NYPIRG Presents Student Loans: A Student Empowerment Series Workshop

1. NYPIRG Presents Student Loans: A Student Empowerment Series Workshop

2. NYPIRG is… • Student directed not-for-profit advocacy organization • Six issue-based campaigns • Among other things, NYPIRG chapter is a resource which provides workshops addressing civic action, organizing, leadership, financial literacy, student housing/tenants rights and student loans

3. Objectives • Provide student loan debt history • Review student loan types • Explore payment plans • Discuss options when money gets tight • Identify loan forgiveness programs • Discuss federal student loan legislation • Free money? Free money!!

4. Student Loan Debt History • Student loan debt is topping $1 trillion. • 37 million Americans hold outstanding student loan debt • 2.7 million of those debt holders are New Yorkers • Nationally, the average amount of student loan debt for the Class of 2011 was $26,600. • New York graduates carrying student loan debt had an average debt of $27,310. • On this campus the average student graduating with debt owes…

5. Student Loan Debt History, cont’d • Among all bachelor's degree recipients, median debt was: • $7,960 at public four-year institutions • $17,040 at private not-for-profit four-year institutions • 31,190 at for-profit institutions. • Pell Grant recipients are much more likely to borrow and to borrow higher sums • 24,800 NYS borrowers defaulted on their student loans or were more than nine months delinquent on their payments between 2009 and 2012. • Recent federal student loan interest rate debates have brought more attention to the issue.

6. How the Credit Crisis is Affecting Student Loans • Some students had to change lenders • Investors are buying less loans • Lenders are offering fewer “deals” • Some colleges are switching from the Federal Family Education Loan Program (FFELP) to the Federal Direct Student Loan Program (FDSLP) • Private loans are harder to get

7. How the Credit Crisis is not Affecting Student Loans • Students can still get federal loans, regardless of their financial need • Interest rates and terms on all federal loans remain the same once you take them out

8. Types of Student Loans Perkins Loan Stafford Loan PLUS Loan Private Loans

9. Perkins Loan: Basics • No credit check • Loans for students with “exceptional need” • For undergraduate and graduate students • College acts as the lender • Must submit FAFSA (Free Application for Federal Student Aid) and complete a Perkings promissory note • Subsidized • Loan forgiveness for certain occupations

10. Perkins Loan: Terms • 5% interest rate • No fees • 10-year repayment period • 9-month grace period

11. Stafford Loan: Basics • No credit check • No income requirement • For undergrad, grad/professional, med students • Subsidized and/or unsubsidized • Borrow directly from federal government • Must submit FAFSA • Loan forgiveness for certain occupations

12. Stafford Loan Interest Rates

13. Stafford Loan: Terms • Interest rates this year are 3.86% • 1% origination fee • 10 years repayment period • 6-month grace period

14. PLUS Loan: Basics • For parents and grad/professional students • Requires credit check • Unsubsidized • Borrow directly from U.S. Department of Education • Must submit a FASFA form, promissory note and grads much complete counseling

15. PLUS Loan: Terms • Fixed 6.41% interest rate • 4.2% fees • Max loan amount is cost of attendance minus other financial aid received • Repayment begins 60 days after disbursement • Can make interest only payments • Grad borrowers can defer while in school, but must start paying back as soon as they leave (no grace period) • Parents can defer while child is in school • Parents get a 6-month grace period

16. Private Loan: Basics • Offered by banks and other private lenders • Not secured by the federal government • May be more expensive, higher interest • Subject to credit approval • Often need a cosigner • Marketed aggressively • Harder to get in current economy *Avoid private loans if you can

18. Which loans do you have? • Look it up in the National Student Loan Data System • Website: www.nslds.ed.gov • Ask the financial aid office

19. Managing Student Loan Debt Consolidation Payment Plans DiscountsRecent Student Loan Debt-Relief

20. Consolidation Basics • Refinancing several student loans you have to pay off together. • Previous interest rates get averaged for new repayment rates. *Federal Direct Loan Consolidation program www.loanconsolidation.ed.gov

21. Special Direct Consolidation Loans Only offered between January to June 2012 • What are Special Direct Consolidation Loans? • Who is eligible for a Special Direct Consolidation Loan? • What federal student loans are eligible for the Special Direct Consolidation Loan program?

