Transcript 2016 AAMC Exit Presentation

Student Loans
and Repayment Strategies
Prepared for the Graduating Class of 2016
Spring 2016
Disclaimer: All information and estimates are based on AAMC interpretation of federal regulations as of January 2016 and are subject
to change. These are estimates only. Students should contact their servicer(s) to discuss exact loan balances and repayment options.
Why do I Need to Know This?
© 2016 Association of American Medical Colleges. All rights reserved.
Oh, That’s Why!
© 2016 Association of American Medical Colleges. All rights reserved.
Agenda
Know Your Loans
What Happens After Graduation
Repayment Plans
How Repayment Looks in Residency
Other Considerations
© 2016 Association of American Medical Colleges. All rights reserved.
Online Resource
Education Debt Manager (EDM)
www.aamc.org/first/graduating-edm
© 2016 Association of American Medical Colleges. All rights reserved.
Know Your Loan Portfolio
© 2016 Association of American Medical Colleges. All rights reserved.
Class of 2015 Indebtedness
Refer to page 3
Median MD School Debt: $183,000
PUBLIC
PRIVATE
$180,000
$200,000
Source: AAMC 2015 Graduate Questionnaire (GQ)
81% ofGot
classPrivate
report having
Loaneducational
Debt? debt
45% report see
debt page
of $200,000
61 or higher
© 2016 Association of American Medical Colleges. All rights reserved.
Master Promissory Note
Refer to page 9
Is a contract with the lender
Has a multi-loan feature
Details terms and conditions
Includes rights & responsibilities
© 2016 Association of American Medical Colleges. All rights reserved.
Rights and Responsibilities
Refer to page 9
Prepay any federal loan
without penalty
Change repayment plans
Request a deferment or
forbearance
Request a shorter
repayment schedule
Review your promissory
note for all rights
© 2016 Association of American Medical Colleges. All rights reserved.
Rights and Responsibilities
Refer to page 9
Make on time loan
payments
Make payments despite
non-receipt of bill
Notify the servicer of
changes in contact info
Complete exit counseling
Review your promissory
note for all responsibilities
© 2016 Association of American Medical Colleges. All rights reserved.
A Serious Obligation
Refer to page 9
Student loans must be repaid
Manage
your debt don’t let it
manage you
© 2016 Association of American Medical Colleges. All rights reserved.
Consequences
Refer to page 10
© 2016 Association of American Medical Colleges. All rights reserved.
Loan Discharge
Refer to page 11
© 2016 Association of American Medical Colleges. All rights reserved.
Finding Your Federal Loans
Refer to page 6
To access, provide your
FSA ID, including :
Username/Password
For questions, visit
www.fsaid.ed.gov
www.nslds.ed.gov
© 2016 Association of American Medical Colleges. All rights reserved.
Subsidized Versus Unsubsidized
Refer to page 12
Subsidized
Direct Subsidized
Perkins Loans*
Primary Care Loans
4444
Loans for Disadvantaged
Students*
Institutional Loans
(some)
Unsubsidized
Direct Unsubsidized
Direct PLUS
Private Loans
4444
Institutional Loans
(some)
Consolidation Loans
(underlyng subsidized loans)
Consolidation Loans
(underlyng subsidized loans)
* subsidy and deferment rights lost during consolidation
© 2016 Association of American Medical Colleges. All rights reserved.
Fixed Interest Rates for the Class of 2016
Refer to pages 13-14
M3
M4
2013-2014
2014-2015
2015-2016
PERKINS*
PERKINS*
PERKINS*
PERKINS*
DIRECT
UNSUBSIDIZED
DIRECT
UNSUBSIDIZED
DIRECT
UNSUBSIDIZED
DIRECT
UNSUBSIDIZED
DIRECT PLUS
DIRECT PLUS
DIRECT PLUS
DIRECT PLUS
M1
M2
2012-2013
* Perkins, PCL and LDS Loans are disbursed at a fixed rate of 5%. All loans shown have a fixed interest rate.
© 2016 Association of American Medical Colleges. All rights reserved.
Capitalization
Refer to page 15
Addition of unpaid interest to the principal
Principal
+ Interest
© 2016 Association of American Medical Colleges. All rights reserved.
=
Larger
Principal
Repayment Tips
When sending voluntary payments:
1) Send as a separate payment
- Instruct to APPLY NOW
- Specify the loan to apply it to
(high interest rates are the priority)
2) Verify payment was applied as requested
When possible, pay the interest on your loans
before they capitalize!
© 2016 Association of American Medical Colleges. All rights reserved.
After Graduation
© 2016 Association of American Medical Colleges. All rights reserved.
Grace
Refer to page 17
The path for some loans
© 2016 Association of American Medical Colleges. All rights reserved.
