Loans 101 presented by the Office of Financial Education.
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Transcript of Loans 101 presented by the Office of Financial Education.
Loans 101Loans 101Loans 101Loans 101
presented by the Office of Financial presented by the Office of Financial
EducationEducationpresented by the Office of Financial presented by the Office of Financial
EducationEducation
About our officeAbout our officeAbout our officeAbout our office• The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates
so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to
ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills. ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills.
• As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and
empower them to make wise financial decisions while attending school and beyond.empower them to make wise financial decisions while attending school and beyond.
• The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates The Office of Financial Education serves the Montana State University community by providing financial education to students and graduates
so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to so that they gain financial independence and a means to achieve their life goals. Within the office we educate and support our students to
ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills. ensure that they can manage debt, thoughtfully consider the role of both loans and savings, and develop sound budgeting skills.
• As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and As an office we are committed to aiding and educating students to ensure that they understand and develop solid financial habits and
empower them to make wise financial decisions while attending school and beyond.empower them to make wise financial decisions while attending school and beyond.
What is the cost of What is the cost of attendance at MSU?attendance at MSU?What is the cost of What is the cost of
attendance at MSU?attendance at MSU?
In-State Tuition=$6,705In-State Tuition=$6,705
w/ housing, books, misc. =$19,185w/ housing, books, misc. =$19,185
Out-of-State Tuition=$20,062Out-of-State Tuition=$20,062
w/ housing, books, misc. =$32,542w/ housing, books, misc. =$32,542
• 2012-2013 2012-2013 (http://www.montana.edu/opa/facts/quick.htm#Expenses)(http://www.montana.edu/opa/facts/quick.htm#Expenses)
Income SourcesIncome SourcesIncome SourcesIncome Sources
ParentsParents
SavingsSavings
Federal Grants (FAFSA)Federal Grants (FAFSA)
ScholarshipsScholarships
Earned Income (making tuition payments)Earned Income (making tuition payments)
Student Loans (federal, Perkins, and/or Student Loans (federal, Perkins, and/or
private)private)
Loan LimitsLoan LimitsLoan LimitsLoan Limits
Dependent students=$31,000Dependent students=$31,000
Independent students=$57,500Independent students=$57,500
Graduate students=$138,500Graduate students=$138,500
Types of Student Types of Student LoansLoans
Types of Student Types of Student LoansLoans
SubsidizedSubsidized
UnsubsidizedUnsubsidized
PerkinsPerkins
Parent PLUSParent PLUS
PrivatePrivate
Federal SubsidizedFederal SubsidizedFederal SubsidizedFederal Subsidized
Lender is Dept. of EducationLender is Dept. of Education
Stafford and DirectStafford and Direct
6.8% + 1% origination fee6.8% + 1% origination fee
During periods of deferment, interest is paid During periods of deferment, interest is paid
by federal governmentby federal government
Grace period=6 months after student Grace period=6 months after student
graduates/leaves schoolgraduates/leaves school
Federal Federal UnsubsidizedUnsubsidized
Federal Federal UnsubsidizedUnsubsidized
Lender is Dept. of EducationLender is Dept. of Education
Stafford and DirectStafford and Direct
6.8% + 1% origination fee6.8% + 1% origination fee
During periods of deferment, interest is NOT During periods of deferment, interest is NOT
paid by federal governmentpaid by federal government
Grace period=6 months after student Grace period=6 months after student
graduates/leaves schoolgraduates/leaves school
Perkins loansPerkins loansPerkins loansPerkins loans
Lender is Montana State University Lender is Montana State University
Current interest rate at 5% (subsidized)Current interest rate at 5% (subsidized)
Grace period=9 months after student Grace period=9 months after student
graduates/leaves schoolgraduates/leaves school
Can be consolidated with federal loansCan be consolidated with federal loans
PrivatePrivatePrivatePrivate
Private lender (ex. Wells Fargo, Sallie Mae)Private lender (ex. Wells Fargo, Sallie Mae)
Varying interest rates; can be fixed or Varying interest rates; can be fixed or
adjustableadjustable
May or may not have a grace periodMay or may not have a grace period
Cannot be consolidated with federal or Cannot be consolidated with federal or
Perkins loansPerkins loans
Use as a last resort and use sparingly!Use as a last resort and use sparingly!
National Student Loan Data National Student Loan Data SystemSystem
National Student Loan Data National Student Loan Data SystemSystem
http://www.nslds.ed.govhttp://www.nslds.ed.gov
You will need your PIN to log inYou will need your PIN to log in
If you donIf you don’’t have your PIN, visit t have your PIN, visit http:pin.ed.govhttp:pin.ed.gov to to ““Request A Duplicate PINRequest A Duplicate PIN””
Refer back to NSLDS once a yearRefer back to NSLDS once a year
Make sure information is accurate and up Make sure information is accurate and up to dateto date
Locate your loan servicer!Locate your loan servicer!
