Student Loans Flashcards
Types of Financial Aid …
Grants, scholarships, work-study, loans
____________
* Automatically accepted
* Split equally between Fall and Spring semesters
* Does NOT need to be paid back
Gift Aid
_________________
* Community Foundations
* Town Halls
* Local Clubs/Lodges
* Places of Worship
* High School Counselor
* Alumni Associations
* Local Business/Libraries
* Your Parents Occupation/Job
Where to find more scholarships
FAFSA - …
Free Application for Federal Student Aid
NSLDS - …
National Student Loan Data System
OFA - …
Office of Financial Aid
COA - …
Cost of Attendance
EFC - …
Expected Family Contribution (results of
the FAFSA)
SAI - …
Student Aid Index
Types of loans …
Federal (backed by the government), private
_____________
* Issued by lenders such as bank or credit union
* Typically, variable interest rates and no interest ceiling
* Credit check is required
* Not based on need-don’t have to file FAFSA
* No borrowing limits
* (Loan max, up to cost of education minus other aid)
* No benefits for death or disability
* (Benefits not equal to federal student loans)
* (Designed to fill in the gap left by other loans)
Loan Types-Private
When Do My Payments Begin?
_____________
* 6 months after graduation
* Less than ½ time
Direct Subsidized & Unsubsidized
When Do My Payments Begin?
_____________
* Varies based on lender preferences
Private
When Do My Payments Begin?
_____________
* 2 months after full receipt of the loan
* 6 months after graduation
PLUS
Grace Period & Deferment
* Grace period of …
6 or 9 months after graduation
Grace Period & Deferment
* In-school deferment (__________)
* (Interest continues to accrue on unsubsidized loans and PLUS loans)
* (If you do not pay the interest, it may be capitalized and added to the principal at the end of your grace period)
Enrolled at least half-time
Repayment Options
_________ - 10 years
Standard
Repayment Options
__________ - Low beginning payment increases every 2 years. 10 years max repayment.
Graduated Repayment
Repayment Options
__________ - Repayment 25 year
Extended
Repayment Options
___________ - Repayment based on a 12-year repayment, or 20% of your discretionary Income, divided by 12 years
Income Contingent (ICR)
Repayment Options
___________ - Generally 10 percent of your discretionary income, but never more than the 10-year Standard Repayment Plan amount
Pay As You Earn (PAYE)
Repayment Options
___________
* Partial financial hardship (PFH)-determined annually based on HHS & and
income
* Payment is 10-15% of the net income over 150% of poverty line and could
be as low as $0
* Max payment is the standard amount of time to go into repayment
* Balance forgiven after 25 years but taxed
Income Based (IBR)
___________
* Bundles your federal loans together
with one fixed rate
* In some circumstances, this could
reduce your payments
* Your repayment period may be extended up to
30 years depending on the amount of your
consolidated loan
What Is Consolidation?
___________
* Loss of any loan benefits such as interest rate discounts
or rebates
* Will consolidation increase my total cost?
* Once you consolidate it cannot be revoked for any reason
Things to Consider Before Consolidating
___________
* Simplifies record-keeping
* Variable-rate education loans are converted to fixed rate loans
* Can significantly reduce your monthly payments because consolidation allows you to stretch your repayment period from the standard 10 years up to 30
years
Consolidation Advantages
__________
* Extending repayment period increased total interest
payments
* If you are in a situation where the military (or other entity) will repay all/some of your loans, do not consolidate
Consolidation Disadvantages
How Is Student Loan Interest Calculated?
__________
*Your interest rate is divided by the number of days in the year, and you are charged each day based on the outstanding balance.
Compounded Daily
How Is Student Loan Interest Calculated?
__________
* Addition of unpaid interest to the principal (increases the amount due)
* Repayment strategy - pay interest on unsubsidized loans PRIOR to capitalization
Capitalization
How To Save
__________
* Borrow only what is needed
* Live like a student now to be able to enjoy life more fully when you’re earning
Borrow Less
How To Save
__________
* Make payment now
* Make extra payments to reduce cost
* Contact servicer for details
Voluntary loan payments
Help With Payments
__________
* Temporarily postponing payments
Deferment
__________
* In-school (must be at least half time)
* Unemployed
* Economic hardship
* Military service
Types of deferment
Help With Payments
__________
* Postpones repayment if financial hardship
* Interest still accumulates
Forbearance
Education Tax Savings
__________
* Deductible up to $2,500 in interest
Student loan interest
Education Tax Savings
__________
* $2,500 per student
American Opportunity Credit
Education Tax Savings
__________
* 20 percent of the first $10,000 of qualified education expenses or a maximum of $2,000 per return
Lifelong learning credit
