Public Service Loan Forgiveness and Career Paths

1. Public Service Loan Forgiveness and Career Paths Presented by: Student Financial Services and Career Services

2. Pop Quiz! What is the number one question you should ask yourself before considering Public Service Loan Forgiveness?

3. Loan Forgiveness • Public Service Loan Forgiveness – eff. 10/1/07 • Right Loans – Right Job – Right Payments • Direct Loans Only (may need to consolidate) • Public Service – full-time employment for 10 years • 120 qualifying payments (ICR, IBR, PAYE, or Standard Repayment plans only) made within 15 days of the due date – only payments made after 10/1/2007 count • Balance of loans forgiven – not taxable • http://studentaid.ed.gov/publicservice • www.IBRInfo.org • www.equaljusticeworks.org (Checklist & Webinars)

4. Public Service Loan Forgiveness

5. Loans Eligible for PSLF • Federal Direct Subsidized Stafford Loans • Federal Direct Unsubsidized Stafford Loans • Federal Direct GradPLUS Loans • Federal Direct Consolidation Loans

6. FFEL Subsidized/Unsubsidized Stafford Loans FFEL PLUS Loans for grad/professional students FFEL Consolidation Loans (excluding joint spousal consolidation loans) Federal Perkins Loans (pros/cons) Certain Health Professions and Nursing Loans Other Federal Loans may qualify for PSLF if consolidated into a Direct Consolidation Loan

7. In Summary… • DIRECT LOANS ONLY • FFEL Loans must be consolidated into a Direct Loan • Perkins Loans are only eligible if part of a Direct Consolidation Loan (pros/cons) • Alternative/Commercial Loans are NOT eligible loans for PSLF

8. PSLF – Qualifying Employment Full-time Paid Work

9. Non-Profit Organizations • Universities • Hospitals • NGOs • Government • Foundations • Charitable Organizations • Research Institutes

10. Where To Look • Career Connect • Crimson Compass • CSO Career Resources, such as: • WWW.IDEALIST.ORG • WWW.HERC.ORG • WWW.USAJOBS.GOV • WWW.NON-PROFITJOBS.ORG • Organization’s Website

11. HSPH Graduate Salary Ranges More than 85% of HSPH Grads take jobs with non-profit organizations • ScD = $40,000-$150,0001 • MPH = $30,000-$150,0002 • MS1 = $80,000 - $150,000+3 • MS2 = $30,000-$100,0004 1Lower end includes post-docs & fellowship 2Have another professional degree andexperience 3Mid-career, very experienced 4Depends on education andexperience

12. Food for Thought… The $40,000 yearly salary versus the $120,000 salary

13. Definition of “Full-time” for Qualifying Employment • Full-time means working in qualifying employment in one or more jobs for the greater of: • An annual average of at least 30 hours weekly or • For a contractual or employment period of at least 8 months, an average of 30 hours per week; or • Unless the qualifying employment is with two or more employers, the number of hours the employer considers full-time • Employment Certification Form for PSLF

14. PSLF – Employment Certification • FedLoan Servicing • Ongoing - Track Employment • Procedure to be set by ED • Must be in qualified employment at time of forgiveness

15. PSLF – Qualifying Repayment Plans • ICR – Income-Contingent Repayment • IBR – Income-Based Repayment • PAYE – Pay As You Earn • Standard 10-year Repayment Plan

16. Income-Contingent Repayment (ICR) • Direct Loans ONLY - Consider Loan Consolidation • Monthly payment is based on: • Annual income (plus spouse if married) • Family size • Total loan amount • Lesser of 12-year standard plan amount X income % factor or 20% discretionary income. • As your income changes, so do the payments. • 10% interest capitalization benefit • After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount discharged. • StudentAid.ed.gov/ICR

17. Income-Based Repayment (IBR) • Direct Loans and FFEL Loans • Monthly payment based on your income during any period of partial financial hardship (PFH) – may be $0 per month • Maximum payments are 15% of discretionary income • Monthly payment may be adjusted annually • Maximum repayment period up to 25 years • Will qualify for cancellation of any outstanding loan balance after 25 years but may be taxable • Interest capitalization if no PFH or if leave IBR • Medical residents – IBR replaces the economic hardship deferment option • StudentAid.ed.gov/IBR and www.IBRinfo.org

18. Pay As You Earn Repayment (PAYE) • Direct Loans ONLY – Consider Loan Consolidation • New borrower as of 10/1/2007 AND received a new loan on/after 10/1/2011 • Monthly payment based on income during any period of partial financial hardship – may be $0 per month • Maximum payments are 10% of income • Monthly payment may be adjusted annually • Maximum repayment period is up to 20 years • Will qualify for cancellation of any outstanding loan balance after 20 years but may be taxable • 10% limit on interest capitalization if no PFH or if leave PAYE • Medical residents – PAYE replaces the economic hardship deferment • StudentAid.ed.gov/PAYE

