Successful Loan Repayment for Students with Split-Servicing including Put loans

1. Successful Loan Repayment for Students with Split-Servicing(including Put loans)

2. Objectives Understand the realities students entering repayment are facing Learn three simple steps to help your students successfully address these realities Learn different ways to reach your students Discover resources available to you and your students I doubt anyone will disagree that students who are entering repayment today are entering a repayment reality that is unlike anything we have seen in recent history. The economy and unemployment, PUT loans, lenders leaving the FFELP program, and legislative changes have made the repayment of student loans quite complex. Today we hope to understand the realities that students who are entering repayment are facing. In additional we will discuss three simple steps you can use with your students to help them navigate their student loan repayment. We will also explore different techniques you can use to reach out to your students, including resources that area available to you and your students.I doubt anyone will disagree that students who are entering repayment today are entering a repayment reality that is unlike anything we have seen in recent history. The economy and unemployment, PUT loans, lenders leaving the FFELP program, and legislative changes have made the repayment of student loans quite complex. Today we hope to understand the realities that students who are entering repayment are facing. In additional we will discuss three simple steps you can use with your students to help them navigate their student loan repayment. We will also explore different techniques you can use to reach out to your students, including resources that area available to you and your students.

4. Today’s Realities Reality #1 Borrowers have loans with multiple lenders/servicers and Are confused Don’t know where all of their loans are Are not applying for deferments or repayment plans with all of their lenders The first reality is that borrowers most likely will have loans with multiple servicers/lenders. The days of one lender/servicer are most likely gone. This reality is due to a number of factors: lenders exiting FFELP and students needing to change lenders; students transferring from a DL school to a FFELP school or the opposite; lenders selling (or putting) loans to the Department of Education. Regardless of why borrowers are having multiple lenders/services there are some things these students have in common: They are confused; they don’t know whey they have multiple lender/servicers They may not even know who is currently servicing all of their loans Finally, with the necessity of contacting multiple servicers, they may not be taking advantage of deferments and repayment plan options with all of their lendersThe first reality is that borrowers most likely will have loans with multiple servicers/lenders. The days of one lender/servicer are most likely gone. This reality is due to a number of factors: lenders exiting FFELP and students needing to change lenders; students transferring from a DL school to a FFELP school or the opposite; lenders selling (or putting) loans to the Department of Education. Regardless of why borrowers are having multiple lenders/services there are some things these students have in common: They are confused; they don’t know whey they have multiple lender/servicers They may not even know who is currently servicing all of their loans Finally, with the necessity of contacting multiple servicers, they may not be taking advantage of deferments and repayment plan options with all of their lenders

5. Today’s Realities Reality #2 Borrowers need our help now more than ever Approximately 40-50% of deferment and income-based repayment applications are incomplete Borrowers are having a difficult time managing their payments The second reality is that borrowers need our help now more than ever. This is evident in the fact that approximately 40-50% of deferment and income-based repayment applications are incomplete! Borrowers are having a difficult time managing their repayment; even if they haven’t needed our help in the past, they will need our help now.The second reality is that borrowers need our help now more than ever. This is evident in the fact that approximately 40-50% of deferment and income-based repayment applications are incomplete! Borrowers are having a difficult time managing their repayment; even if they haven’t needed our help in the past, they will need our help now.

6. Today’s Realities Reality #3 Schools could see increases in default rates Forgotten loans could translate into loan default Students with unaffordable payment plans could become frustrated and stop paying on their loans Schools could see increases in default rates Forgotten loans could translate into loan default Students with unaffordable payment plans could become frustrated and stop paying on their loans. These students often hide from their lender/guarantor because are embarrassed and unfortunately, they default. Schools could see increases in default rates Forgotten loans could translate into loan default Students with unaffordable payment plans could become frustrated and stop paying on their loans. These students often hide from their lender/guarantor because are embarrassed and unfortunately, they default.

8. Explain Who’s Who Students often don’t know the difference between their lender, servicer, a newer player, the Department of Education. This might be especially confusing for those who will have loans with both or all three. A borrower could have a loan with Citibank (that Citibank services), a US Bank loan (that Great Lakes could service), and a loan that was sold to the Department. You should explain who’s who so they understand. Lender - bank or credit union provides the funding for students – FFELP program. Servicer – manages the loan portfolio on behalf of the lender and assists borrowers with the repayment of their loan. Department of Education – government agency that oversees the Title IV programs, provides funds in the form of grants and loans for studentsStudents often don’t know the difference between their lender, servicer, a newer player, the Department of Education. This might be especially confusing for those who will have loans with both or all three. A borrower could have a loan with Citibank (that Citibank services), a US Bank loan (that Great Lakes could service), and a loan that was sold to the Department. You should explain who’s who so they understand. Lender - bank or credit union provides the funding for students – FFELP program. Servicer – manages the loan portfolio on behalf of the lender and assists borrowers with the repayment of their loan. Department of Education – government agency that oversees the Title IV programs, provides funds in the form of grants and loans for students

9. Eliminate the Confusion Explain that: Their loans may have been sold to other lenders or to the Department of Education They’ll receive a letter by mail if their loans are sold Letter will state: Change of servicing from one servicers to ED or an ED servicer Future payments will need to be made to ED They may have other loans with that servicer that may not be transferred You can help to eliminate the confusion they have by explaining that: Their loans may have been sold to other lenders or to the Department of Education They’ll receive a letter by mail if their loans are sold Letter will state: Change of servicing from one servicer to ED or one of the ED servicers Future payments will need to be made to ED – payments for a PUT serviced loan must be mailed to an Atlanta PO Box They may have other loans with that servicer that may not be transferred If they have multiple holders, they’ll need to make multiple payments each month You can help to eliminate the confusion they have by explaining that: Their loans may have been sold to other lenders or to the Department of Education They’ll receive a letter by mail if their loans are sold Letter will state: Change of servicing from one servicer to ED or one of the ED servicers Future payments will need to be made to ED – payments for a PUT serviced loan must be mailed to an Atlanta PO Box They may have other loans with that servicer that may not be transferred If they have multiple holders, they’ll need to make multiple payments each month

10. Put Loan Servicing Transition New servicers (contracts awarded June 17, 2009) Great Lakes Nelnet PHEAA Sallie Mae Contracts are for all Federal Loans - ECASLA Put loans, FDSLP loans, and Perkins loans Implementation is September 2009 for Put loans, and Fall 2010 for FDSLP loans Moving forward schools with borrowers who’s loans were sold under ECASLA (commonly referred to as PUT) as also existing/future FDSL schools will be working with four servicers instead of just one. Those four servicers are listed here and they will be responsible for servicing PUT loans, future loans processed in the DL program and also future Perkins loans. These servicers already have PUT loans placed on their system by the DOE and we expect to have loans processed under Direct Lending placed on their systems beginning as early as June. (Note – the DOE has moved up the date for the servicers to have their systems ready for FDSL loans from August 31st to June 30th.) Moving forward schools with borrowers who’s loans were sold under ECASLA (commonly referred to as PUT) as also existing/future FDSL schools will be working with four servicers instead of just one. Those four servicers are listed here and they will be responsible for servicing PUT loans, future loans processed in the DL program and also future Perkins loans. These servicers already have PUT loans placed on their system by the DOE and we expect to have loans processed under Direct Lending placed on their systems beginning as early as June. (Note – the DOE has moved up the date for the servicers to have their systems ready for FDSL loans from August 31st to June 30th.)

