Student Loan Repayment #GetSavvy Webinar Recording

Welcome to today’s webinar, Student Loan
Repayment. This is part of the Get Savvy Grow Your Green Stuff webinar series.
We’ve been running for several years now, we have several people and organizations
that work together across the state of Illinois to make this entire series
available. Today, my name, every day my name is Andrea Pellegrini and I am the
assistant director in University Student Financial Services and Cashier
Operations, and I run the Student Money Management Center for the entire
University of Illinois system. And my friend Sasha is joining me today!
Sasha, you wanna talk about yourself? Sure! My name is Sasha Grabenstetter, and I’m a consumer economics educator, with the University of Illinois
Extension. We are housing units and the places that I get to serve are Grundy,
Kankakee, and Will counties. Thank You Sasha.
So we’re also joined today by a few of our colleagues, Kathy Sweedler, who’s in the
chat kind of moderating what’s going on, Kendra Nalubega is also in the chat
going to be sharing some resources and also answering any questions that you
might have and then there might be other people that log on pretty soon and help us
moderate that chat. That chat is going to be used a lot so make sure that you’re
familiar with it, and we will continue with our first activity in the chat
today. So this is a little warm up, how about you tell us in what state and/or
county that you’re logging in from today? Even though this is primarily for people
in the state of Illinois, and all the educators that are involved and the gift
savvy series are from the state of Illinois like obviously University of
Illinois system, University of Illinois Extension, and North Park University, and Columbia
College in Chicago, we promote this to people across the United States. So I
kind of want to get an idea of where people are coming in from. Lots of
Champaign, Sangamon, lots of Illinois, there’s Texas,
Will County, that’s where Sasha is, lovely all over the place. One time we had
somebody from Canada and that was pretty cool that we hit international fame. So
we’re gonna continue moving through the slides since we have so much to cover.
Speaking of things that we’re gonna cover, these are our learning objectives
today, so we’re gonna be talking about what types of loans that you might have,
we’re gonna be focusing on the ones that are currently available. We’re also going
to be talking about what you need to do to get organized with your student loan
repayment. You want to know how much you owe, and who you’re going to have to pay,
we’re gonna talk about servicers, we’re gonna talk a little bit about the different tools that you have
for managing repayment tools and services. So not just like calculators
that exist, but also what are the repayment plans that are available?
What’s deferment? What’s forbearance? All kinds of things that might help you in
managing your repayments obligations. we’re also going to talk a little bit
about what the risks of default are, and how to avoid default. There’s so many
options available, it can be overwhelming but you definitely want to avoid default,
that’s why there are so many options. it’s just hard to figure out which one’s the
best for you sometimes. So we’re going to talk about what they are, and kind of
what the pros and cons are of those. We’re also going to talk about what your
rights are when it comes to student loan repayment and where to report any
problems you might have with the lenders or servicers that you’re dealing with. So
again, if you have any burning questions that you want to have addressed throughout
the webinar, use the chat feature. So again, we love the chat and we want to
kind of know where you are in the student loan management process. Are you
currently in school or in deferment? Are you in your grace period? Did you just
graduate and you’re just waiting for the repayment to start? Are you in repayment
actively? Are you in forbearance? Or are you are you not sure where you are or
you need to be? Oh lots of people are in school, some people are graduating in a couple weeks, lots of in school. Okay that makes sense, that
makes a lot of sense. Okay I’m gonna continue. Let’s talk a little bit about
what student loan looks student loan debt in the United States looks like right
now. So there are currently a total of 44.7 million people
that have student loan debt, and that equals about 1.56 trillion
dollars. That’s a ton of money, and of those borrowers 11.4% of them are either delinquent or in default. So that’s a pretty big chunk
of 44.7 million people. As far as how many people are in school,
like you, 7.4 million are currently in school borrowers or currently in school, 3.7 million are in deferment, 1.7 million are in
their grace period, maybe they graduated in December or maybe they’re in a plan,
maybe they graduated or left school during a different time period so that’s
why there would be 1.7 million in their grace period. A lot of you will be
entering your grace period pretty soon. 17.8 million are
currently in repayment, 2.6 , 2.6 million, numbers are hard today guys,
are in forbearance and 5.1 million are in default. And we’re going to talk more
about delinquency and default later, but this kind of gives you an idea of where
you are in the grand scheme of data when it comes to student loan repayments
since it’s such a big issue. We just want to really let you guys know that we’re
not going to be covering all the different types of loans available so if
you have questions about your student loans you want to contact your school or
your servicer, but we will be going over a lot of the different types of loan.
