1 / 33

Office of Financial Aid Duke University School of Medicine

Loan Information. Office of Financial Aid Duke University School of Medicine. Agenda. Loan Terms and Conditions What Happens Now? Electronic Loan Signing Deferring Pre-Duke Loans What happens after Graduation? Internship & Residency Options Sample Loan Repayment Scenario

keagan
Download Presentation

Office of Financial Aid Duke University School of Medicine

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Loan Information Office of Financial Aid Duke University School of Medicine

  2. Agenda Loan Terms and Conditions What Happens Now? • Electronic Loan Signing • Deferring Pre-Duke Loans What happens after Graduation? • Internship & Residency Options • Sample Loan Repayment Scenario Preparing a Budget Credit Reports

  3. Types of Loans • Unsubsidized Stafford Loan • Grad PLUS Loan • Alternative Loans • Fixed Rate vs. Variable • Federal, Institutional, Private

  4. Unsubsidized Loans • Interest begins to accrue at the time of disbursement Types of unsubsidized loans • Federal Direct Unsubsidized Loan • Federal Grad PLUS Loan • Other Private/Alternative Loans

  5. Federal Direct Unsubsidized Stafford • Interest Rate: fixed at 6.8% • Grace Period: 6 months • Borrowing Limits: • $47,166 is the maximum for the 2012-2013 school year. • A student can borrow only up to the cost of attendance less any other assistance received.

  6. Grad PLUS • Direct PLUS loans include federally guaranteed unsubsidized loans for graduate students who have additional financial need beyond what federal Stafford loans cover. Borrowers are encouraged to use federal loans before turning to unregulated private loans to fund their education costs. • Direct PLUS Loan Benefits: • Can fill the gap between a medical school's financial aid cost of attendance and the annual maximum of Stafford loans • Can be included in a federal consolidation loan • Low interest rate of 7.9% • Deferring repayment includes in school deferment and 6 month post-enrollment deferment

  7. Alternative Loans • Private Education Loans, also known as Alternative Education Loans, help bridge the gap between the actual cost of your education and the limited amount the government allows you to borrow in its programs. Private loans are offered by private lenders and there are no federal forms to complete. Eligibility for private student loans often depends on your credit score. • The interest rates and fees you pay on a private student loan are based on your credit score and the credit score of your cosigner, if any. • Private student loans typically have variable interest rates, with the interest rate pegged to an index, such as LIBOR or PRIME, plus a margin

  8. Institutional Loans • Interest Rate: 7% fixed • Subsidized while enrolled and during residency • Grace Period: 6 months after graduation and residency • Loans Managed By: ECSI

  9. Federal Direct Loans • Loans will be managed by one of five servicers • Servicers randomly selected: • ACS Education Services • Federal Loan Servicing (PHEAA) • Great Lakes Educational Loan Servicer, Inc. • Nelnet • Sallie Mae

  10. Customer Service • Federal Direct Loans: Direct Loan Servicing Center PO Box 5609 Greenville, TX 74503 1-800-848-0979 Your account number is your social security number • Duke Student Loan Office 2127 Campus Drive Annex PO Box 90755 Durham,. NC 27708 919-684-6132

  11. Capitalization of Interest • Unpaid accrued interest on unsubsidized loans is added to the original amount borrowed (i.e. principal balance), thereby increasing your total indebtedness. • Unsubsidized Stafford Loans: • First capitalization typically occurs six months after borrower leaves school • Borrowers receive quarterly interest statements • Borrowers have the option to pay interest prior to capitalization

  12. National Student Loan Data System (NSLDS) • U.S. Department of Education’s central database for Federal Direct Loans. • Allows borrower to track loan balances and identify servicers of loans • Federal PIN required to access site: www.nslds.ed.gov

  13. AAMC Medloans Organizer and Calculator • Organizer and Calculator is a secure and personalized, one-stop online loan management resource tool • Available at www.aamc.org/first • Enter your 2012-2013 (and previous, if any) loan information in the Medloans Organizer and Calculator

  14. After Graduation • Internship/Residency • Deferment • Forbearance • Repayment Plans • Sample Repayment Scenarios • Loan forgiveness Programs • PGPresents

  15. Forbearance & Deferment • Forbearance: an arrangement to postpone or reduce a borrower’s monthly payment amount for a limited and specified period or to extend the repayment period. The borrower is charged interest during forbearance. • Deferment: the temporary postponement of loan payments. During deferment, interest does accrue.

  16. Repayment Options • Federal Stafford Loans • Standard fixed amount for 10 years • Extended: fixed amount extended over 12 to 25 years • Graduated: 10 years to repay, however, the payment amount increases gradually over the life of the loan • Income Contingent/Income Based: monthly payment is based on the borrower’s adjusted gross income. Interest rate is fixed. Maximum repayment period is 25 years. • Public Service Loan forgiveness.

