moneycounts: a financial literacy series

MoneyCounts: A Financial Literacy Series

Student Loan Repayment Strategy

Dr. Daad RizkMoneyCounts: A Financial Literacy Series301 Outreach BuildingUniversity Park PA [email protected] 814-863-0214

mailto:[email protected]


Learning Objectives

Review the loan repayment process

Choose your repayment plan

To consolidate or not to consolidate? that is the question!

Budgeting and saving tips to meet your loan repayment

Strategy to protect your financial reputation


Key Terms

Terminology Loan Servicer – DOE designated agency to service your loan

Total student loan debt amount – principle and interest

Monthly payment – depends on your payment plan

Interest rate – varies per loan

Grace period – waiting period to start repayment

Repayment Plan – various plans to choose from (7 plans)

Consolidation – combining all loans into a NEW loan

Deferment and forbearance – ways to help in difficult time

Defaulting – not being able to pay your loan

Loan forgiveness – must meet requirements for forgiveness


Exit Counseling

Manage My Direct Loan [StudentLoans.gov]

You can get to your exit counseling from different websites Penn State – e-Lion Studentloans.gov

At the end of the exit counseling session, you will be asked for information that will be included as part of your federal student loan records. You must provide the following:

Name, address, e-mail address, and phone number for: Your next of kin Two references who live in the US Your future employer (if known)

https://studentloans.gov/myDirectLoan/index.action


Where Do I Start?

Penn State Student Aid Office Website Loan Debt [Penn State Office of Student Aid]

Know Loan Servicer NSLDS

National Student Loan Data SystemStudent Access: National Student Loan Data SystemManage My Direct Loan [StudentLoans.gov]

http://studentaid.psu.edu/understand-financial-debt/loans

http://www.nslds.ed.gov/nslds_SA/

https://studentloans.gov/myDirectLoan/index.action


National Student Loan Data System


Loan Servicer


How much Do I Owe?

Student Access: National Student Loan Data System

Tips: Use the provided worksheet Excel Spreadsheet to

track all your loan information in one place! Print an amortization schedule for each loan


NSLDS - Loan Summary


When Do I Begin Repaying my Student Loans?

6 months after you leave college, graduate or drop below half-time enrollment (Grace Period)

Your loan servicer or lender must provide you with a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

It is your responsibility to update your contact information with your loan servicer


How much will I Need to Pay?

Your bill will tell you how much to pay. Your payment (usually made monthly) depends on: The type of loan you received How much money you borrowed The interest rate on your loans The repayment plan you choose.


How Do I Make My Payment?

The U.S. Department of Education (ED) uses several loan servicers to handle the billing and other services on loans for the William D. Ford Federal Direct Loan (Direct Loan) Program and for loans that were made under the Federal Family Education Loan (FFEL) Program and that ED later purchased. You’ll tell your loan servicer which repayment plan you’d like to choose.

National Student Loan Data System

https://www.nslds.ed.gov/


Repayment Plan?

Standard Repayment PlanGraduated Repayment PlanExtended Repayment PlanIncome-based Repayment PlanPay As You Earn Repayment PlanIncome Contingent Repayment PlanIncome Sensitive Repayment Plan

Repayment Plans [Office of Federal Student Aid]

http://studentaid.ed.gov/repay-loans/understand/plans


Payment Plan - 1


Payment Plan – 2


Payment Plan – 3


Repayment Estimator

Repayment Estimator [Office of Federal Student Aid]Helps you compare repayments under each

repayment planHelps you visualize length of time and total cost of

each loan

Note: this does not include “PRIVATE LOANS”

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action

https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action


Payments (mail or online)

There are several ways you can make your payments:Electronic payments (receive your loan

statement electronically, make payments on line)

Electronic Debiting (link the payment to your checking account)

Send a paper check in the mail to loan servicer (avoid late payment)


What Happens if I Don’t Pay My Student Loan Back?

Borrowers who default on their student loans are reported to credit bureausYour credit rating and future borrowing ability

will be negatively impactedLegal action can be taken to require payment

through garnishment of wages and withholding of tax refunds

Student Loans are NOT dischargeable through bankruptcy!


Consolidation, Deferment & Forbearance

Consolidation is making all your loans into one, make one payment Subsidized, Unsubsidized, PLUS (Student, not parent) Do the math before you make the decision to consolidate or not

to consolidate

Deferment and Forbearance Gives you more time to get your financial hardship under control You have to apply and qualify!


Loan Forgiveness Program

What is the Public Service Loan Forgiveness Program? In 2007, congress created this program to encourage individuals

to enter and continue to work full-time in public service jobs Under this program, borrowers may qualify for forgiveness of the remaining

balance due on their eligible federal student loans after they have make 120 payments on those loans under certain repayment plans while employed full time by certain public service employers.

The cancellation of all or some portion of your remaining federal student loan balance. If your loan is forgiven, you are no longer responsible for repaying that remaining portion of the loan.


Strategy for Success

Increase your emergency fund from 10% to 20% of your net income

Start paying into the fund as soon as you start earning income (3 months payments)

Pay off credit card debt before you enter student loan repayment

Remain in touch with your servicer and notify them of any financial problems, do not default at any cost

Depending on your income level, speed pay your student loans so you can free money for other future commitment


Quick Tip to estimate payment

Amount Borrowed Number of Payments

Estimated Monthly Payments*

Recommended Annual Salaries**

$ 5,000 120 $55.51 $8,326.50

$10,000 120 $111.02 $16,653.00

$15,000 120 $166.53 $24,979.35

$20,000 120 $222.04 $33,306.00

$25,000 120 $277.55 $41,632.50

$30,000 120 $333.06 $49,959.00

$35,000 120 $388.57 $58,285.50

$40,000 120 $444.08 $66,612.00

$45,000 120 $499.59 $74,938.50

$50,000 120 $555.10 $83,265.00

$55,000 120 $610.61 $91,591.50

$60,000 120 $666.12 $99,918.00

Loan Debt Repayment Chart


Budgeting Tips

Net Income 100%Saving 10%Debt Repayment 15% (instead of 10%)Housing & Utilities 30%Food 20%Car 10%All Other Expenses 15%


NEXT CHANCE TO JOIN THE CONVERSATION:

CEO OF ONE LAPTOP PER CHILD (VIA SKYPE)Date 10/09/14 Time 6:00 PM to 7:00 PM Location Berg Auditorium

https://www.google.com/maps/place/Huck%20Life%20Sciences%20Building+The%20Pennsylvania%20State%20University+University%20Park+PA+16802


Thank You!

Comments and Questions

Dr. Daad RizkMoneyCounts: A Financial Literacy Series301 Outreach BuildingUniversity Park PA [email protected] 814-863-0214

mailto:[email protected]

moneycounts: a financial literacy series

Documents

loan moneycounts

loan information

direct loan

loan servicermoneycounts

loan servicers

loan repaymentstrategy

type of loan

loan repayment schedule