Loan Repayment Timeline
Refer to pages 17-18
www.aamc.org/first/timeline
© 2016 Association of American Medical Colleges. All rights reserved.
Postponement Options
Refer to pages 19-20
Contact the loan servicer to apply
Forbearance
Deferment
Request 30-days before needed
Postponement Options
Refer to page 19
Subsidized loans are interest free
Interest accrues on unsubsidized loans
Contact each loan servicer to apply
Strict requirements to qualify
NOTE: For more details, or to request a deferment or forbearance, contact each loan servicer.
Postponement Options
Refer to page 20
Interest accrues on all loans
Interest will capitalize
Contact each loan servicer to apply
Request 30-days before needed
NOTE: For more details, or to request a deferment or forbearance, contact each loan servicer.
Postponement Options
Refer to page 20
Medical Residency Forbearance
Postpones payments in annual increments
Capitalization may occur at end of residency
(if increments occur back-to-back throughout residency)
An option for medical residents/interns
NOTE: Request increments in a timely manner to avoid unnecessary and additional capitalization.
Repayment Plans
© 2016 Association of American Medical Colleges. All rights reserved.
Loan Repayment
Refer to pages 34-35
© 2016 Association of American Medical Colleges. All rights reserved.
Repayment Plans
Refer to pages 36-37
Effects on the total repayment costs
© 2016 Association of American Medical Colleges. All rights reserved.
Debt Fact
The lower the
monthly payment,
the higher the
overall cost
© 2016 Association of American Medical Colleges. All rights reserved.
Repayment Plans
Refer to pages 22-23
Traditional
Standard
Monthly payments for the
entire repayment term are
calculated
up-front and
Extended
disclosed to you.
Graduated
Based on a 2016 graduate indebtedness of $183,000 with a PGY1 stipend of $53,300 and a family size of one.
© 2016 Association of American Medical Colleges. All rights reserved.
$2,370/mo
$1,380/mo
$1,080/mo
Repayment Plans
Refer to pages 24-31
Income-Driven
$690/mo
Income-Contingent Repayment (ICR)
$440/mo
$300/mo
Monthly payments
are (IBR)*
Income-Based
Repayment
based on income
and other factors Pay As You Earn (PAYE)
recalculated annually.
$300/mo
Revised Pay As You Earn (REPAYE)
Based on a 2016 graduate indebtedness of $183,000 with a PGY1 stipend of $53,300 and a family size of one.
* New Borrowers on or after July 1, 2014 that select IBR will receive payment amounts equal to that of PAYE.
© 2016 Association of American Medical Colleges. All rights reserved.
What’s the Catch?
How are these payments possible?
© 2016 Association of American Medical Colleges. All rights reserved.
Payments: Income-Driven Repayment (IDR)
Refer to pages 24-31
ICR
20%
IBR
15%
PAYE
10%
REPAYE
10%
© 2016 Association of American Medical Colleges. All rights reserved.
Different Payment
Amounts
Payments: Income-Driven Repayment (IDR)
ICR
No
Max
IBR
Max
PAYE
Max
REPAYE
No
Max
© 2016 Association of American Medical Colleges. All rights reserved.
Different Payment Limits
Terms: Income Driven Repayment (IDR)
Refer to pages 24-31
ICR
IBR
25
years
25
years
PAYE
REPAYE
© 2016 Association of American Medical Colleges. All rights reserved.
20
years
25
years
Different Term Lengths
IDR Plans: Eligibility Requirements
Refer to pages 24-31
ICR
Eligible
Loans
IBR
Eligible
Loans
PAYE
Eligible
Loans
REPAYE
Eligible
Loans
© 2016 Association of American Medical Colleges. All rights reserved.
Must be a Direct Loan
IDR Plans: Eligibility Requirements
Refer to pages 24-31
Must have a
Partial Financial Hardship
ICR
Eligible
Loans
IBR
Eligible
Loans
Show
Need
PAYE
Eligible
Loans
Show
Need
REPAYE
Eligible
Loans
© 2016 Association of American Medical Colleges. All rights reserved.
The Test for a PFH
Refer to page 25
Partial Financial Hardship (PFH)
Standard
$2,370 / mo
Payment
>
$440
PAYE
(IBR)
oror
IBR
$300
Payment
(PAYE)
Must have PFH to enter into IBR or PAYE
• Can remain in IBR or PAYE in subsequent years,
even without a PFH
• Must submit annual documentation
• Max payment in IBR or PAYE is the Standard
amount (determined when entering the plan)
Based on indebtedness of $183,000 with a PGY1 stipend of $53,300 and a family size of one.
© 2016 Association of American Medical Colleges. All rights reserved.