19. What are some differences between ICR, IBR, and PAYE? • IBR- available for FFEL and Direct Loans. ICR/PAYE- Direct Loans Only • To qualify for IBR/PAYE, you must have a “partial financial hardship”. There is no comparable requirement for ICR. • The amount of loan debt is not considered in determining the IBR/PAYE payment amount – (only family size and income). • The required monthly payment under ICR is generally higher than under IBR/PAYE, and in some cases it may be higher than the monthly payment under a 10-year standard repayment plan. • IBR/PAYE – if the calculated monthly payment does not cover the full amount of interest that accrues on the loans the government pays the remaining unpaid accrued interest on subsidized loans for up to three consecutive years. This benefit is not available under ICR. • Under IBR/PAYE unpaid interest is capitalized only if you are determined to no longer have a “partial financial hardship”, or if you choose to leave the IBR/PAYE Plan. Under ICR, unpaid interest is capitalized annually (10% cap).

20. Who Has a Partial Financial Hardship? - IBR/PAYE Calculator Source: Jeff Hanson, Ph.D., Director of Borrower Education, Access Group, Inc. Assumption: Interest rate = 6.8%; 2012 Poverty Guidelines; Household size of 1 residing in 48 contiguous states

21. IBR – Monthly Payment Amount Source: U.S. Department of Education

22. PAYE – Monthly Payment Amount Source: U.S. Department of Education

23. How do I apply for ICR/IBR/PAYE? • Review NSLDS at www.nslds.ed.gov for federal loan types and loan servicers • If there are multiple loan servicers, the borrower must apply to each loan holder to qualify on all loans or consolidate loans • StudentLoans.gov • Repayment Estimator – compare all repayment plans

24. IBR/PAYE/ICR Repayment Plan Request Form • How to Apply • StudentLoans.gov • Online process • Check with Servicer • Check Box on Plan Request Form Servicer will determine plan eligibility & lowest monthly payment

25. What is loan consolidation? • Multiple federal loans are combined into one new Direct Consolidation Loan • A simple way to manage debt - One servicer - One payment • Changes interest rate from variable (DL/FFEL prior to 06-07) to a fixed rate – calculates a weighted average • Must be in grace period, repayment, or deferment (not in-school deferment status) to consolidate • Married borrowers CANNOT consolidate loans together • www.loanconsolidation.ed.gov – 800-557-7392 or StudentLoans.gov – select 1 of 4 federal loan servicers (FedLoan Servicing for PSLF)

26. Perkins Loans & Consolidation • Perkins has a fixed interest rate of 5% which is weighted into the new interest rate • May lose deferment subsidies if consolidate (9 month grace period) – may request processing delay • Loan becomes Unsubsidized when consolidated • Lose valuable loan cancellation options. Harvard Student Loan Office provides cancellation options that you should review before consolidation. • Harvard Website for Perkins

27. More on Consolidation • If all loans have a fixed interest rate there is no rush to consolidate to secure a lower interest rate; the calculated rate will be the same now or 5 years into repayment • If you have a Federal Consolidation Loan you can re-consolidate only if you have new loans to join with that loan; or if your Consolidation Loan is not a Direct Loan • Educational Loans are not like home mortgages • Private Loans cannot be consolidated with Federal Loans • Although you may be able to combine private loans from various lenders with a company, it is likely that your private loan interest rate will remain variable. • Credit card debt cannot be consolidated through the federal loan consolidation process

28. Other Financial Considerations • Beware of Private Loans offering low variable interest rates • If you consolidate and extend payments • Consider pre-paying a private loan • Paying off credit card debt or other consumer loans with higher interest • Invest – 401(k), 403(b), 459, IRA, stock • Be aware of “interest” paid and capitalization • Consider tax implications and benefits • Think about future income and career plans

29. Other Loan Forgiveness & Cancellation Options • NIH Loan Repayment Programs - http://www.lrp.nih.gov/ • Teach/Practice Medicine in certain communities • Volunteer Work • Americorps • Peace Corps • VISTA • Military Service • Forgiveness, Cancellation, Discharge Chart • FINIAD.org Loan Forgiveness • Perkins Loans – Harvard Student Loan Office • National Health Service Corps

30. Proposals for Changes to PSLF • Limiting PSLF to $57,500 and then borrower pays for an additional 15 years for forgiveness of the remainder of the debt • Making the forgiven amount taxable • Grandfathering? • Contact your Congressional Representatives • Stay informed!

31. In Conclusion Please feel free to contact us OSFS - osfs@hsph.harvard.edu 617-432-1867 Career Services - careers@hsph.harvard.edu 617-432-1034