So just letting you know, we won’t cover everything but we will be
covering a lot. Alright, so when it comes to student loan repayment one of
the biggest things is getting organized, and we’re going to talk a little bit
about how to do that. You want to know how much you owe, what types of loans
that you have, since it impacts what your repayment options are, and who your loan
servicers are, because that’s who you’re going to make payments to, that’s who you’re going
to contact when you have issues, that’s who you’re going to contact when you need
to make changes to your repayment plan. So we’re gonna be focusing a little bit
on that. First you want to gather all the information, so if you have multiple
types of loans you might have to go multiple places. So for federal loans
like the direct or the FFEL loan you’ll go to either or and you’ll probably use your FSA ID if you have federal loans to log in
there. If you have campus based or institutional loans, you would visit your
school. Perkins is technically a federal loan but it’s serviced by the school,
managed by the school so it’s like a campus based federal loan. That’s not an
active loan right now, that loan expires so we’re not going to focus on
that, but that’s just one example of a type of loan that your school would have
information on so you can contact them about it. And then if you have private
loans or you don’t know who your lender is, you can go to
and pull all three of your credit reports from the three major bureaus for
free once every 12 months. So that’s a good resource to have if you have
private loans or even if you want to look at how your repayments have been
reported to the service, to the credit bureaus. It’s a lot of words here guys.
And if you do pull your credit reports it’s important to remember that there
might be information related to your federal loans too, so all that
information is going to impact your creditworthiness
and you might see some information. The important thing is going to make sure
that’s accurate and it can be a good source for finding who your lender or
servicer is if you don’t know who it is. Alright, so here are some of the current
federal student loans that are available, there’s the direct subsidized loan, a
direct unsubsidized loan, the Direct PLUS loan and the direct consolidation loan.
So the most confusing is probably the subsidized versus
unsubsidized student loans. Does anyone want to summarize in the chat for us
what you think the difference is? Obviously we have some of the details up
here on who is eligible for these types of loans and what some of the
differences are, but if you want to put in the chat and give us a better idea of
what your understanding is. Mmm the other thing that I want to point out is that
the PLUS loans are available to grad and professional students, and parents of
dependent undergrad students, and that it is credit impacted. So your credit
history can impact whether or not you can get this type of loan. So, does anyone have a…. we have one
answer :subsidized does not accrue interest while in school. This is true,
the reason why it does not accrue interest is because the government pays
it on your behalf while you’re in school, but you have to be in school at least
part time and that’s defined by what part-time or full-time is categorized as
actually specific school. So in most of the institutions in the University of
Illinois system it’s at least six credit hours, so if you drop below six credit
hours, then you start accruing interest and you have to start making payments on
any type of loan that’s available here. So those are some of the high level
differences. Subsidized, you don’t accrue interest, unsubsidized you do accrue interest; subsidized is only available to
undergrads, whereas unsubsidized could be available to undergrads, grads and
professional students. So those are the high level differences. We’re also going
to talk about consolidation loans a little bit more later, that’s when you
combine all of your loans. We’ll talk more in depth later about consolidation
loans, so the other type of loan that you might have is that private or
third-party loan, these loans are typically based on credit history, and
your credit will impact both the interest rate as well as your
eligibility to obtain these types of loans, and it’s important to remember
that only like 7.6% of outstanding student loan debt is private.