11. Put Loan Servicing Transition Annual performance measurement Customer satisfaction Default aversion Borrower centric assignment of loans to the same servicer planned Additional information will be shared as this contract rolls forward The DOE will be conducting quarterly phone surveys to schools, borrowers and employees of the DOE working with the servicers and will use the results of those surveys to rate the performance of each servicer. Based on the results an individual servicer will receive no more than 40% of a given loan pool and no less than 10% of the same pool. It s the DOE’s intent to keep every borrower “whole” by shifting loans from one servicer to another in order to keep a borrower from being placed in a split-serviced situation (where possible). How borrowers will be identified and to which servicer they will be awarded is not completely known. One school of thought is the servicer holding the largest loan volume for that borrower will be awarded subsequent loans. That is not confirmed. Also, how quickly or efficiently this will be handled is still pending so we will provide more information as more is shared with us. This is a major concern for everyone involved, from the borrower and school to the individual servicer. This is where your voice may be needed to be heard above all other concerns as we move forward. Especially if legislation moves us all to FDSL. The DOE will be conducting quarterly phone surveys to schools, borrowers and employees of the DOE working with the servicers and will use the results of those surveys to rate the performance of each servicer. Based on the results an individual servicer will receive no more than 40% of a given loan pool and no less than 10% of the same pool. It s the DOE’s intent to keep every borrower “whole” by shifting loans from one servicer to another in order to keep a borrower from being placed in a split-serviced situation (where possible). How borrowers will be identified and to which servicer they will be awarded is not completely known. One school of thought is the servicer holding the largest loan volume for that borrower will be awarded subsequent loans. That is not confirmed. Also, how quickly or efficiently this will be handled is still pending so we will provide more information as more is shared with us. This is a major concern for everyone involved, from the borrower and school to the individual servicer. This is where your voice may be needed to be heard above all other concerns as we move forward. Especially if legislation moves us all to FDSL.

12. Put Process (Day 1 to Day 45) Day 1 -35 = All changes can be processed by the original service provider of the loan. Day 36 – 44 = is the adjustment cutoff date and certain change transactions cannot be performed (increases, reinstatements, reissues, and reallocations.) Refunds can still be performed! Day 1 -35 = All changes can be processed by the original service provider of the loan. Day 36 – 44 = is the adjustment cutoff date and certain change transactions cannot be performed (increases, reinstatements, reissues, and reallocations.) Refunds can still be performed!

13. Put Process (Day 1 to Day 45) Day 45 – beyond = (day 45 the record is completely locked out for transfer of ownership) on day 46 & beyond, only post-disbursement cancellations and refunds can be processed. Since the DOE is the owner of the loan, they must process all refunds that are sent. Day 45 – beyond = (day 45 the record is completely locked out for transfer of ownership) on day 46 & beyond, only post-disbursement cancellations and refunds can be processed. Since the DOE is the owner of the loan, they must process all refunds that are sent.

14. FFELP serviced loan is put to ED and then assigned back to the same FFELP servicer “Hometown Bank has elected to sell your Academic Year 2008/2009 Stafford student loan(s) to the U.S. Department of Education.” “Effective mm-dd-yyyy, Same Servicer will service this Stafford loan account on behalf of the U.S. Department of Education.” Borrower Communication Borrowers entering repayment now that have had a loan PUT will receive one of two letters. The type of letter they receive depends upon the situation. Let’s first look at a student who has loans that are currently serviced by a servicer and the lender then PUTs them to ED and ED assigns them back to the original servicer. The letter from the servicer will include contact information, including the address to which payments are to be made. Note that payments for PUT loans are actually made to the U.S. Department of Education and sent to an Atlanta PO Box. This may cause confusion for students so helping them understand it is important. The letter reads in part: Hometown Bank has elected to sell your Academic Year 2008/2009 Stafford student loan(s) to the U.S. Department of Education . . . Xxxxxx servicer will service this Stafford loan account on behalf of the U.S. Department of Education.” The letter goes on to tell them that they may have other loans with this or another lender and that these loans are not impacted by this loan purchase. It directs the student to NSLDS.Borrowers entering repayment now that have had a loan PUT will receive one of two letters. The type of letter they receive depends upon the situation. Let’s first look at a student who has loans that are currently serviced by a servicer and the lender then PUTs them to ED and ED assigns them back to the original servicer. The letter from the servicer will include contact information, including the address to which payments are to be made. Note that payments for PUT loans are actually made to the U.S. Department of Education and sent to an Atlanta PO Box. This may cause confusion for students so helping them understand it is important. The letter reads in part: Hometown Bank has elected to sell your Academic Year 2008/2009 Stafford student loan(s) to the U.S. Department of Education . . . Xxxxxx servicer will service this Stafford loan account on behalf of the U.S. Department of Education.” The letter goes on to tell them that they may have other loans with this or another lender and that these loans are not impacted by this loan purchase. It directs the student to NSLDS.

15. Borrower Communication FFELP serviced loan is put to ED and then assigned to a different FFELP servicer “Hometown Bank has elected to sell your Academic Year 2008/2009 Stafford student loan(s) currently serviced by National Servicer to the U.S. Department of Education.” “Effective mm-dd-yyyy, New Servicer will service this Stafford loan account on behalf of the U.S. Department of Education.” This information is contained within the letter: Loan has been Put to DOE GL will now service the loan & send updated payment statements if needed Reminds them they may have other loans with their lender that are not affected Gives GL contact and payment information The second situation would be when a FFELP serviced loan is PUT to ED and ED assigns it to a different servicer. The letter from the servicer will include contact information, including the address to which payments are to be made. Note again that payments for PUT loans are actually made to the U.S. Department of Education and sent to an Atlanta PO Box. This may cause confusion for students so helping them understand it is important. The letter reads in part: “Hometown Bank has elected to sell your Academic Year 2008/2009 Stafford student loan(s) currently serviced by National Servicer to the U.S. Department of Education . . . New servicer will service this Stafford loan account on behalf of the U.S. Department of Education.”The second situation would be when a FFELP serviced loan is PUT to ED and ED assigns it to a different servicer. The letter from the servicer will include contact information, including the address to which payments are to be made. Note again that payments for PUT loans are actually made to the U.S. Department of Education and sent to an Atlanta PO Box. This may cause confusion for students so helping them understand it is important. The letter reads in part: “Hometown Bank has elected to sell your Academic Year 2008/2009 Stafford student loan(s) currently serviced by National Servicer to the U.S. Department of Education . . . New servicer will service this Stafford loan account on behalf of the U.S. Department of Education.”

16. Put Program (Repayment) Notification is sent to the borrower indicating the loan is now owned by the DOE and also identifies the servicer of that loan (it’s possible at this point the borrower may have multiple loans with multiple servicers). The notice will include where to send payments and how to get in touch with the servicer. Although each servicer is going to work hard to meet the needs of the individual borrowers on their system, this process may create confusion for the borrower (especially if they are receiving multiple notices) and they may reach out to you for help and guidance. This is where having access to a servicers systems will help you in tracking down loans for the borrowers and helping guide them through a successful repayment experience. Notification is sent to the borrower indicating the loan is now owned by the DOE and also identifies the servicer of that loan (it’s possible at this point the borrower may have multiple loans with multiple servicers). The notice will include where to send payments and how to get in touch with the servicer. Although each servicer is going to work hard to meet the needs of the individual borrowers on their system, this process may create confusion for the borrower (especially if they are receiving multiple notices) and they may reach out to you for help and guidance. This is where having access to a servicers systems will help you in tracking down loans for the borrowers and helping guide them through a successful repayment experience.