IDR Plans: Eligibility Requirements
Refer to pages 24-31
ICR
Eligible
Loans
IBR
Eligible
Loans
Show
Need
PAYE
Eligible
Loans
Show
Need
REPAYE
Eligible
Loans
© 2016 Association of American Medical Colleges. All rights reserved.
Recent
Borrower
Must be a “New”
borrower
“New Borrower” Defined
Refer to page 28
Two Requirements
1) No outstanding loans
on October 1, 2007
or paid-off all outstanding loans
before receiving a new loan on
or after 10/1/07
AND
2) Received a Direct
Loan disbursement
on/after October 1, 2011
© 2016 Association of American Medical Colleges. All rights reserved.
Develop Your Own “Best” Strategy
It’s not about the best one
It’s about what fits with your life and financial goals
© 2016 Association of American Medical Colleges. All rights reserved.
Options During Residency
© 2016 Association of American Medical Colleges. All rights reserved.
Decision Time: 6 Months Post-Graduation
Make
Payments
Postpone
Payments
PAYE
Medical Residency
Forbearance
REPAYE
IBR
© 2016 Association of American Medical Colleges. All rights reserved.
Which Option to Choose?
© 2016 Association of American Medical Colleges. All rights reserved.
Dr. Internal Medicine (General)
Student Loan Debt: $183,000
Career: Internal Medicine
Residency Length: 3 years
Debt: $183,000
Post-Residency Y-1 Salary:$180,000
© 2016 Association of American Medical Colleges. All rights reserved.
Dr. Internal Medicine
Student Loan Debt: $183,000
Repayment
Plan
PostResidency
Payment
Total
Repayment
Amount
Forgiven
20
$1,500 –
2,200
$377k
$46k
21
$1,500 –
2,200
$393k
--
Total
Years
(range)
Pay As You
Earn (PAYE)
Revised
PAYE
(REPAYE)
IncomeBased (IBR)
$2,200 –
15
$344k
-2,400
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Lowest
Cost
Highest
Cost
X
X
Dr. Internal Medicine
Debt: $183,000
Student Loan Debt: $250,000
Repayment
Plan
PostResidency
Payment
Total
Repayment
Amount
Forgiven
Lowest
Cost
20
$1,500 –
2,200
$377k
$285k
X
25
$1,500 –
2,400
$517k
$189k
Total
Years
(range)
Pay As You
Earn (PAYE)
Revised
PAYE
(REPAYE)
IncomeBased (IBR)
$2,200 –
21
$568k
-3,300
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Highest
Cost
X
Dr. Internal Medicine
Debt: $183,000
Student Loan Debt: $325,000
Repayment
Plan
PostResidency
Payment
Total
Repayment
Amount
Forgiven
Lowest
Cost
20
$1,500 –
2,200
$377k
$503k
X
25
$1,500 –
2,400
$517k
$425k
Total
Years
(range)
Pay As You
Earn (PAYE)
Revised
PAYE
(REPAYE)
IncomeBased (IBR)
$2,200 –
25
$775k
$149k
3,700
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Highest
Cost
X
Dr. ObGyn
Student Loan Debt: $183,000
Career: Obstetrics & Gynecology
Residency Length: 4 years
Debt: $183,000
Post-Residency Salary:$230,000
© 2016 Association of American Medical Colleges. All rights reserved.
Dr. ObGyn
Debt: $183,000
Student Loan Debt: $183,000
Repayment
Plan
PostResidency
Payment
Total
Repayment
Amount
Forgiven
18
$2,000 –
2,400
$383k
$0k
17
$2,000 –
2,600
$348k
$0
Total
Years
(range)
Pay As You
Earn (PAYE)
Revised
PAYE
(REPAYE)
IncomeBased (IBR)
$2,400 –
16
$363k
$0
2,400
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Lowest
Cost
Highest
Cost
X
X
Dr. ObGyn
Debt: $183,000
Student Loan Debt: $250,000
Repayment
Plan
PostResidency
Payment
Total
Repayment
Amount
Forgiven
Lowest
Cost
20
$2,000 –
2,800
$470k
$166k
X
24
$2,000 –
3,100
$596k
$0
Total
Years
(range)
Pay As You
Earn (PAYE)
Revised
PAYE
(REPAYE)
IncomeBased (IBR)
$3,000 –
17
$521k
$0
3,300
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Highest
Cost
X
Dr. ObGyn
Debt: $183,000
Student Loan Debt: $325,000
Repayment
Plan
PostResidency
Payment
Total
Repayment
Amount
Forgiven
Lowest
Cost
20
$2,000 –
2,800
$470k
$410k
X
25
$2,000 –
3,200
$652k
$287k
Total
Years
(range)
Pay As You
Earn (PAYE)
Revised
PAYE
(REPAYE)
IncomeBased (IBR)
$3,000 –
22
$799k
$0
4,300
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Highest
Cost
X
Dr. Cardiology
Student Loan Debt: $183,000
Career: Cardiology
Residency Length: 6 years
Debt: $183,000
Post-Residency Salary:$330,000
© 2016 Association of American Medical Colleges. All rights reserved.
