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Financial Aid

Financial Aid. Agenda. Planning for Expenses Federal and Private Loans Repayment Plans Delinquency, Default and Collections Discharge, Forgiveness and Cancellation Questions.

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Financial Aid

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  1. Financial Aid

  2. Agenda • Planning for Expenses • Federal and Private Loans • Repayment Plans • Delinquency, Default and Collections • Discharge, Forgiveness and Cancellation • Questions

  3. If you do not have the resources to cover all of your educational costs, you may want to consider borrowing from one or more educational loan programs. Federal and private educational loans are available, but terms and conditions vary. Planning for Your Expenses

  4. When to borrow? • To help with parent contribution • To replace or supplement earnings • Determine how much you need—may be less than you’re offered

  5. Federal and Private Loans

  6. Private Educational Loans 6 Private Educational Loans May: • Require payments while you’re still in school • Have variable interest rates with no cap • Require an established credit record. The cost of a private student loan will depend upon your credit score and other factors • Need a co-signer • Not be consolidated into a Direct Consolidation Loan • Not offer forbearance or deferment options • Not offer a loan forgiveness program Loan Comparison Tool: http://financialaid.stanford.edu/loans/other/index.html

  7. Federal Loans

  8. Interest Rates for Federal Loans

  9. Your Loan History The National Student Loan Data System (NSLDS): • Is a centralized national database • Stores information on federal grants and loans (no private student loans) • Displays your current enrollment status Access NSLDS using your Federal Student Aid ID at www.nslds.ed.gov

  10. NSLDS: Home Page

  11. Repayment Plans

  12. Your Loan Servicer • Collects payments on a loan • Responds to customer service inquiries • Performs other administrative tasks associated with maintaining a loan on behalf of a lender Your federal student loan servicer can be found on www.nslds.ed.gov

  13. Repayment Plans • Traditional plans: • 10-Year Standard • Graduated • Extended • Income-driven plans: • Income-Based • Income-Contingent • Pay As You Earn

  14. Repayment—Traditional Plans • Default repayment plan. • Generally results in lowest interest cost. • Minimum payment: $50/month. • Payments increase over time. • No payment will exceed three times any other payment. • Borrowers with $30,000 or more in FFEL or DL student loans. • Longer repayment period. Standard Graduated Extended

  15. Repayment—Income-driven plans • Must have a partial financial hardship. • Minimum payment: $0/month. • Forgiveness available after 25 years. • Payment amount based on annual income. • Minimum payment: $5/month. • Must re-apply each year. • Must have a partial financial hardship. • Minimum payment: $0/month. • Must re-apply each year.. Income-based Income-contingent (DL) Pay as You Earn (DL)

  16. Repayment Plan Summary John Smith has $35,000 in Direct Loan debt at an interest rate of 4.66%. His income is $30,000, he is single, and he lives in Indiana. His income increases at a rate of 5% per year.

  17. Estimate Your Student Loan Payments

  18. Consolidation • One lender and one monthly payment • Flexible repayment options • Reduced monthly payments • Fixed interest rate • Subsidized, unsubsidized, Graduate PLUS loans and Perkins Loans, are eligible for consolidation Note: Private loans are ineligible for federal loan consolidation

  19. Deferment and Forbearance • Postpone making payments • All deferments have eligibility criteria • Some forbearances have eligibility criteria; others are at the lender’s discretion • Most have time limits • Unpaid interest capitalizes at end • Interest does not accrue on subsidized loans during deferments • Time does not count against repayment period

  20. Deferment & Forbearance Reasons

  21. Delinquency, Default, and Collections

  22. Delinquency and Default • Delinquency begins on the day after due date when full payment not made • Servicers will provide deferment and forbearance options if needed • Default occurs after 270 days of delinquency

  23. Consequences of Default

  24. Getting Out Of Default • Repay loan in full • Loan Rehabilitation • Loan Consolidation

  25. Discharge, Forgiveness, Cancellation

  26. Public Service Loan Forgiveness • Borrower must also be employed by a qualifying organization at the time that the borrower applies for and receives PSLF • According to the IRS, the forgiven amount is not treated as taxable income • Details about the program: StudentAid.gov/public service

  27. PSLF– Qualifying Repayment Plan Income-driven plans are most likely to leave a remaining balance for forgiveness after 120 qualifying payments

  28. PSLF – Qualifying Employment Doesn’t matter what the borrower’s job duties are. Borrower can work at multiple organizations while making the required 120 payments

  29. Office Hours: MON: 8am–5pm TUE: 10am–5pm WED: 8am–5pm THU: 8am–5pm FRI: 8am–5pm SAT: Closed SUN: Closed Questions? The Financial Aid Office is here to assist you. Feel free to contact us anytime through email at financialaid@stanford.edu , phone (650) 723-3058, or come and visit us at Montag Hall.

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