17. Servicer Identification Info Here is a list of the different DOE servicers and their codes. You will see these codes on NSLDS (if it’s updated in a timely manner). Great Lakes also has a list of the servicers available that includes these codes and numbers for you and your borrowers to use to reach each of the servicers. If you would like a copy of that please see me after the presentation and I’ll get your info to send you one.Here is a list of the different DOE servicers and their codes. You will see these codes on NSLDS (if it’s updated in a timely manner). Great Lakes also has a list of the servicers available that includes these codes and numbers for you and your borrowers to use to reach each of the servicers. If you would like a copy of that please see me after the presentation and I’ll get your info to send you one.

18. Is NSLDS being updated to include Put status? NSLDS is a good place to start but remember it’s not updated in real-time and it will be beneficial for you to have access to the servicers system to see the most up-to-date information in real-time about your borrowers. Having access does not change your upfront processing or your partners for origination. The access is to help you guide your borrowers on an as-needed basis.NSLDS is a good place to start but remember it’s not updated in real-time and it will be beneficial for you to have access to the servicers system to see the most up-to-date information in real-time about your borrowers. Having access does not change your upfront processing or your partners for origination. The access is to help you guide your borrowers on an as-needed basis.

19. Put Reports Great Lakes will make various reports available to you for tracking purposes so that you can identify which of your borrowers are on our system and to track errors and details regarding your change transactions. These reports may be very handy when a loan is moved from one servicer to another by the DOE in the event the change was initiated with the wrong servicer.Great Lakes will make various reports available to you for tracking purposes so that you can identify which of your borrowers are on our system and to track errors and details regarding your change transactions. These reports may be very handy when a loan is moved from one servicer to another by the DOE in the event the change was initiated with the wrong servicer.

20. Simple Steps to Successful Repayment Provide your students with a three-step approach to ensure successful repayment Step 1 Help borrowers to know who they owe and how much Step 2 Help borrowers determine the right repayment plan Step 3 Stress to borrowers the importance of staying on top of their loans You can also help by providing students with this three-step approach to repayment. Step one: help borrowers locate to whom they owe and how much Step two: help borrowers determine which repayment plan is best for them Step three: stress the importance to borrowers of staying on top of their loans: keeping in touch with servicers, letting them know if they are having troubles repayingYou can also help by providing students with this three-step approach to repayment. Step one: help borrowers locate to whom they owe and how much Step two: help borrowers determine which repayment plan is best for them Step three: stress the importance to borrowers of staying on top of their loans: keeping in touch with servicers, letting them know if they are having troubles repaying

22. Start with NSLDS It is more important now than ever that borrowers become familiar with the National Student Loan Data System. This database collects data from schools, guaranty agencies, DL and lenders and provides a centralized view of all federal student loans and grants a student received. Please understand that the NSLDS access that you as an aid administrator has is different that than the access a borrower has. On the next few slides we are going to show you what the student sees. To log on, a student would go to www.nslds.ed.gov.It is more important now than ever that borrowers become familiar with the National Student Loan Data System. This database collects data from schools, guaranty agencies, DL and lenders and provides a centralized view of all federal student loans and grants a student received. Please understand that the NSLDS access that you as an aid administrator has is different that than the access a borrower has. On the next few slides we are going to show you what the student sees. To log on, a student would go to www.nslds.ed.gov.

23. Once you log in, you can see a summary all of your federal loans. [Click] [Click] “Type of loan” tells you the kind of loan that you borrowed. [Click] “Loan amount” tells you the amount of money that you borrowed and the date you borrowed the money. [Click] “Disbursed amount” lets you know exactly how much money you received after all of the fees were taken out. [Click] “Canceled amount” lets you know if any of your loans have been canceled. [Click] “Outstanding principal” and [Click] “outstanding interest” let you know how much you have left on each loan. [Click] NSLDS will also show you the total amount for each loan, the total for each type of loan, and the total for all of your loans. These totals help you understand how much you owe in federal student loans. [Click] [Click] You’ll also see any grants that you may have received. The good news is that you don’t have to pay these back. Once you log in, you can see a summary all of your federal loans. [Click] [Click] “Type of loan” tells you the kind of loan that you borrowed. [Click] “Loan amount” tells you the amount of money that you borrowed and the date you borrowed the money. [Click] “Disbursed amount” lets you know exactly how much money you received after all of the fees were taken out. [Click] “Canceled amount” lets you know if any of your loans have been canceled. [Click] “Outstanding principal” and [Click] “outstanding interest” let you know how much you have left on each loan. [Click] NSLDS will also show you the total amount for each loan, the total for each type of loan, and the total for all of your loans. These totals help you understand how much you owe in federal student loans. [Click] [Click] You’ll also see any grants that you may have received. The good news is that you don’t have to pay these back.

24. The loan detail page shows you even more. [Click] If you click on the number to the left of each loan, you’ll see all of the information from the loan summary page. [Click] You’ll see the [Click] current interest rate and [Click] outstanding principal and interest balance as of a specific date. [Click] The loan detail shows the repayment status for each loan, such as if it’s in grace, deferment, or repayment. [Click] It also includes the current servicer, lender, and guaranty agency for each loan. Note how many lenders/servicers you have. It’s important to check the loan detail for each one of your loans. Keep track of this information because you will need to make payments to each lender/servicer separately. The loan detail page shows you even more. [Click] If you click on the number to the left of each loan, you’ll see all of the information from the loan summary page. [Click] You’ll see the [Click] current interest rate and [Click] outstanding principal and interest balance as of a specific date. [Click] The loan detail shows the repayment status for each loan, such as if it’s in grace, deferment, or repayment. [Click] It also includes the current servicer, lender, and guaranty agency for each loan. Note how many lenders/servicers you have. It’s important to check the loan detail for each one of your loans. Keep track of this information because you will need to make payments to each lender/servicer separately.

25. Put Status (IBIS) Great Lakes provides access to a system called IBIS which will allow you to see additional information about your borrowers who started on our system, even if they are transferred to another service provider. It will tell you who is servicing based on the code to the right of the DOE designation. It will also provide you a repayment status for borrowers serviced by Great Lakes and information regarding due dates, interest accrued and balance of the loan.Great Lakes provides access to a system called IBIS which will allow you to see additional information about your borrowers who started on our system, even if they are transferred to another service provider. It will tell you who is servicing based on the code to the right of the DOE designation. It will also provide you a repayment status for borrowers serviced by Great Lakes and information regarding due dates, interest accrued and balance of the loan.

26. Put Status (Meteor) Meteor is another system you may want to use for identifying where your borrowers loans may be housed. Meteor can be access from Great Lakes’ website (I think also through other servicers). Think of it as a more timely updated version of NSLDS.Meteor is another system you may want to use for identifying where your borrowers loans may be housed. Meteor can be access from Great Lakes’ website (I think also through other servicers). Think of it as a more timely updated version of NSLDS.