  17. Sample Borrower Repayment • Single • No Dependents • Lives in U.S. • Annual Gross Income: $130,000 • Amount Borrowed: $115,000 • Interest Rate: 6.8%

  18. Sample Standard Loan Repayment • Term: 10 years • Monthly Payment: $1,323 • Cumulative Payments: $158,810 • Total interest Paid: $43,811

  19. Standard Repayment • Under this plan you will pay a fixed monthly amount for a loan term of up to 10 years. Depending on the amount of the loan, the loan term may be shorter than 10 years. There is a $50 minimum monthly payment.

  20. Extended Repayment • This plan is like standard repayment, but allows a loan term of 12 to 30 years, depending on the total amount borrowed. Stretching out the payments over a longer term reduces the size of each payment, but increases the total amount repaid over the lifetime of the loan.

  21. Sample Extended (Fixed & Graduated) Fixed • Term: 25 years • Monthly Payment: $798 • Cumulative Payments: $239,454 • Total interest Paid: $124,454 Graduated • Term: 25 years • Monthly Payment: $652 • Cumulative Payments: $259,371 • Total interest Paid: $144,371

  22. Graduated Repayment • Unlike the standard and extended repayment plans, this plan starts off with lower payments, which gradually increase every two years. The loan term is 12 to 30 years, depending on the total amount borrowed. The monthly payment can be no less than 50% and no more than 150% of the monthly payment under the standard repayment plan. The monthly payment must be at least the interest that accrues, and must also be at least $25.

  23. Graduated Repayment Option • Loan Term: 10 years • Monthly Payment: $909 • Cumulative Payments: $167,389 • Total Interest Paid: $52,389

  24. Income Contingent • The Income Contingent Repayment (ICR) plan is designed to make repaying education loans easier for students who intend to pursue jobs with lower salaries, such as careers in public service. It does this by pegging the monthly payments to the borrower's income, family size, and total amount borrowed. The monthly payment amount is adjusted annually, based on changes in annual income and family size. • The maximum repayment period is 25 years. After 25 years, any remaining debt will be discharged (forgiven). Under current law, the amount of debt discharged is treated as taxable income, so you will have to pay income taxes 25 years from now on the amount discharged that year. But the savings can be significant for students who wish to pursue careers in public service. And because you will be paying the tax so long from now, the net present value of the tax you will have to pay is small.

  25. Sample Income Contingent • Loan Term: 7.25 years • Monthly Payment $1644 • Cumulative Payments: $146,215 • Total Interest Paid: $31,215

  26. Income-Based Repayment • The College Cost Reduction and Access Act of 2007 introduced income-based repayment as a more generous alternative to income-sensitive and income-contingent repayment, starting on July 1, 2009. Unlike income-contingent repayment and income-sensitive repayment, it is available in both the Direct Loan and FFEL programs. Income-based repayment is like income contingent repayment, but caps the monthly payments at a lower percentage of a narrower definition of discretionary income.

  27. Loan Term for Extended/Graduated Repayment • For extended and graduated repayment, the following chart shows how the maximum loan term depends on the amount borrowed.

  28. Repayment Option Need to Know • Gradauted: Monthly payment amounts will generally increase every two years based on the gradation factor in the graduated repayment rules. • Income Contingent: Repayment amount will be calculated annually and is subject to change based on poverty guidelines for the family size determined by the US Dept. of Health and Human Services. Plan has a maximum of 25 years. • No prepayment penalty. • Can switch repayment plans.

  29. Comparing Repayment Plans • The following table compares each of the major repayment plans with standard ten year repayment. As the table illustrates, increasing the loan term reduces the size of the monthly payment but at a cost of substantially increasing the interest paid over the lifetime of the loan. For example, increasing the loan term to 20 years may cut about a third from the monthly payment, but it does so at a cost of more than doubling the interest paid over the lifetime of the loan. This table is based on the unsubsidized Stafford Loan interest rate of 6.8%.

  30. Repayment Calculators • The Loan Payment Calculator may be used to calculate what your monthly payments would be under the standard and extended repayment plans. • The Loan Comparison Calculator is like the loan payment calculator, but allows you to compare three loans side by side. • The Income Contingent Repayment Calculator may be used to calculate an estimate of what your monthly payments would be under income contingent repayment plans, and compares the total payments with the standard and extended repayment plans. • The UndergraduateMaster's and Doctoral student loan advisor calculators provide an estimate of the debt the student can reasonably afford, given the expected starting salary for their field.

  31. The Parent Loan Advisor provides parents with an estimate of the amount of educational debt they can afford for their children's education, given their current salary and other debt obligations. • The Cost of Interest Capitalization calculates the additional cost over the lifetime of a loan if a student capitalizes the interest of an unsubsidized Stafford loan during the in-school period. • There are also other loan calculators in the Calculators section of FinAid, including a Loan Analyzer that does a detailed comparison of the financial impact of various loan features, including loan fees, interest rates, repayment terms, interest capitalization, and prompt payment incentives.

  32. Questions?

More Related