Transcript Slide 1

2015 Counselor Training
Paying For College Strategies
after all of the student’s “free” money has been exhausted
OASFAA is a non-profit
organization
OASFAA has provided the information
today as a free service
to access staff and high school
counselors
You have permission to copy and distribute these materials to your students and
families. Charges may not be assessed for the material or for the information
presented. Permission must be granted for other use of this information or
these materials. Contact the Outreach Chairperson listed on the OASFAA
web site or e-mail: [email protected]
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Agenda
 Counseling Framework
 Federal Student Loans
 After Stafford or Gap Financing
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How does America pay for college?
Sources of Funds for College by Percentage
Source: Sallie Mae “How America Pays for College,” 2009
“There are only 3 Ways To Pay for College”
 Before
 Savings from Summer Job
 Income protection allowance - $6,310
 Gifts – Holidays, birthdays…
 Summer classes at CC after Senior Year
 Parents - planning opportunity - 529
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“There are only 3 Ways To Pay for College”
 During - Families are not in this alone!
 File the FAFSA to find out eligibility for
Grants (federal and state) and Scholarships
(from the school "outside“)
 Work study
 Summer classes, summer jobs
 Parents – Tuition Payment Plans
 Tax credits (Consult your tax advisor)
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“There are only 3 Ways To Pay for College”
 After
 Federal Student Loans
 Perkins
 Direct Subsidized and Unsubsidized Loans (aka
Stafford)
 Parent PLUS versus Private Loans
 Other financing
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Perkins Loans, 2015-2016
2015-2016 will be the last year for the Perkins Loan
without new legislation.

Many schools are not awarding to new students (only to
returning students).
Eligible students (priority to exceptional need)


Undergraduate or graduate students
Must file the FAFSA
Annual and aggregate loan limits


up to $5,500 annually for undergraduates
(actual awards, if any, will vary between schools)
$27,500 aggregate for undergraduates
Interest rate: 5% (fixed) during repayment

Interest subsidized during in-school and nine-month grace period
Deferment and cancellation provisions available
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Direct Loans, 2014-2015
Direct Subsidized and Unsubsidized Loans are
two separate, unique types of loans that are
awarded separately.
Subsidized
Unsubsidized
Need based
Not based on financial need
Interest is fixed at 4.66% for new
Interest is fixed at 4.66% for all
undergraduate loans disbursed new loans disbursed during 2014during 2014-15*. Interest is
15*. Interest accrues from time
subsidized while the student is in
of disbursement of the funds.
school and during deferment.
*Interest rates recalculated annually and are effective July 1st based on
the 10-year Treasury note index plus 2.05%, capped at 8.25%
Direct Loans, 2014-2015
Class Year
Base Amount
Additional
Unsubsidized
Amount
Freshman
$3,500
$2,000
$5,500
Sophomore
$4,500
$2,000
$6,500
Junior
$5,500
$2,000
$7,500
Senior
$5,500
$2,000
$7,500
Total Available
to Borrow
Independent Students and Dependent Students whose parents
have been denied the PLUS Loan are eligible for additional
Unsubsidized Stafford Loans ($4,000 as Freshmen and
Sophomores and $5,000 as Juniors and Seniors)
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Direct Loans, 2014-2015
•Subsidized and Unsubsidized
Loans
• 1.073% origination fee.
•Parent and Graduate PLUS
• 4.292% origination fee.
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Direct Loans, 2014-2015
FAFSA
Follow
instructions at
school attending
Entrance
Counseling
MPN
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IBR – Income Based Repayment
 Available to federal loan borrowers experiencing
financial hardship
 Borrower qualifies if annual monthly student loan
payments exceed 15% of “discretionary income”
 If eligible for IBR, borrower’s monthly payment will be
determined by a formula that takes into account
household size and adjusted gross income. Increases
in income will impact the required monthly payment
amount
 Unpaid balance may be forgiven after 25 years of
scheduled monthly payments
Pay As You Earn
•Available to new Direct loan borrowers (except Parent PLUS)
experiencing financial hardship
• No loan balance as of October 1, 2007, and
• Received a Direct loan on or after October 1, 2011
•Borrower qualifies if annual monthly student loan payments
exceed 10% of “discretionary income”
•Similar to IBR, borrower’s monthly payment will be determined
by a formula that takes into account family size and adjusted
gross income. Increases in income will impact the required
monthly payment amount
•Unpaid balance may be forgiven after 20 years of qualifying
repayment (which is a taxable event)
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Public Service Loan Forgiveness
120 qualifying payments on Direct Loans while
on qualified repayment plans while working at a
qualified employer.
• Borrower must also be employed by a
qualifying organization at the time that the
borrower applies for and receives PSLF
• According to the IRS, the forgiven amount is
not treated as taxable income
Source: Slide 39, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”
Public Service Loan Forgiveness
Qualifed employer.
• Any government organization
• 501(c)3 not-for-profit organization
• Other not-for-profit organizations providing
specific qualifying services
Does not matter what the borrower’s job duties
are
Borrower can work at multiple organizations
Source: Slide 43, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”
Public Service Loan Forgiveness
Qualified Repayment Plans
• 10 year standard
• ICR
• IBR
• Pay As You Earn
• Others>= 10-Year Standard (Any other Direct
Loan Repayment Plan, but only payments that
are at least equal to the standard payment)
Source: Slide 41, FSA Conference 213, “Pay As You Earn & Other Income-Driven Repayment Plans”
IBR and PSLF FAQ’s
Federal Student Aid Public Service Loan
Forgiveness Frequently Asked Questions
• https://studentaid.ed.gov/sites/default/files/
public-service-loan-forgiveness-commonquestions.pdf
Income-Based Repayment Program Questions
and Answers
• https://studentaid.ed.gov/sites/default/files/
income-driven-repayment.pdf
Student Loan Calculator
Department of Education
• http://studentaid.ed.gov/repayloans/understand/plans/incomebased/calculator
• Allows you to pull in your actual loans from
NSLDS and project your payment, total
interest, repayment term, etc. under
different payment plans.
“After Federal Unsub” or Gap
Counseling
 Tuition Payment Plan (student and/or Parent)
 Parent PLUS
 Home Equity Line of Credit
 Retirement Plan Loans
 Roth IRA
 401(k)
 Private Student Loans
 Importance of Providing Planning Framework
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 Connect future loan payment to earnings.
Parent PLUS
•Parent PLUS Loans
• Loans to parents of dependent students.
• Loan limits are up to the cost of education less any
financial aid received.
• Interest rate is 7.21% fixed*.
• Repayment begins within 60 days of full
disbursement. Payments may be deferred while the
student is in school.
• FAFSA completion is required.
*Interest rates recalculated annually and are effective July 1st based
on the 10-year Treasury note index plus 4.60%, capped at 10.50%
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