27. Tracking Non-Federal Loans All loans are reported to the credit bureaus Students can obtain a listing of their non-federal loans on their credit report Free credit reports are available at annualcreditreport.com Remember that NSDLS only tracks federal loans. A borrower of private/alternative and/or institutional loans would not find them on NSLDS. All student loans are reported to at least one of the national credit bureaus and we recommend students obtain a copy of their credit report to locate private/alternative loan information if they cannot obtain it from their lender. Any consumer is eligible to receive one free copy of their credit report from each of the credit bureaus, once every 12 months. You may want to remind students that freecreditreport.com, while they have catchy commercials, is not the website to obtain the free credit report. Freecreditreport.com is owned and operated by one of the credit bureaus, Experian. In order to receive the free credit report, you must sign up for a trial membership for a credit monitoring service. If you don’t cancel within 7 days, you will be charged $14.95 each month until you cancel. All of this detail is in fine print. They should go to annualcreditreport.com and you may even want to link annualcreditreport.com to your school’s website. Remember that NSDLS only tracks federal loans. A borrower of private/alternative and/or institutional loans would not find them on NSLDS. All student loans are reported to at least one of the national credit bureaus and we recommend students obtain a copy of their credit report to locate private/alternative loan information if they cannot obtain it from their lender. Any consumer is eligible to receive one free copy of their credit report from each of the credit bureaus, once every 12 months. You may want to remind students that freecreditreport.com, while they have catchy commercials, is not the website to obtain the free credit report. Freecreditreport.com is owned and operated by one of the credit bureaus, Experian. In order to receive the free credit report, you must sign up for a trial membership for a credit monitoring service. If you don’t cancel within 7 days, you will be charged $14.95 each month until you cancel. All of this detail is in fine print. They should go to annualcreditreport.com and you may even want to link annualcreditreport.com to your school’s website.

28. Obtaining a Credit Report

29. Obtaining a Credit Report What’s needed Name Address Social Security number Personal information check Questions based on information in the credit file Lender for a particular credit or loan account Loan payment amount Previous address Please also let students know what information is needed to access their credit report such as: SSN and they must answer a couple of personal information check questions to authenticate who they are. Sometimes these questions can be difficult to answer, especially if they don’t have information available in front of them such as: Lender for a particular credit or loan account Loan payment amount Previous addressPlease also let students know what information is needed to access their credit report such as: SSN and they must answer a couple of personal information check questions to authenticate who they are. Sometimes these questions can be difficult to answer, especially if they don’t have information available in front of them such as: Lender for a particular credit or loan account Loan payment amount Previous address

30. When you request your credit report, [Click] this is what your student loans will look like.When you request your credit report, [Click] this is what your student loans will look like.

32. Counseling Borrowers Remind students that they have options What is in their immediate future? Are they going to graduate school? Do they have a job? What other expenses will they have? Help borrowers determine their goals for repaying their loans Defer monthly payment Pay off quickly Lower monthly payment When counseling borrowers on repayment plans it is important to first remind them that they do have options. Most other installment loans do not have options: car loans and mortgages for example, you are told what your monthly payment is and you have to make that payment. With student loans, students can choose from multiple repayment options that vary the monthly payment greatly. Help your students think about their immediate future. If they are going to graduate school, a deferment may be an option or they may choose to pay while in graduate school. Whether or not the student has a job and knows his/her monthly income is important as that will help the student determine what he/she can afford to pay each month. It is also important to help students determine their goals in regards to repaying their loans. If they are going to graduate school, then they may want to consider an in-school deferment. Do they have a job in their field, then they may want to consider the standard repayment schedule so they can pay the loan off as quickly as possible with the least amount of interest. If they haven’t found a job yet, then they may want to consider an unemployment deferment or a repayment schedule that gives them a lower monthly payment. Knowing what’s in their immediate future and repayment goals will help the borrower choose the best repayment plan.When counseling borrowers on repayment plans it is important to first remind them that they do have options. Most other installment loans do not have options: car loans and mortgages for example, you are told what your monthly payment is and you have to make that payment. With student loans, students can choose from multiple repayment options that vary the monthly payment greatly. Help your students think about their immediate future. If they are going to graduate school, a deferment may be an option or they may choose to pay while in graduate school. Whether or not the student has a job and knows his/her monthly income is important as that will help the student determine what he/she can afford to pay each month. It is also important to help students determine their goals in regards to repaying their loans. If they are going to graduate school, then they may want to consider an in-school deferment. Do they have a job in their field, then they may want to consider the standard repayment schedule so they can pay the loan off as quickly as possible with the least amount of interest. If they haven’t found a job yet, then they may want to consider an unemployment deferment or a repayment schedule that gives them a lower monthly payment. Knowing what’s in their immediate future and repayment goals will help the borrower choose the best repayment plan.

33. Counseling Borrowers Next, have borrowers calculate their student loan debt through the various repayment plans Finally, have them look at their budget Student loan payment shouldn’t exceed more than 10-15% of monthly income You can also help borrowers by providing tools or helping them calculate their loan repayment and look at the results of the various options. We at Great Lakes have tools to help you with this so please do not feel you need to do this all alone. We know you are busy and have been looking for tools to help your students. To meet that need we have developed a brand new repayment brochure and presentation to address the realities your students are facing. We will be discussing these in more detail later on in this presentation. You will also want to help them look at their budget. Many recommend that student loan payments should not exceed more than 10-15% of their monthly income. Students may want to use this guideline in determining which repayment plan they select. Over the next few slides, we will look at each repayment plan and match the plan that could work based on the borrowers circumstances. You can also help borrowers by providing tools or helping them calculate their loan repayment and look at the results of the various options. We at Great Lakes have tools to help you with this so please do not feel you need to do this all alone. We know you are busy and have been looking for tools to help your students. To meet that need we have developed a brand new repayment brochure and presentation to address the realities your students are facing. We will be discussing these in more detail later on in this presentation. You will also want to help them look at their budget. Many recommend that student loan payments should not exceed more than 10-15% of their monthly income. Students may want to use this guideline in determining which repayment plan they select. Over the next few slides, we will look at each repayment plan and match the plan that could work based on the borrowers circumstances.

34. Borrower’s Budget As we just mentioned, financial planners often recommend that monthly payments for student loan debt not be more than 10-15% of a student’s monthly budget. Having the student prepare a budget will help him/her determine what repayment plan will fit into their budget.As we just mentioned, financial planners often recommend that monthly payments for student loan debt not be more than 10-15% of a student’s monthly budget. Having the student prepare a budget will help him/her determine what repayment plan will fit into their budget.

35. Standard Repayment Equal monthly payments of at least $50 (depending on their loan balance) for up to 10 years Borrowers will automatically be enrolled in the standard repayment plan Option for borrowers who want to repay loans off in the shortest time with the lowest amount of interest accrued We will now discuss the various repayment plans options borrowers have. The most common plan is the standard plan. Equal monthly payments of at least $50 (depending on loan balance) for up to 10 years. Students are automatically enrolled in the standard repayment plan, but can choose a different plan if they find one that works better for their budget. If students would like to switch plans they need to talk to their lender or servicer. This plan is good for someone who has a steady income and wants to pay the lowest amount of interest over the shortest amount of time. For your borrowers who have found a job in their field, then you probably should encourage them to stay with the standard schedule. We will now discuss the various repayment plans options borrowers have. The most common plan is the standard plan. Equal monthly payments of at least $50 (depending on loan balance) for up to 10 years. Students are automatically enrolled in the standard repayment plan, but can choose a different plan if they find one that works better for their budget. If students would like to switch plans they need to talk to their lender or servicer. This plan is good for someone who has a steady income and wants to pay the lowest amount of interest over the shortest amount of time. For your borrowers who have found a job in their field, then you probably should encourage them to stay with the standard schedule.

36. Standard Repayment Chart This example shows how much you a student would pay on a standard plan if $25,000 was borrowed. This example shows how much you a student would pay on a standard plan if $25,000 was borrowed.