Dr. Cardiology
Debt: $183,000
Student Loan Debt: $183,000
Repayment
Plan
PostResidency
Payment
Total
Repayment
Amount
Forgiven
20
$2,400 –
2,400
$413k
--
14
$3,100 –
3,600
$326k
--
Total
Years
(range)
Pay As You
Earn (PAYE)
Revised
PAYE
(REPAYE)
IncomeBased (IBR)
$2,400 –
19
$402k
-2,400
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Lowest
Cost
Highest
Cost
X
X
Dr. Cardiology
Debt: $183,000
Student Loan Debt: $250,000
PostResidency
Payment
Total
Repayment
Amount
Forgiven
20
$3,100 –
3,300
$572k
$16k
Revised
PAYE
(REPAYE)
18
$3,100 –
3,900
$503k
--
IncomeBased (IBR)
20
$3,300
$591k
--
Repayment
Plan
Total
Years
(range)
Pay As You
Earn (PAYE)
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Lowest
Cost
Highest
Cost
X
X
Dr. Cardiology
Debt: $183,000
Student Loan Debt: $325,000
Repayment
Plan
PostResidency
Payment
Total
Repayment
Amount
Forgiven
Lowest
Cost
20
$3,100 –
4,100
$622k
$232k
X
23
$3,100 –
4,500
$767k
--
Total
Years
(range)
Pay As You
Earn (PAYE)
Revised
PAYE
(REPAYE)
IncomeBased (IBR)
$4,300 –
21
$809k
-4,300
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Highest
Cost
X
The FIRST Stop
Refer to page 5
A tool for graduates!!
®
Medloans Organizer and Calculator
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
Other Considerations
© 2016 Association of American Medical Colleges. All rights reserved.
Loan Forgiveness (PSLF)
Refer to pages 51-52
Eligible Loans
+ Qualifying Payments
+ Qualifying Work
Public Service Loan Forgiveness
www.myfedloan.org
© 2016 Association of American Medical Colleges. All rights reserved.
Loan Forgiveness (PSLF)
Refer to pages 51-52
Want to know more?
www.aamc.org/first/pslfebook
© 2016 Association of American Medical Colleges. All rights reserved.
Repayment Assistance
Information on other
programs:
aamc.org/repayasst
lrp.nih.gov
nhsc.hrsa.gov
AAMC
National Institutes of
Health (NIH)
National Health
Service Corps
(NHSC)
© 2016 Association of American Medical Colleges. All rights reserved.
Reasons to Consolidate
Refer to pages 53-54
Reduce
# of
Servicers
Eligibility
for
PAYE
or
REPAYE
Eligibility
for
PSLF
Eligibility
for
IBR
© 2016 Association of American Medical Colleges. All rights reserved.
Should You Consolidate?
Refer to pages 56-57
www.aamc.org/first/consolidatequiz
© 2016 Association of American Medical Colleges. All rights reserved.
Should I Refinance?
Refer to pages 58-59
www.aamc.org/first/shouldirefinance
© 2016Association
Associationof
ofAmerican
AmericanMedical
MedicalColleges.
Colleges.All
Allrights
rightsreserved.
reserved.
©2014
Taxpayer Relief Act of 1997*
Refer to page 60
Full Deduction
Partial
Deduction
NO Deduction
Single
$65,000 or less
$65,001 to
$79,999
$80,000 or
more
Married
filing
Jointly
$130,000 or
less
$130,001 to
$159,999
$160,000 or
more
Max student loan interest deduction: $2,500/year
May be eligible: Voluntary payments & capitalization
* Numbers reflect effect of MAGI on Student Loan Interest Deduction for 2015.
www.irs.gov/publications/p970
© 2016 Association of American Medical Colleges. All rights reserved.
The Next Steps
Refer to page 62
© 2016 Association of American Medical Colleges. All rights reserved.
Support Along The Way
studentaid.ed.gov/repay-loans/disputes
aamc.org/advocacy/meded
Financial Aid Office &
Residency Programs
www.aamc.org/FIRST
Medloans Organizer &
Calculator
www.aamc.org/medloans
© 2016 Association of American Medical Colleges. All rights reserved.
StudentLoans.gov
Saltmoney.org/AAMC
“An investment in knowledge always
pays the best interest”
© 2016 Association of American Medical Colleges. All rights reserved.
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