22. Special Direct Consolidation Loans • Benefits • Interest rate reduction • Repayment term will not be changed • Credit for previous IBR Payments • Eligibility for loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program

23. How are Special Direct Consolidation Loans different than traditional Direct Consolidation Loans?

25. Payment Plans Standard Graduated Extended Payments Based on Income

27. Payment Plans Based on Income Income Contingent • For FDLP borrowers • Formula determines monthly payments • Enroll once • Remaining balance forgiven after 25 years Income Sensitive • For FFELP borrowers • Pay fixed percentage of monthly income • Reapply every year • Length of loan is 10 years Income Based • For FDLP and FFELP borrowers • More generous formula determines monthly payments • Enroll once • Remaining balance forgiven after 25 years

28. Income-Based Repayment Plan • What is income-based repayment? • What federal student loans are eligible to be repaid under an IBR plan? • Who is eligible for IBR? • How do borrowers apply for IBR?

29. Income-Based Repayment Plan • What are the benefits of IBR? • Pay as you earn • Interest payment benefit • 25-year cancellation • 10-year public service loan forgiveness

31. Recent Student Loan Debt-Relief Obama's Student Loan Debt-Relief Plan • Caps loan payment at 10% (from 15%) starting July 12’ • Forgives balances after 20 years (from 25 years) • Benefits • Pay as you earn and interest payment benefit • 20-Year balance forgiveness • 10-Year public service forgiveness • What it doesn’t cover • Anyone who took out loans before 2008 (who won’t be taking out more loans starting now). • Purely private loans and defaulted loans • You may pay more interest

32. When Student Loan Debt Seems Unmanageable Stay Out of Default Deferment Forbearance Other Ways to Avoid Default Income-Based Repayment Plan

33. Default 9 months of missed payments Entire loan becomes due Lender uses “aggressive” collections methods Delinquency and Default Delinquency • Fall behind on payments • Calls and notices from lender • Late fees • Lender reports missed payments to credit bureaus

34. Effects of Defaulting Collection agencies Lawsuits Paychecks may be garnished Income tax refunds seized Ineligible for state and federal aid Credit damaged Filing for bankruptcy will not effect a loan in default

35. Deferment • Temporary break from payments for: • Enrolled college students • Unemployed borrowers • Borrowers facing economic hardship • Peace Corps enrollees • Active military personnel • No interest accrues on subsidized loans

36. Forbearance • For borrowers who don't qualify for a deferment but need a break • Lasts up to 12 months • Renewed for up to 3 years • You pay the interest

37. Other Ways to Avoid Default • Borrow as little as possible • Income Based Payment Plans • Get help making a budget

38. Loan Forgiveness Programs • Forgive all or part of your student loan • Encourage high-needs or public-service work • Perkins loan has many such opportunities • For detailed information go to: http://www.finaid.org/loans/publicservice.phtml

40. Free Money? Think Aid/Grants/Work Study First • Federal Student Aid, an office of the U.S. Department of Education, ensures that all eligible individuals can benefit from federally funded financial assistance for education beyond high school. • Tuition Assistance Program • A New York State funded grant program that helps pay the tuition of eligible full-time and part-time students. If you receive a TAP award, the money comes directly to the college for payment of your tuition. • New York State Higher Education Services Corporation • http://www.hesc.com/content.nsf • Foundation Center • www.foundationcenter.org • CUNY CAPS (Counseling Assistantship Program) • http://www.cuny.edu/employment/student-jobs/jobs/counsel-assist-prog.html • SUNY Assistantships • Student receives a stipend and/or tuition scholarship; each SUNY school varies, reach out to Financial Aid Office

41. For Help with Your Loans www.collegefinancecenter.org www.studentaid.ed.gov www.finaid.org www.mappingyourfuture.org www.obudsman.ed.gov www.oag.state.ny.us www.nslds.ed.gov http://www.finaid.org/loans/forgiveness.phtml Resources For Info & Research www.studentdebtalert.org www.projectonstudentdebt.org http://college-insight.org http://edlabor.house.gov http://studentaid.ed.gov/PORTALSWebApp/students/english/specialconsolidation.jsp http://studentaid.ed.gov/students/publications/student_guide/2010-2011/english/typesofFSA_loans_2.htm http://www.theatlantic.com/business/archive/2011/10/who-qualifies-for-obamas-10-student-loan-payment-cap/247470/ http://www.csmonitor.com/USA/Politics/2011/1025/Obama-s-student-loan-debt-relief-plan-too-good-to-be-true