Presentation Transcript

1. Entrance Counselingfor Direct Loan Borrowers

   Presented byElena Sanderson
2. Disclaimer The material presented in this slide presentation was prepared by TG and the Council for the Management of Educational Finance. This presentation is intended to help schools conduct entrance counseling for Federal Direct Loan borrowers. Depending on the types of loans that the borrowers attending the entrance session have, the information in some slides may not apply to all students. To ensure compliance with federal regulations, we request that the remaining slides not be deleted under any circumstances. Also, slides may be rearranged in a sequence that is most appropriate for the presenter.
3. Why do I have to attend? Federal regulations require that all first-time Direct Stafford loan borrowers receive entrance loan counseling School is unable to release your loan funds until you complete this session Current loan default rate is 14.8%

4. Direct Stafford Loan-Specific Information

5. Direct Stafford Loan Eligibility Although there are maximum annual loan limits, how much Stafford loan a student can borrow each year depends on the following calculation: Cost of Attendance – EFC = Need School will determine eligibility for subsidized before determining eligibility for unsubsidized
6. Impact on Other Financial Aid Accepting a loan may impact eligibility for other types of financial aid, and may affect the amounts of other financial aid.
7. Direct Stafford Annual Loan Limits – Dependent undergraduate
8. Direct Stafford Annual Loan Limits – Independent undergraduate
9. Direct Stafford Career Maximum Limits
10. Direct Stafford Loan Interest Rates Undergraduate students: 6.8%fixed interest rate for Subsidized Stafford 6.8% fixed interest rate for Unsubsidized Stafford
11. Direct Stafford Loan Fee Origination fee: 1.0% Amounts automatically deducted from each disbursement
12. Subsidized versus Unsubsidized Subsidized and unsubsidized Direct Stafford Loans Direct Subsidized Loan– need-based loan; government pays interest while student is enrolled, during grace period, and during periods of deferment Direct Unsubsidized Loan– non-need-based loan; student responsible for all interest
13. Interest Capitalization Unpaid interest that is added to the original loan balance Option to repay interest while in school Interest capitalized When the loan enters repayment When deferment ends When forbearance ends
14. Interest Capitalization Interest accrues during in-school & six-month grace periods New principal balance upon entering repayment increases by amount of interest accrued
15. Interest Capitalization Example Example: Student borrows $2,000unsubsidized Stafford and takes 5 years to graduate
16. Direct Stafford Master Promissory Note (MPN) Agreement to pay back the loan(s) Borrower rights and responsibilities detailed on MPN Multi-year feature vs. new promissory note per year You can e-sign your MPN at www.studentloans.gov
17. Use of Loan Money Authorized educational expenses (cost of attendance) Tuition, room, and board Institutional fees Books, supplies, and equipment Dependent child care Transportation and commuting expenses Rental or purchase of personal computer Miscellaneous personal expenses
18. Loan Disbursements Loan amount disbursed in at least two installments 1st installment - beginning of enrollment period 2nd installment - midpoint of enrollment period Example: First Year Dependent Student 2011/2012 Subsidized Stafford $5,500 Fall semester: $2,750 (minus loan fee) Spring semester: $2,750 (minus loan fee) 2011/2012 Unsubsidized Stafford $2000 Fall semester: $1,000 (minus loan fee) Spring semester: $1,000 (minus loan fee)
19. Loan Cancellation Before Disbursement Before the Department of Education sends the money to the school, student may cancel all or part of a loan by notifying school or After Disbursement After school credits student's account, student may still cancel all or part of a loan within 2 weeks
20. Repayment Responsibilities Borrowing money is a serious matter and all loans must be paid back Not receiving billing statement is not an excuse for not making payments Student responsible for repaying loan even if student: Does not find a job, Is dissatisfied with the school or its services, Does not graduate or does not complete program of study within the regular time for program completion
21. When Repayment Begins Direct Stafford loans have a grace period: first payment due six months after student graduates, withdraws, or drops below half-time enrollment, but will start gaining interest after graduation or drops below half time status Repayment generally scheduled for 10 years
22. Choosing a Repayment Plan The borrower has the right to choose his or her repayment plan The borrower may change to different repayment plan
23. Available Repayment Plans Standard plan Graduated plan Extended plan Income-contingent plan Income-based repayment plan
24. Sample Monthly Repayment Amounts Interest Rates
25. Circumstances for Loan Discharge and/or Forgiveness Teacher Service – teach at low-income school Public Service – applies to specific jobs Death of borrower Total and permanent disability of borrower School fails to pay refund if you withdraw School closes and unable to complete program False certification of loan (e.g. identity theft)
26. Deferments & Forbearances Deferment Allows student to postpone payment under certain circumstances (e.g., attending graduate school, economic hardship) Forbearance Temporarily reduces or stops payments. However, interest continues to accrue during this period. Most expensive option and should be used as last resort
27. Consolidation Loans Allows borrowers with loans in grace period or repayment to combine one or more federal education loans Original loans are paid-in-full New loan for the combined balances is issued with new terms, including a new interest rate that is fixed for the life of the loan www.loanconsolidation.ed.gov
28. Consequences of Default Loss of federal financial aid eligibility Withholding of federal income tax refunds Inability to renew professional license (e.g. lawyer, doctor) Negative credit history (will affect credit purchase of house, car, etc.)
29. Consequences of Default Wage withholding May be sued Collection fees and attorney’s fees assessed Enforcement of delinquent debt collection procedures
30. Change of Status Dropping below half-time enrollment can have serious consequences on your loans: Subsidized and Unsubsidized Stafford: Grace period begins Grad Plus Loans: Deferment period begins Payment will become due at the end of 6 months Half time enrollment = _ hrs fall/spring and _ hrs summer Withdrawing from school Student must follow formal withdrawal procedures Notify the appropriate offices (e.g. financial aid office, registrar, etc.)
31. Change of Status Student is responsible for notifying the school and Direct Loan Servicing Center about certain changes: Withdrawal from school Transfer to another school Change in graduation date Address change Name change SSN change
32. School Policies Refund policy Satisfactory academic progress Appeals process Withdrawal procedures
33. Accessing Loan Information National Student Loan Data System U.S. Department of Education's (ED's) central database for student aid NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of ED programs To access loan records visit www.nslds.ed.gov Students will need their PIN for access

34. Managing your money

35. Make a Budget Take sum of all sources of income Grants and scholarships College work-study or part-time job Student loans Subtract all expenses Tuition and fees Books and supplies Utilities Credit card payments Rent or dorm Groceries or meal plan
36. Money Management Tips Keep in mind when you’ll get your loan funds 30-day delay for some first-time Stafford loan borrowers Keep track of how much you borrow Consider making interest and/or principal payments while in school Remember that credit cards are loans!
37. Money Management Tips Be realistic about earnings after college Use them wisely Average salary for teacher vs. engineer Keep all your loan records Do not spend beyond your means – keep a simple lifestyle Consult with your financial aid counselor before dropping a class. It may affect your financial aid eligibility. Ask questions
38. Last Reminder!! Complete an exit counseling session before you graduate or drop below half time For questions contact: Elena Sanderson (361) 572-6485 Elena.sanderson@victoriacollege.edu