37. Graduated Repayment Monthly payments start lower and gradually increase over time for up to 10 years More interest will be paid over 10 years Option for borrowers who have cash flow problems early on, but expect that their income will increase steadily over time If the monthly payment on the standard plan is too high, students might think about the graduated plan. This is good for those who have found a job but not in their field of study. They can afford to make a payment but not the one under the standard schedule. The monthly payments start lower, but increase over time for up to 10 years. If the monthly payment on the standard plan is too high, students might think about the graduated plan. This is good for those who have found a job but not in their field of study. They can afford to make a payment but not the one under the standard schedule. The monthly payments start lower, but increase over time for up to 10 years.

38. Graduated Repayment In this example of the graduated plan, the payments are lower for the first two years, then increase for the last eight years. The total amount of interest on a $25,000 loan is $1,300 higher under the graduated plan than the standard. In this example of the graduated plan, the payments are lower for the first two years, then increase for the last eight years. The total amount of interest on a $25,000 loan is $1,300 higher under the graduated plan than the standard.

39. Income-Based Repayment Reduced monthly payments for borrowers who demonstrate a partial financial hardship (based on loan debt, income, and family size) Eligibility is re-evaluated each year At the end of 25 years of repayment and 300 payments, any remaining balance may be forgiven Option for borrowers who need an affordable payment adjusted based on their income The newest repayment option is income-based repayment. It has a similar name to the previous plan, but with some real differences in repayment options. The monthly payments are reduced if the borrower demonstrates a partial financial hardship (based on loan debt, income, and family size). And eligibility is re-evaluated each year. At the end of 25 years of repayment and 300 payments, any remaining balance may be forgiven. This plan is good for someone who is looking for the lowest possible monthly payment. The newest repayment option is income-based repayment. It has a similar name to the previous plan, but with some real differences in repayment options. The monthly payments are reduced if the borrower demonstrates a partial financial hardship (based on loan debt, income, and family size). And eligibility is re-evaluated each year. At the end of 25 years of repayment and 300 payments, any remaining balance may be forgiven. This plan is good for someone who is looking for the lowest possible monthly payment.

40. Income-Based Repayment Monthly payment is 15 percent of X To determine payment under the income-based repayment plan, the Department of Education has established a calculation. Payments will not be more than 15% of the amount by which a borrower’s adjusted gross income exceeds 150% of the poverty level for their family size. The monthly payment is 15% of X. X is the monthly adjusted gross income – 150% of monthly poverty level. Poverty level is defined annually by the federal government and is determined by income and family size. To determine payment under the income-based repayment plan, the Department of Education has established a calculation. Payments will not be more than 15% of the amount by which a borrower’s adjusted gross income exceeds 150% of the poverty level for their family size. The monthly payment is 15% of X. X is the monthly adjusted gross income – 150% of monthly poverty level. Poverty level is defined annually by the federal government and is determined by income and family size.

41. If monthly payment is amount not enough to pay accrued interest Income-Based Repayment It’s possible that the monthly payment amount may not be enough to pay the accrued interest on the borrower’s loans. If the borrower has a subsidized Stafford loan, the Department of Education will pay the remaining interest for up to three years. If the borrower has an unsubsidized Stafford loan, the interest will accrue and be capitalized at the end of the income-based repayment plan. Student should know that more interest may accrue over the life of the loan because the principal balance is decreasing at a slower rate. It’s possible that the monthly payment amount may not be enough to pay the accrued interest on the borrower’s loans. If the borrower has a subsidized Stafford loan, the Department of Education will pay the remaining interest for up to three years. If the borrower has an unsubsidized Stafford loan, the interest will accrue and be capitalized at the end of the income-based repayment plan. Student should know that more interest may accrue over the life of the loan because the principal balance is decreasing at a slower rate.

42. Income-Based Repayment This chart gives four different examples of how the income-based repayment plan is calculated. Borrowers 1 and 2 have a family income of $36,000 and Borrowers 3 and 4 have a family income of $72,000. It shows the different elements that are used in the payment plan calculation. However, you’ll notice that nowhere does it take into account the amount that was borrowed. The lower chart explains how the income-based repayment plan fits into the amount they borrowed. If the amount they would pay on the income-based repayment plan is less than the amount on the standard repayment plan, then they will make their payments based on the income-based repayment plan. Using these examples, if the borrowers’ loans total $25,000, Borrowers 1 and 2 qualify for income-based repayment. This chart gives four different examples of how the income-based repayment plan is calculated. Borrowers 1 and 2 have a family income of $36,000 and Borrowers 3 and 4 have a family income of $72,000. It shows the different elements that are used in the payment plan calculation. However, you’ll notice that nowhere does it take into account the amount that was borrowed. The lower chart explains how the income-based repayment plan fits into the amount they borrowed. If the amount they would pay on the income-based repayment plan is less than the amount on the standard repayment plan, then they will make their payments based on the income-based repayment plan. Using these examples, if the borrowers’ loans total $25,000, Borrowers 1 and 2 qualify for income-based repayment.

43. Income-Based Repayment This example assumes an annual salary of $36,000 and a 4% income growth. This example assumes an annual salary of $36,000 and a 4% income growth.

44. Maximum Qualifying Income Examples The charts show maximum qualifying income examples for income-based repayment. Note: The charts show 2009 poverty guidelines. The charts show maximum qualifying income examples for income-based repayment. Note: The charts show 2009 poverty guidelines.

45. IBR Roadblocks Qualifying for a reduced payment can be a challenge for some borrowers because their financial situation changes frequently 40-50% of IBR applications are returned Supporting documentation not included Incomplete application Tax returns not signed Some of the roadblocks or challenges with IBR include: Qualifying for a reduced payment can be a challenge for some borrowers because their financial situation changes frequently 40-50% of IBR applications are returned Supporting documentation not included Incomplete application Tax returns not signed Because these roadblocks are similar to those with verification, you may want to remind students during exit counseling sessions that they need to follow through with this paperwork and to treat it just as diligently as they did when they applied for financial aid. Some of the roadblocks or challenges with IBR include: Qualifying for a reduced payment can be a challenge for some borrowers because their financial situation changes frequently 40-50% of IBR applications are returned Supporting documentation not included Incomplete application Tax returns not signed Because these roadblocks are similar to those with verification, you may want to remind students during exit counseling sessions that they need to follow through with this paperwork and to treat it just as diligently as they did when they applied for financial aid.

46. Income-Sensitive Repayment* Reduced monthly payments based on income and total loan amount for up to 10 years Lender must grant a forbearance for up to 5 years if the loan cannot be repaid within 10 years Borrowers need to reapply every year Option for borrowers who need their monthly payment to fluctuate with their income over a period of 10 years The next two plans are also based on income but may be used less frequently now that IBR is an option for borrowers. The first one we’ll go over is the income-sensitive plan. The monthly payments are based on income and total loan amount. Borrowers need to reapply for this plan every year. With this plan, keep in mind that each year monthly payments are decreased, the monthly payments for the remaining years increase proportionately. This can mean very high payments in future years. If a student has a fluctuating income, this plan may be ideal. It’s also good for those who anticipate earning a higher income in a few years but need a substantially lower payment now. The next two plans are also based on income but may be used less frequently now that IBR is an option for borrowers. The first one we’ll go over is the income-sensitive plan. The monthly payments are based on income and total loan amount. Borrowers need to reapply for this plan every year. With this plan, keep in mind that each year monthly payments are decreased, the monthly payments for the remaining years increase proportionately. This can mean very high payments in future years. If a student has a fluctuating income, this plan may be ideal. It’s also good for those who anticipate earning a higher income in a few years but need a substantially lower payment now.

