

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Make Sound Decisions

• Research your repayment options

– Loan servicer websites

– www.finaid.org (calculators to compare repayment plans)

– www.studentaid.ed.gov (DOE – IBR, consolidation, and calculators) – www.ibrinfo.org (IBR and PSLF)

• If interested in IBR, file income taxes for 2011? • Investigate deferment options

• Special and/or traditional consolidation

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Support Along the Way

U C S F

• Loan Servicers & Websites

• UCSF Financial Aid Office