Loan repayment

Question 1

Principle

Answer 1

Sum of money borrowed + capitalized interest

Question 2

Interest

Answer 2

loan expense charged for use of borrowed money

Question 3

Unsubsidized loan

Answer 3

Interest accrues from date of disbursement

• interest continues through life of the loan
• no financial need necessary
• school determines what you can borrow based on cost of attendance

Question 4

Capitalization

Answer 4

Addition of unpaid interest to principal loan balance

• increases outstanding principle amount due
• may increase your monthly payment
• interest charged on higher principle balance

Question 5

Primary Vet student loan types

Answer 5

1. Unsubsidized stafford loan (5.41-6.8% interest)
2. Plus loan (unsubsidized 6.41-7.21% int)
3. Health Professions Loan (PSL) subsidized 5% interest
4. Perkins loan-subsidized 5% interest

Question 6

Loan Consolidation

Answer 6

May be necessary for eligibility for some repayment programs

-some benefits are lost with consolidation

Question 7

Borrowers eligible to consolidate

Answer 7

graduation/departure from school/below 1/2 time enrollment

Question 8

Standard repayment plan

Answer 8

Fixed monthly amount for up to 10 years

Question 9

Extended repayment lan

Answer 9

Fixed monthly amount for 12-30 year term

Question 10

Graduated repayment

Answer 10

• Starts of with lower payments that gradually increase every two years for 12-30 years
• Monthly payment can be no less than 50% and no more than 150% monthly payment under standard repayment
• Monthly payment must be at least the interest that accrues

Question 11

Income contingent repayment

Answer 11

• Based on income and total debt, monthly payments adjusted each year
• Loan term up to 25 years, after which remaining balance is forgiven with taxes
• Only available for direct loan borrowers

Question 12

Income based repayment

Answer 12

Similar to contingent with caps on monthly payments at lower percentage of discretionary income

Question 13

Pay as you earn (PAYE)

Answer 13

• Loan term up to 20 years
• Initial loans no older than issued in 2007
• Disbursements must have been received up to oct 2011

Question 14

Public Service Loan Forgiveness (PSLF)

Answer 14

Forgives remaining balance on direct loans after making 120 qualifying monthly payments while working full time for your employer

• govt org/tax exempt/ non profits are eligible
• Private loans aren’t eligible

Question 15

Veterinary Medicine Loan repayment Program (VMLRP)

Answer 15

• Up to 25,000 each year towards qualified loans

- Vets agree to serve in a NIFA designated vet shortage for 3 years

Question 16

Tax deductions

Answer 16

Up to $2,500 in student loan interest may be deducted yearly on taxes

Question 17

Bankruptcy

Answer 17

student loans not discharged upon bankruptcy

Question 18

First payment

Answer 18

1/4-1/3 borrowers are late on the first payment

• most students have 6 months grace period before repayment due
• set up AUTOMATIC PAYMENT IN ADVANCE

Question 19

Deliquency

Answer 19

Government can garnish up to 15% of wages and SS benefits, intercept tax returns

Question 20

Late fees

Answer 20

• up to 6% can be charged for each additional late payment

- Collection charges of up to 25% deducted from payments on defaulted loans