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STUDENT Loan FUNDAMENTALS

STUDENT Loan FUNDAMENTALS. 2014 TASFAA NAOW Workshop May 12-14, 2014 – Arlington, Texas Tanya Vittitow Associate Director – UT Arlington. Student Loan Programs and Eligibility Student Loan Application Process Student Loan Repayment. Federal Student Loan Programs Direct Subsidized Loan

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STUDENT Loan FUNDAMENTALS

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  1. STUDENT Loan FUNDAMENTALS 2014 TASFAA NAOW Workshop May 12-14, 2014 – Arlington, TexasTanya VittitowAssociate Director – UT Arlington

  2. Student Loan Programs and Eligibility Student Loan Application Process Student Loan Repayment

  3. Federal Student Loan Programs • Direct Subsidized Loan • Direct Unsubsidized Loan • Direct PLUS Loans • Direct Consolidation Loans – Student Loan Repayment • Perkins Loan Program • Alternative Loans

  4. Direct Subsidized Loans • Need-based Loan for Undergraduate Students Enrolled at Least Half Time • No In- School Accrued Interest – 6 Month Grace Period • 150% Direct Subsidized Loan Limit Rule Applies • Fixed Interest Rate 3.86% – July 1 Annual Adjustment • Origination Fee 1.072% – Sequester Adjustment on October 1, 2014

  5. 150% Direct Subsidized Loan Limit • New Borrowers on/after July 1, 2013 – 0 Loan Balance • Ineligible for Additional Subsidized Loans Beyond 150% of the Published Program Length • Replaced with Unsubsidized Loan • Additional Dependent Subsidized Loan – Parent PLUS Denial

  6. Direct Unsubsidized Loans • Non-Need-based Loan for Undergraduate & Graduate Students Enrolled at Least Half Time • In- School Accrued Interest – 6 Month Grace Period • Fixed Interest Rate 3.86% Undergrad & 5.41% Grad – July 1 Annual Adjustment • Origination Fee 1.072% – Sequester Adjustment on October 1, 2014

  7. Direct PLUS Loans • Parent/Gaurdian of Dependent Undergraduate Students • Graduate Students • Non-Need-based Loan - Student Enrolled at Least Half Time • Borrow to Cost of Attendance – No Aggregate Limit • Credit Check Required – Adverse Credit = Additional Unsubsidized for Undergraduate Students • Fixed Interest Rate 6.41% – July 1 Annual Adjustment • Origination Fee 4.288%– Sequester Adjustment on October 1, 2014 • Interest Accrues and Repayment Begins at 100% Loan Disbursement • Deferment Can be Requested at Application

  8. Direct Loan Application Process • Eligible Student in Eligible Program with Pell Eligibility Determination Complete • www.studentloans.gov • Entrance Counseling • First Time Subsidized/Unsubsidized and PLUS Student Borrowers • Completed Prior to First Disbursement • Master Promissory Note • Loan Note for All Programs Valid for 10 Years

  9. Additional Direct Loan Requirements • Exit Counseling • www.nslds.ed.gov • Required when Student Ceases to Attend Half Time – Includes Transfers • 14 Day Disbursement Notification – Right to Cancel • Per Disbursement

  10. Perkins Loan Program • Need-based Loan – Student Enrolled at Least Half Time • School with Funds – Lender and Servicer • Undergraduate and Graduate Students • Annual Limit – Undergraduate $5,500 and Graduate $8,000 • Aggregate Limit - Undergraduate $27,500 and Graduate $60,000 • Grace Period 9 Months - 10 Year Max Repayment

  11. Alternative Loan Programs • Non-need Based External Loan • Interest Rates, Origination Fees and Repayment Terms Vary • Should Require School Certification - http://ifap.ed.gov/dpcletters/attachments/GEN1001A-AppSelfCert.pdf • School Provided List – Consumer Disclosure Requirements

  12. Student Loan Repayment • Single Source – www.nslds.ed.gov • Multiple Repayment Options Via Servicer • Standard – Monthly payment remains consistent for up to10 years • Graduated – Monthly payments are lower at first but then increase every 2 years up to 10 years. • Income-sensitive– Monthly payments are based on your annual income and payments change as your income changes. • Extended – Payments may be fixed or graduated for up to 25 years. Income Contingent – payments based on annual calculations and adjusted so as not to cause “undue hardship”; (25 year forgiveness) • Income Based- Monthly payments will not exceed 15% of the amount by which your adjusted gross income exceeds 150% of the poverty guideline for your family size. (25 year forgiveness) • Pay As You Earn – Monthly payments will not exceed 10% of the amount by which your adjusted gross income exceeds 150% of the poverty guideline for your family size. (20 year forgiveness)

  13. Student Loan Repayment Continued • Grace Period – Period of time (generally 6 months) in witch a student has to begin repayment. • Deferment – Period of time payments are postponed for an approved set of reasons; no-accrued interest on Subsidized Loans. • Consolidation – Can be fix for default issues and/or way to combine all loans into one with one servicer.

  14. Student Loan Repayment Continued • Cohort Default Rate • Includes DL loans, and loans underlying DL consolidation loans • CDR= % of borrowers who enter repayment in a given federal fiscal year who then default within the next 3 fiscals years • High rate has consequences for schools • >15% = loss of 1 installment/semester • 15% = 30 day hold on 1st time, 1st year borrowers • > 40% = loss of participation in Title IV funding

  15. THANK YOU QuestionsTanya VittitowAssociate Director – UT Arlington vittitow@uta.edu817.272.69169

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