Over 90 percent of student loans are federal loans, so the thing to remember
with private loans is that you don’t have the exact same rights or options
for repayment that you do with federal loans. and we’re going to be focusing our
repayment conversation on federal loans. the important thing to remember with
private loans is to read that fine print so you know what your obligations are, so
you avoid default and that you are working with your servicer if you are
running into issues just in case they can help you out. So there’s there’s not as
many options with dealing with private loans if there are any issues but the
important thing to remember is most loans are federal so this is only a
small percentage of the entire outstanding student loan debt. So I’m
going to hand it over to Sasha to talk about repayment. Thanks Andrea! So to
start off, especially if you’re going to be graduating soon
in two weeks, oh goodness you want to know how much you owe and what types of
loans you have, and who your loan servicers are. So to get us started we’re
going to be talking about when is your first payment due. So in the chat
if you could answer: immediately or three months or six months or nine months, one
year, unsure? Lots of six months, unsure…so I’m glad
that you those who are unsure are on, because looking forward we know that there’s a
grace period right! The grace period is the period after you graduate you leave
school or you drop below halftime enrollment before you’re required to
begin repayment on student loans, and depending on the type of student loan,
there are two different grace periods. So, looking at the grace periods, we get the
answer; we have six months for Federal Direct Loans or Federal Family Education
Loans, and then there’s nine months for federal Perkins Loans. So if you don’t
have a Perkins loan, don’t worry about it, but if you do have the Federal Direct
Loan, you have a six month grace period from the time you graduate until
repayment starts. So one thing you should know is that you’re still accruing
interest during your grace period, especially if you have those
unsubsidized loans, so let me say that again: You’re still accruing interest
during that grace period. And then again if you have a private loan like Andrea was talking about, you may be required to start payment
immediately after loans disperse, so you just have to look at the types of
loans that you have, but again for federal loans, we’re looking at six
months, federal Perkins Loans you’re looking at nine; but for most people it’s
six. So let’s talk a little bit about what are my repayment options? We’re
talking about the different types, I’ll be really honest with you guys that
repayment feels a lot like pac-man. Pac-man is eating away at your money
with very little rewards or bonus points from eating the ghosts, you know get to
eat the ghosts and then you get a reward but not here not in student loan land.
There are different types of repayments so there’s lots to talk about so hold on
to your hats folks, because there’s lots to talk about. So this is just kind of a
very large overview of standard repayment plans or a repayment plan
summary. So you can see here that we have, there’s four categories and then that
last category is driven into four different smaller categories. So we have
the standard repayment, the graduated to graduate extended, which I’ll talk about just in a second, and then those income driven
repayment plans. So one thing that we wanted to talk about in the webinar is
that we wanted you to really focus on what kind of repayment plan you wanted.
So with most people are probably going to enroll in the standard repayment plan.
This is a fixed amount each month until your loans are paid in full; the monthly
payment amount will be at least $50. It might take you… it’s gonna
take ten years to repay the loan. It might be a higher payment but it gets
paid in the shortest amount of time, and you usually pay less interest overall. So
one thing to note is if you don’t do anything after this webinar, you do
nothing, and you just go into repayment, this is gonna be the one that will
be chosen for you automatically. Standard is the most common repayment plan out
there. I’m quickly just gonna talk about graduated, but we do have an example here
in the next few slides, so we have a graduated repayment, so the payments
start out lower and they increase every two years. This is our… this your monthly
payment will never be less than the amount of interest accrued, so you’ll
always pay that amount of interest accrued plus maybe a small amount of principal
so just think about it as a stair-step you’ll see that graphic here in a minute,
but we wanted you to let you know that. And then graduated extended is
for those who have amount that’s more than $30 in outstanding loans,
and again you’re repaying over, this is for twenty-five years and it goes up like a
stair-step. So this is if you do have a lot of loans,
this might be something you might be interested in, again this is a
longer repayment so you’re repaying on more interest. So that’s something to be
very very aware of and very considerate of , so these are just some of the options.