47. Income-Sensitive Repayment As you can see with this plan, based on the borrower’s income, they would pay $120 as opposed to $287 under the standard repayment plan. The example also assumes the loan is an unsubsidized Stafford loan with a 6.8% interest rate. The monthly payment is based on 4% of the gross monthly income—$1,440, which compares to an annual salary of $36,000. As you can see with this plan, based on the borrower’s income, they would pay $120 as opposed to $287 under the standard repayment plan. The example also assumes the loan is an unsubsidized Stafford loan with a 6.8% interest rate. The monthly payment is based on 4% of the gross monthly income—$1,440, which compares to an annual salary of $36,000.

48. Income-Contingent Repayment* Reduced monthly payments based on income, family size, and total loan amount, and for up to 25 years After 25 years, any remaining debt will be discharged Option for Direct loan borrowers who plan to pursue careers with lower salaries Income-contingent repayment is another option to reduce a monthly payment based on income. A borrower’s income, family size and total loan amount is used to determine their monthly payment. The payment is adjusted annually. They have 25 years to pay it off, instead of 10. Under the ICR plan the borrower will pay each month the lesser of: The amount they would pay if they repaid their loan in 12 years multiplied by an income percentage factor that varies with their annual income, or 20% of their monthly discretionary income*. After 25 years, any remaining debt will be discharged. They may, however, have to pay taxes on the amount that is discharged. The income-contingent plan is an option for Direct loan borrowers who plan to pursue careers with a lower salaries.Income-contingent repayment is another option to reduce a monthly payment based on income. A borrower’s income, family size and total loan amount is used to determine their monthly payment. The payment is adjusted annually. They have 25 years to pay it off, instead of 10. Under the ICR plan the borrower will pay each month the lesser of: The amount they would pay if they repaid their loan in 12 years multiplied by an income percentage factor that varies with their annual income, or 20% of their monthly discretionary income*. After 25 years, any remaining debt will be discharged. They may, however, have to pay taxes on the amount that is discharged. The income-contingent plan is an option for Direct loan borrowers who plan to pursue careers with a lower salaries.

49. Income-Contingent Repayment The example also assumes the loan is an unsubsidized Stafford loan with a 6.8% interest rate. Assumes an annual salary of $36,000 when entering repayment. The example also assumes the loan is an unsubsidized Stafford loan with a 6.8% interest rate. Assumes an annual salary of $36,000 when entering repayment.

50. Extended Repayment Payments that are fixed or gradually increase over 25 years for loan debt that exceeds $30,000 More interest is paid over the life of the loan Can be used as an alternative to consolidation Option for borrowers who have larger loan debt and need lower monthly payment The extended repayment plan isn’t affected by a student’s income. Instead, it stretches their payments over 25 years. The payments are fixed or gradually increase over 25 years for loan debt that exceeds $30,000 and for loans disbursed on or after Oct 7, 1998 This plan is good for someone who wants a lower monthly payment but won’t qualify for the income required payment schedules. Just remember that students will pay more over the life of the loan, especially if they take 25 years to repay. The extended repayment plan isn’t affected by a student’s income. Instead, it stretches their payments over 25 years. The payments are fixed or gradually increase over 25 years for loan debt that exceeds $30,000 and for loans disbursed on or after Oct 7, 1998 This plan is good for someone who wants a lower monthly payment but won’t qualify for the income required payment schedules. Just remember that students will pay more over the life of the loan, especially if they take 25 years to repay.

51. Extended Repayment If they pay the loan off in 25 years, you can see the amount paid more than doubles. If they pay the loan off in 25 years, you can see the amount paid more than doubles.

52. [Placeholder Slide—Presenter will customize debt and salary level according to school.] Chart compares monthly payments on each repayment plan if a student had $40,000 in student loan debt. It also shows how much interest they would pay and the total amount paid over the life of the loan. The income-based, income-sensitive, and income-contingent plans assume an annual salary of $36,000. The IBR example assumes 4% income growth rate. With IBR, it’s possible that the monthly payment amount may not be enough to pay the accrued interest on the loans. If they have a subsidized Stafford loan, the U.S. Department of Education will pay the interest for up to three years. If they have an unsubsidized Stafford loan, the interest will accrue and be capitalized at the end of your repayment plan. Be aware that more interest may accrue over the life of the loan because the principal balance is decreasing at a slower rate. At the end of 25 years of repayment and 300 payments, any remaining balance may be forgiven. In this example it takes 16 years to pay off $40,000. The income-sensitive example assumes a monthly payment amount based on 4% of the gross monthly income and assumes that the plan is only in place for the first year of the loan. The standard repayment plan is in place for the remaining nine years. The income-contingent example allows up to 25 years to repay your loan. This example has a repayment term of 169 months.[Placeholder Slide—Presenter will customize debt and salary level according to school.] Chart compares monthly payments on each repayment plan if a student had $40,000 in student loan debt. It also shows how much interest they would pay and the total amount paid over the life of the loan. The income-based, income-sensitive, and income-contingent plans assume an annual salary of $36,000. The IBR example assumes 4% income growth rate. With IBR, it’s possible that the monthly payment amount may not be enough to pay the accrued interest on the loans. If they have a subsidized Stafford loan, the U.S. Department of Education will pay the interest for up to three years. If they have an unsubsidized Stafford loan, the interest will accrue and be capitalized at the end of your repayment plan. Be aware that more interest may accrue over the life of the loan because the principal balance is decreasing at a slower rate. At the end of 25 years of repayment and 300 payments, any remaining balance may be forgiven. In this example it takes 16 years to pay off $40,000. The income-sensitive example assumes a monthly payment amount based on 4% of the gross monthly income and assumes that the plan is only in place for the first year of the loan. The standard repayment plan is in place for the remaining nine years. The income-contingent example allows up to 25 years to repay your loan. This example has a repayment term of 169 months.

53. Consolidation Loans Will give borrowers a single payment for their federal loans May give borrowers a lower monthly payment Option for borrowers with multiple servicers and who want to make one payment each month Many students may consider consolidation to help them eliminate the need to make multiple payments. Consolidation does have its pros and cons, however. Consolidation Will give borrowers a single payment for their federal loans May give borrowers a lower monthly payment Consolidation is an option for borrowers with multiple servicers who want to make one payment each month.Many students may consider consolidation to help them eliminate the need to make multiple payments. Consolidation does have its pros and cons, however. Consolidation Will give borrowers a single payment for their federal loans May give borrowers a lower monthly payment Consolidation is an option for borrowers with multiple servicers who want to make one payment each month.

