College Board TRENDS IN STUDENT AID

• Total Aid Awarded

$134.8 BillionGraduate & Undergraduate

• 51% or 69 Billion in Loans(FFELP and Direct)

– Undergrad Annual Average• $3,074 Subsidized• $3,398 Unsubsidized

http://www.collegeboard.com/press/releases/150634.html

College Board TRENDS IN STUDENT AID

• PARENT LOANS

– 820,000 Borrowers

– $9,984 Average Loan

http://www.collegeboard.com/press/releases/150634.html

College Board TRENDS IN STUDENT AID

• PELL GRANTS– # Recipients

•2004-05 3.0% Increase•2005-06 1.5% Increase

– Average Award•2004-05 $2,474•2005-06 $2,354

http://www.collegeboard.com/press/releases/150634.html

College Board TRENDS IN STUDENT AID

• PELL GRANTSAs a result of the lower average Pell Grant,

the percentage of tuition, fees, room, and board covered by the maximum Pell Grant at the average public four-year college,

DELCINED by 9 percent from 2001-02 to 2005-06.

http://www.collegeboard.com/press/releases/150634.html

College Board TRENDS IN STUDENT AID

• PRIVATE LOANS

– Total Volume 2005-06 = $17.3 Billion

– 27% average annual growth since 2000-01

– Accounted for 20% of all borrowing in 2005-06

http://www.collegeboard.com/press/releases/150634.html

College Board TRENDS IN STUDENT AID

• STUDENT DEBT

• $19,300 Median student debt 2003-2004 bachelor’s degree

• $24,600 Student borrowers graduating in 2004 from for-profit colleges had the highest median debt, followed by

• $19,500 students from private nonprofit colleges

http://www.collegeboard.com/press/releases/150634.html

College Board TRENDS IN STUDENT AID

• STUDENT DEBT• Graduate student borrowing

is increasing more rapidly than undergraduate student borrowing;

• The fastest growing student aid program over the decade was Parent Loans for Undergraduate Students (PLUS).

http://www.collegeboard.com/press/releases/150634.html

College Board TRENDS IN COLLEGE PRICING

• TUITION & FEES2006-07 – 4-Year Public Tuition

Avg. = $5,836 2.4% Increase

- 4-Year Private Tuition- Avg. = $22,272 2.0%

Increase

http://www.collegeboard.com/press/releases/150634.html

Total tuition, fee, room, and board charges for undergraduate in-state students at public institutions, now average $12,796—up $669 from the previous year.

College Board TRENDS IN COLLEGE PRICING

• UNDERGRADS (Public &

Private)

COSTS (Tuition & Fees)

•42% < $ 6,000•13% > $24,000

4-Year PublicNet tuition & fees = $2,700

http://www.collegeboard.com/press/releases/150634.html

College Board EDUCATION PAYS

2005, median earnings for bachelor’s degree holders

between the ages of 25 and 34 working full-time

were $13,900 higher than median earnings of high school graduates working full-time

http://www.collegeboard.com/press/releases/150634.html

Higher Education Reconciliation Act of 2005

• Signed by President Bush 2/8/06 (Senate Bill 1932)

• The bill authorized PLUS Loans for graduate/ professional students

• All terms & conditions of PLUS Loan for parents are identical for graduate/professional students

Graduate PLUS Loan• Terms & Conditions

– Fixed Interest Rate of 8.5%

– 3% origination fee will be deducted from the loan proceeds at disbursement and paid to the Department of Education

– Up to a 1% default fee may be charged by the guarantor and will be deducted from the loan proceeds at disbursement

Graduate PLUS Loan

• Terms & Conditions– Students must complete

the (FAFSA) Free Application for Federal Student Aid

– Students must apply for their annual loan maximum eligibility under the Federal Subsidized and Unsubsidized Stafford Loan Program before applying for the Graduate PLUS Loan

Graduate PLUS Loan

• Terms & Conditions

– Determination that student does not have adverse credit via credit check; no income requirement; no co-signer requirement

– Maximum loan amount equal to cost of attendance minus other financial aid received

Graduate PLUS Loan

• Terms & Conditions

– Multiple disbursements may be required depending upon the school attended

– Interest accrues from date of disbursement

Graduate PLUS Loan• Terms & Conditions

– In-school deferment available while student is enrolled at least half time

– Various deferment and forbearance options are available if student has difficulty repaying loan; interest will continue to accrue

– Death and Total Disability benefit

Graduate PLUS Loan

• Terms & Conditions

Repayment begins 60 full days from disbursement

(unless student remains enrolled at least half-

time)

– 10 year repayment period

– Flexible repayment options

• Standard• Extended• Graduated

Application Process• Credit pre-approval

(web or phone)

• Master Promissory Note – legal commitment to repay loan

• Lender sends request to school to certify student’s eligibility for the loan

• Schools may certify Graduate PLUS Loans beginning 7/1/06

• Lender disburses funds to school based upon recommended dates from school that follow Federal guidelines

Graduate PLUS vs. Private Loans

• If a graduate student has limited or no credit history, it may be more difficult to qualify for a private loan

• Graduate PLUS Loans have no income requirement and no co-signer requirement

• Graduate PLUS Loans will have a fixed interest rate,

• while private loans typically do not have an interest rate cap

Graduate PLUS vs. Private Loans

• Graduate PLUS Loans may

charge up to 4% in fees • Private loan fees may vary

• Graduate PLUS Loans offer flexible repayment options such as Standard, Extended and Graduated;

• Private loans typically offer only Standard repayment option

• Forbearance option available for Graduate PLUS Loan borrowers that have difficulty repaying loan

Graduate PLUS vs. Private Loans

• Graduate PLUS Loans offer Death and Total Disability benefit that is

• typically not available for private loans

• Graduate PLUS Loans may be consolidated into a Federal Consolidation Loan

Graduate PLUS Loan

QUESTIONS

&

DISCUSSION

Graduate PLUS Loan

DAVE RICE

St. Louis College of Pharmacy

drice@stlcop.edu

(314) 446-8320