And then income-driven is very… I don’t want to say that they’re good or
bad, they’re not either, there are just a lot of steps that are involved with
income driven repayment plans because technically, they’re going to look at
what your income is every year so they’re gonna
want to know how much you’re paying in taxes, they’re gonna look at some of that
you know, how many dependents do you have, do you have any children, things like
that; but these income driven ones are really good for the public student loan
forgiveness which we’ll talk on about later but I want to keep us going on our
webinar, so let’s keep going over to the next slide. So one thing that you should
know is that you do get a discount on your an interest rate if you sign up for
automatic payments, so an ACH is something that you may have heard it
before because it’s not unique to student loans. It stands for Automatic
Clearing House and it’s the method in the United States for a direct deposit or
automatic payments from your bank account. So you do get like a little
small interest rate reduction for signing up automatically; this is
something to be thinking about when you’re looking at repayment for student
loans. So let’s look at an example of a student in Illinois, so this is Vanessa,
and she is about to graduate maybe like some of you, and she is accumulated
$25,000 in student loans. Her interest rate is 6.8% so we’re talking about how
much her monthly payment will be, and how much interest she’s gonna pay over the
life of her repayment plan. So if we’re looking at repayment plans there’s the
standard and the graduated, so graduated just means it’s a stair-step, okay, just
think like graduating across the stage you have to take go to the stairs to
graduate, just something to think about. So we can see here that the the loan
amount is the same on each side but the monthly payments are different, so the
monthly payment for the standard plan is $288, it’s gonna be that way every year for ten years, where the graduated does
change. You can see the the large difference in interest repayment paid;
the standard is about nine thousand… $9,500
where the graduated is 12,000 that’s it that’s a significant
difference. The two plans… if we’re talking about the two plans if Vanessa
wants to save herself $2,600 in interest over that 10-year
period that’s where she’s gonna see that savings so just something to be aware of
when we’re talking about standard versus graduated. So to give you
a better visual we wanted to show you what the repayment schedule would look
like so with… again with the standard we can see that it’s $288 all the way from year one all the way up to year 10 with that very
last one, but with the graduated like we were talking about it does stair steps so
that first year it’s $165 where closer towards
the end of year nine in year ten is close to $500. There’s a
$330 difference here which could be
staggering for those students who are really struggling.
The goal of graduated repayment is so that way you know if you aren’t making
very much in the beginning of your career, you can you know take a lower
payment and then you know once you start making more hopefully, hopefully ten
years later you’re making much more than you did when you first started out you
can actually take care of that repayment…that plan so this is
just another way for us to show you the differences in the probably two of the
most popular repayment plans: the standard vs. that graduated. So we also
wanted to show you some of the repayment plans, so you already seen the
standard in a graduated we kind of already know what that looks like,
but we also wanted to show you the repay, which is another income base, and the ICR
which is another income contingent repayment plan. So these just show you
the differences here, they all have the same interest rate they all have the
same loan amount but the months in repayment are different; you can see
there the months and repayment are significantly longer in repay and ICR , the monthly payments change as well, but the total amount paid back
is significantly different for the ICR; so that’s something we wanted to tell
you about. There are a number of federal loan borrowers on the income base
repayment, there is about 2.91 million people who are on these, so these are
just things we wanted to talk about we also wanted to ask you guys if this was
you, if you were Vanessa or ban I don’t know, what factors does your
payment plan depend on? And there are no right or wrong answers here, so we just
wanted to know what repayment options would you choose. So I’ll wait in the
chat and see if I get any answers: income base, okay… anyone else? income, standard, standard, like I said
there are no right or wrong answers here you know you might be doing an income
base because you aren’t making as much money and that works better for you, but
you might be looking at student loan forgiveness which we’ll talk about here
in a few slides so looking forward to having that conversation. So a lot people
setting standards that’s great, so I’m gonna switch this over back over to Andrea,
and she’s gonna talk more about consolidation. So as I promised you
earlier we’re gonna talk a little bit about how consolidation loans work. So
the big thing to remember is there are some pros and cons to consolidation
loans, and these types of loans is when you combine multiple federal student
loans that might have different payment schedules or they might be going to
different servicers into one direct consolidation loan; so in this case
you’ll have one payment instead of multiple monthly payments. Your monthly
payment might be lower kind of depending on what repayment plan you choose on the
consolidation loan, all the federal loans can be consolidated there are no
application fees to consolidate federal education loans into a direct
consolidation loan, so if you see like an ad that says “consolidate your loans
famous $20 fee and that’s it”, that’s a third party that is basically charging
you 20 bucks to file the paperwork you can do yourself, so that’s just something
to put out there. There’s a lot of scams related to student loans, student loan
debt relief, all kinds of stuff so we want to point that out when we see it.