Identifying Your Loan Identifying Your Loan Servicer Servicer
Identifying Your Loan Identifying Your Loan Servicer Servicer
Servicer for Perkins Loans is Montana Servicer for Perkins Loans is Montana
State UniversityState University
Contact the Perkins & Nursing Loan Contact the Perkins & Nursing Loan
Servicer at (406)994-2702Servicer at (406)994-2702
Identifying Your Loan Identifying Your Loan Servicer Servicer
Identifying Your Loan Identifying Your Loan Servicer Servicer
Servicers for all other federal loans:Servicers for all other federal loans:
FedLoan Servicing (PHEAA)FedLoan Servicing (PHEAA)
NelnetNelnet
Great Lakes Educational Loan ServicesGreat Lakes Educational Loan Services
Sallie MaeSallie Mae
About Loan ServicersAbout Loan ServicersAbout Loan ServicersAbout Loan Servicers
Make payments Make payments
Choose a payment planChoose a payment plan
Request a deferment or forbearanceRequest a deferment or forbearance
Making PaymentsMaking PaymentsMaking PaymentsMaking Payments
6 month grace period from the time you 6 month grace period from the time you
graduate or leave school; 9 month grace graduate or leave school; 9 month grace
period for Perkins loansperiod for Perkins loans
You can make payments any time...even You can make payments any time...even
while youwhile you’’re still in school!re still in school!
Payment PlansPayment PlansPayment PlansPayment Plans
Standard-automatically enrolled; 10 yearsStandard-automatically enrolled; 10 years
Extended: 25 years; smaller payments, Extended: 25 years; smaller payments, pay more interest over timepay more interest over time
Graduated: 10 or 25 years; payment Graduated: 10 or 25 years; payment amount increases every 2 yearsamount increases every 2 years
Various Income-based Repayment: 20-25 Various Income-based Repayment: 20-25 years; based on your annual incomeyears; based on your annual income
Avoid Default!!!Avoid Default!!!Avoid Default!!!Avoid Default!!!
Default=non-payment for 270 days (9 months)Default=non-payment for 270 days (9 months)
Potential consequences include:Potential consequences include:
Loan becomes due in full immediatelyLoan becomes due in full immediately
Collection fees of up to 24% Collection fees of up to 24%
Garnished wages, seized tax refundsGarnished wages, seized tax refunds
Negatively affect credit scores and reportsNegatively affect credit scores and reports
State licenses could be suspendedState licenses could be suspended
Always stay in contact with your loan servicer!Always stay in contact with your loan servicer!
Minimize Loan Debt Minimize Loan Debt NowNow
Minimize Loan Debt Minimize Loan Debt NowNow
Budget loan refunds...pay back what you Budget loan refunds...pay back what you
dondon’’t needt need
Make payments now! Even small amounts Make payments now! Even small amounts
here and there help.here and there help.
Consider working while in school to help Consider working while in school to help
reduce need for loans.reduce need for loans.
General Debt RepaymentGeneral Debt RepaymentGeneral Debt RepaymentGeneral Debt Repayment
• If you have a variety of debt, ideally pay off whatever has the If you have a variety of debt, ideally pay off whatever has the
highest interest firsthighest interest first
• However, you can also create a However, you can also create a ““debt snowballdebt snowball”” by paying off by paying off
the smallest debt you have first and then rolling the momentum the smallest debt you have first and then rolling the momentum
from that onto other debt loadsfrom that onto other debt loads
• You wonYou won’’t save as much on interest perhaps, but it may have t save as much on interest perhaps, but it may have
enough impact to get you to stick to the planenough impact to get you to stick to the plan
• Once youOnce you’’ve repaid one debt, you can just roll the money from ve repaid one debt, you can just roll the money from
those payments over to your next debt categorythose payments over to your next debt category
For More InformationFor More InformationFor More InformationFor More Information
National Student Loan Data System: National Student Loan Data System:
http://nslds.ed.govhttp://nslds.ed.gov
Federal Student Aid: Federal Student Aid: http://studentaid.ed.govhttp://studentaid.ed.gov
Get Money Smarts: Get Money Smarts: http://www.getmoneysmarts.orghttp://www.getmoneysmarts.org
General debt repayment calculator: General debt repayment calculator:
http://www.youcandealwithit.com/borrowers/calculatorhttp://www.youcandealwithit.com/borrowers/calculator
s-and-resources/calculators/debt-repayment-s-and-resources/calculators/debt-repayment-
calculator.shtmlcalculator.shtml