54. Consolidation Loans Borrowers should consider the trade-offs Interest rate may increase slightly when the weighted average of consolidated loans is rounded to the nearest eighth percent May pay more in accrued interest Perkins loan loses interest subsidy and some cancellation options However, borrowers will want to consider the trade offs. Because when loans are consolidated, the interest rate is recalculated using a weighted average rounded to the nearest eight percent. Borrowers who choose to consolidate may lose lower interest rates they received just a few years ago. Because the consolidation repayment periods are longer, borrowers may pay more in accrued interest Perkins loan loses interest subsidy and some cancellation options However, borrowers will want to consider the trade offs. Because when loans are consolidated, the interest rate is recalculated using a weighted average rounded to the nearest eight percent. Borrowers who choose to consolidate may lose lower interest rates they received just a few years ago. Because the consolidation repayment periods are longer, borrowers may pay more in accrued interest Perkins loan loses interest subsidy and some cancellation options

55. Loan Forgiveness Teacher Loan Forgiveness Borrowers who teach in an elementary or secondary school that is designated as low income may be eligible to have a portion of their Stafford loan debt forgiven Teach five, consecutive years (one year after 1997-98) No outstanding balance on 10/1/98 Teach at a school included on ED’s Teacher Cancellation Low-Income Directory Many students are not aware of the loan forgiveness options that are available. You can help your students by providing this information or putting this information on your web site. Borrowers who teach in an elementary or secondary school that is designated as low income may be eligible to have a portion of their Stafford loan debt forgiven if they teach for five consecutive years (one year after 1997-98). In addition, to qualify, they must have no outstanding balance on 10/1/98 and teach in a school district that qualifies for funds under Title I of the Elementary and Secondary Education Act of 1965, as amended; (more than 30 percent of the school’s total enrollment is made up of children who qualify for services provided under Title I).Many students are not aware of the loan forgiveness options that are available. You can help your students by providing this information or putting this information on your web site. Borrowers who teach in an elementary or secondary school that is designated as low income may be eligible to have a portion of their Stafford loan debt forgiven if they teach for five consecutive years (one year after 1997-98). In addition, to qualify, they must have no outstanding balance on 10/1/98 and teach in a school district that qualifies for funds under Title I of the Elementary and Secondary Education Act of 1965, as amended; (more than 30 percent of the school’s total enrollment is made up of children who qualify for services provided under Title I).

56. Loan Forgiveness Public Service Loan Forgiveness Borrowers who hold a public service job may be eligible to have a portion of their Direct Loan debt forgiven after 120 qualifying monthly payments on or after 10/1/07 Option for borrowers who pursue public service careers, have high debt and lower income A relatively new loan forgiveness program is the Public Service Loan Forgiveness. Borrowers who hold a public service job may be eligible to have a portion of their Direct Loan debt forgiven after 120 qualifying monthly payments on or after 10/1/07 Borrowers with FFELP loans must consolidate into the Direct Consolidation Loan program in order to qualify. Option for borrowers who pursue public service careers, have high debt and lower income CCRAA defines Public Service Jobs as: A full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education (including early childhood education), social work in a public child or family service agency, public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a nonprofit organization), public child care, public service for individuals with disabilities, public service for the elderly, public library sciences, school-based library sciences and other school-based services, or at an organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; or Teaching as a full-time faculty member at a Tribal College or University as defined in section 316(b) and other faculty teaching in high-needs areas, as determined by the Secretary. A relatively new loan forgiveness program is the Public Service Loan Forgiveness. Borrowers who hold a public service job may be eligible to have a portion of their Direct Loan debt forgiven after 120 qualifying monthly payments on or after 10/1/07 Borrowers with FFELP loans must consolidate into the Direct Consolidation Loan program in order to qualify. Option for borrowers who pursue public service careers, have high debt and lower income CCRAA defines Public Service Jobs as: A full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education (including early childhood education), social work in a public child or family service agency, public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a nonprofit organization), public child care, public service for individuals with disabilities, public service for the elderly, public library sciences, school-based library sciences and other school-based services, or at an organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; or Teaching as a full-time faculty member at a Tribal College or University as defined in section 316(b) and other faculty teaching in high-needs areas, as determined by the Secretary.

57. What Should Borrowers Expect During Grace The lender must offer the borrower a choice of repayment schedules, no more than six months before the first payment is due The borrower must select a repayment schedule within 45 days of the lender’s notification If the borrower does not select a schedule, the lender must establish the standard repayment schedule Before the grace period ends, borrowers will receive a coupon book and repayment schedule Per Common Manual (page 381) Lenders must offer all borrowers their choice of repayment schedule no more than 6 months before the first payment due date. A borrower must select a repayment schedule within 45 days of the lender’s notification and advise the lender of that choice. If a borrower does not respond within 45 days—or selects an ISR or an IBR schedule but does not provide the required documentation—the lender must establish a standard repayment schedule. A borrower also may request a change in his or her repayment schedule. A lender must comply with an eligible borrower’s request to revise his or her choice of repayment schedule at least once annually, except that a borrower may request IBR at any time. Per Common Manual (page 381) Lenders must offer all borrowers their choice of repayment schedule no more than 6 months before the first payment due date. A borrower must select a repayment schedule within 45 days of the lender’s notification and advise the lender of that choice. If a borrower does not respond within 45 days—or selects an ISR or an IBR schedule but does not provide the required documentation—the lender must establish a standard repayment schedule. A borrower also may request a change in his or her repayment schedule. A lender must comply with an eligible borrower’s request to revise his or her choice of repayment schedule at least once annually, except that a borrower may request IBR at any time.

58. What Should Borrowers Do During Grace Contact their lender/servicer if they had a change in their name, address, or phone number Many borrowers move after graduation so it’s important that they inform the lender/servicer of these changes Use calculators Determine their monthly payment Find the plan to meet their goal Borrowers shouldn’t treat their grace period like a vacation (although many do). It really should be a time to prepare for repayment. Strongly encourage them to: Contact their lender/servicer if they had a change in their name, address, or phone number Many borrowers move after graduation so it’s important that they inform the lender/servicer of these changes. If they move and the lenders can not locate them, then they won’t get their payment schedule, coupon book, and other important information on their loan. Grace period is another time to use calculators. Determine their monthly payment Find the plan to meet their goal Successful planning during the grace period will help to put them on the right road for successful repayment.Borrowers shouldn’t treat their grace period like a vacation (although many do). It really should be a time to prepare for repayment. Strongly encourage them to: Contact their lender/servicer if they had a change in their name, address, or phone number Many borrowers move after graduation so it’s important that they inform the lender/servicer of these changes. If they move and the lenders can not locate them, then they won’t get their payment schedule, coupon book, and other important information on their loan. Grace period is another time to use calculators. Determine their monthly payment Find the plan to meet their goal Successful planning during the grace period will help to put them on the right road for successful repayment.

60. Keeping in Touch with Their Lenders Stress importance of informing each lender/ servicer of changes to Name Address Telephone number 50-60% of all borrowers who default are in “skip” on the date of default Whether it’s during entrance or exit counseling or any time throughout the year, stress importance of informing each lender/ servicer of changes to Name Address Telephone number That’s because 50-60% of defaulted borrowers can’t be found. If we only had valid contact information, we would be able to let them know that there is help and resources available to them so they don’t have to default on their loan. Whether it’s during entrance or exit counseling or any time throughout the year, stress importance of informing each lender/ servicer of changes to Name Address Telephone number That’s because 50-60% of defaulted borrowers can’t be found. If we only had valid contact information, we would be able to let them know that there is help and resources available to them so they don’t have to default on their loan.

61. Readjust Their Plan Borrowers can change their Payment due date Repayment plan If the student encounters difficulty paying, remind them of their options Deferment Forbearance Borrowers should also know that they can readjust their plan if their life circumstances changes: Let’s say a borrower doesn’t get paid until the 15th but they payment is due on the 1st. If the payment due date doesn’t work for them, then they can request one that does. If they can’t afford their payment under the standard repayment plan or want to request a new plan for various reasons, then they can do that too. If the student encounters difficulty paying, remind them of their options. Deferment and forbearance will provide relief of making a payment and can even be used to cure a delinquent loan.Borrowers should also know that they can readjust their plan if their life circumstances changes: Let’s say a borrower doesn’t get paid until the 15th but they payment is due on the 1st. If the payment due date doesn’t work for them, then they can request one that does. If they can’t afford their payment under the standard repayment plan or want to request a new plan for various reasons, then they can do that too. If the student encounters difficulty paying, remind them of their options. Deferment and forbearance will provide relief of making a payment and can even be used to cure a delinquent loan.

62. Deferment Postponement of loan payments that a borrower is entitled to as long as he/she meets eligibility requirements Borrower’s eligibility depends on him/her meeting specific criteria; the loan type; and the date the borrower received his/her first loan In most cases, borrowers must request a deferment and provide documentation necessary to support eligibility. Some deferments are automatic (e.g.,in-school deferment) Deferments will postpone the loan payment. Borrowers are entitled to deferments but their eligibility depends on him/her meeting specific criteria; the loan type; and the date the borrower received his/her first loan. In most cases, borrowers must request a deferment and provide documentation necessary to support eligibility. Some deferments are automatic (e.g., in-school deferment). Deferments will postpone the loan payment. Borrowers are entitled to deferments but their eligibility depends on him/her meeting specific criteria; the loan type; and the date the borrower received his/her first loan. In most cases, borrowers must request a deferment and provide documentation necessary to support eligibility. Some deferments are automatic (e.g., in-school deferment).

63. Deferment The federal government pays the accruing interest on subsidized loans All deferments are borrower-specific Time limits are enforced for each borrower Borrowers are entitled to a deferment if they meet eligibility requirements Today, economic hardship and unemployment are the most used deferments The federal government pays the accruing interest on subsidized loans - borrowers may pay interest on unsubsidized and PLUS loans while in school or the interest is capitalized As a result of the struggling economy, it’s no surprise that economic hardship and unemployment are the most used deferments.The federal government pays the accruing interest on subsidized loans - borrowers may pay interest on unsubsidized and PLUS loans while in school or the interest is capitalized As a result of the struggling economy, it’s no surprise that economic hardship and unemployment are the most used deferments.

64. Deferment Criteria Chapter 11 of the Common Manual provides more detail on the deferment criteria.Chapter 11 of the Common Manual provides more detail on the deferment criteria.

65. Deferment Roadblocks Changes to eligibility requirements for economic hardship deferment Borrowers who had an HRD deferment, now do not qualify even though their financial situation is the same 40-45% of deferment applications are rejected Supporting documentation not included Incomplete application Borrowers do not know to apply for a deferment with all of their lenders These are the deferment roadblocks for students. The College Cost Reduction and Access Act of 2007 removed the 20/220 rule from the eligibility standards for a economic hardship deferment. Borrowers who had an HRD deferment, now do not qualify even though their financial situation is the same. 40-45% of deferment applications are returned (for similar reasons as with IBR) Supporting documentation not included Incomplete application Borrowers do not know to apply for a deferment with all of their lenders, therefore they might have one loan in a deferment and stop making payments on the others.These are the deferment roadblocks for students. The College Cost Reduction and Access Act of 2007 removed the 20/220 rule from the eligibility standards for a economic hardship deferment. Borrowers who had an HRD deferment, now do not qualify even though their financial situation is the same. 40-45% of deferment applications are returned (for similar reasons as with IBR) Supporting documentation not included Incomplete application Borrowers do not know to apply for a deferment with all of their lenders, therefore they might have one loan in a deferment and stop making payments on the others.

66. Forbearance Temporary postponement, reduction, or repayment extension of loan payments Interest accrues on all loans during the forbearance Borrower’s first payment is due no later than 60 days after the date the forbearance expires Offered at the discretion of the lender (except mandatory forbearance) Forbearance is a temporary postponement, reduction, or repayment extension of loan payments Interest accrues on all loans during the forbearance Borrower’s first payment is due no later than 60 days after the date the forbearance expires Offered at the discretion of the lender (except mandatory forbearance) Forbearance is a temporary postponement, reduction, or repayment extension of loan payments Interest accrues on all loans during the forbearance Borrower’s first payment is due no later than 60 days after the date the forbearance expires Offered at the discretion of the lender (except mandatory forbearance)

67. Forbearance Generally granted for up to 12-month intervals, but lenders set the maximum amount of forbearance time allowed and it varies from lender to lender Four types of forbearance: Administrative forbearance Discretionary forbearance Mandatory forbearance Mandatory administrative forbearance Four types of forbearance: Administrative – not eligible for a deferment or resolve delinquency before deferment Discretionary – financial difficulties due to personal problems Mandatory – medical residency or maintaining forgiveness with TLF Mandatory administrative – local or national emergency (example - Hurricane Katrina) Four types of forbearance: Administrative – not eligible for a deferment or resolve delinquency before deferment Discretionary – financial difficulties due to personal problems Mandatory – medical residency or maintaining forgiveness with TLF Mandatory administrative – local or national emergency (example - Hurricane Katrina)

69. Offer Supplemental Counseling Consider offering additional counseling to reach students One-on-one exit counseling Group or in-person exit counseling NSLDS training for students Benefits of conducting in-person counseling Assures “high risk” populations get the information they need to be successful Can gauge student’s level of understanding Questions can be answered As efficient as online counseling is, it’s not always the most effective with sharing complicated and detailed information. Consider offering additional counseling to reach students One-on-one exit counseling Group or in-person exit counseling NSLDS training for students Benefits of conducting in-person counseling Assures “high risk” populations get the information they need to be successful Can gauge student’s level of understanding Questions can be answeredAs efficient as online counseling is, it’s not always the most effective with sharing complicated and detailed information. Consider offering additional counseling to reach students One-on-one exit counseling Group or in-person exit counseling NSLDS training for students Benefits of conducting in-person counseling Assures “high risk” populations get the information they need to be successful Can gauge student’s level of understanding Questions can be answered

70. What Else Can You Do? Add these links to your school’s website studentaid.ed.gov nslds.ed.gov annualcreditreport.com finaid.org Send mailings or e-mail messages on how to access NSLDS and find cumulative loan indebtedness Other things you can do to help get this important information to your students: Add these links to your school’s website mygreatlakes.org nslds.ed.gov annualcreditreport.com Send mailings or e-mail messages on how to access NSLDS If your FAMS tracks it, send letters to students with loan indebtedness (if you can send it every year, it will remind students of the debt that’s increasing) Other things you can do to help get this important information to your students: Add these links to your school’s website mygreatlakes.org nslds.ed.gov annualcreditreport.com Send mailings or e-mail messages on how to access NSLDS If your FAMS tracks it, send letters to students with loan indebtedness (if you can send it every year, it will remind students of the debt that’s increasing)

71. What Else Can You Do? Schedule a student seminar with one of your lenders/servicers Leverage resources available from loan partners Brochures Online tools On-campus presentations Share online resources Repayment calculators Deferment/forbearance forms Loan forgiveness options

72. Conclusion Reality 1 Students entering repayment are facing new challenges Reality 2 Students have options to help them successfully repay their student loans Reality 3 You have tools and resources available to help students face these new realities In conclusion: Reality 1 - Student are facing new challenges with repayment but these challenges can be met with realties 2 and 3: Students have options to help them successfully repay their loans You had tools and resources, such as Great Lakes, available to help students face these new realitiesIn conclusion: Reality 1 - Student are facing new challenges with repayment but these challenges can be met with realties 2 and 3: Students have options to help them successfully repay their loans You had tools and resources, such as Great Lakes, available to help students face these new realities

73. Thank You! Dave Bowman Great Lakes Higher Education Corporation dbowman@glhec.org Nancy Masten Great Lakes Higher Education Guaranty Corporation nmasten@glhec.org