Some of the cons might be that you lose access to some of the federal repayment
plan options or loan forgiveness options, that kind of depends on where you are
repayment period could be extended up to 30 years, which is a really long time
especially if you’re looking at a max of 10 years under standard plan or a
graduated plan and then you extend that by a lot, it could also increase the
compound interest that you pay over a period of time. The federal Perkins Loans
are not automatically included in the direct consolidation loan; I have some of
my colleagues that serviced federal Perkins Loans, our schools and that is a
common mistake and reason why people default on their federal loans as they
consolidated the rest of their loans but they forgot to include the federal
Perkins loan which is a little bit of an extra step, and they end up defaulting on
their Perkins loan and lose access to all of their repayment options or public
service or teacher loan forgiveness options. And you can typically only
consolidate once, but like let’s say that you consolidated after undergrad, and
then you went back to grad school and added new federal loans, then you could
also consolidate again and add those new loans from grad school into the
consolidation loan that you already have. It’s important to remember that the
interest rate is fixed for the entire life of the loan for consolidated loans,
and it’s based on a weighted average of all the interest rates that
you’ve consolidated, and it shouldn’t exceed 8.25%, so
that might be a benefit to you unless all of your loans are much lower and
they want to charge you that and they do the consolidation. So some of you might
have heard of private versus federal consolidation, when they say private they
actually mean refinancing, it’s not a consolidation loan it’s considered a
refinancing loan, so some of the differences between a federal direct
consolidation loan and private refinancing loans that are through
private companies is the fact that only federal loans are eligible for
consolidation loans but you can do private and sometimes federal loans in
the refinanced loans your rate is fixed, and it’s usually based on a weighted
average for the consolidation loans, you’re not going to get a
lower interest rate, you’ll get either the same or like a weighted average. So
it’s going to be based on the different amounts that you have and
the interest rates associated with the existing loans that you already have.
Your rate could be variable or fixed and is definitely based on credit for
refinancing loans, so it could be more or it could be less. Credit checks are not
required for consolidation loans but they are definitely required for
refinancing loans. You won’t be able to save money in the long term on a
consolidation loan but you might be able to lower your monthly payments,
especially if you’re extending it up to that 30-year period; you probably
will be able to save money if you receive a lower interest rate on
refinanced loans; you might be able to get a loan or lower payment under
consolidation loan you probably can get a lower payment under refinanced loans
if that’s what your goal is, you also need to consider that consolidation
loans are eligible for income driven repayment plans like: ICR, IBR, pay
and repay, but private loans, you’re turning it into a private loan, so you
don’t have access to those repayment options if you refinance all your loans
into a single private refinance loan. You can still have access to public service
loan forgiveness under consolidation loan, but you will not have that with a
private loan, and that’s really important to remember and if you roll in your
federal Perkins loan like I talked about earlier into the consolidation loan, you
will lose any of your public service or your federal Perkins loan forgiveness
options if you consolidate it. So tadaaa!!! That’s the basic overview, there’s pros
and cons and each and every situation is going to be different, so that’s
important to remember when you’re thinking about whether or not you want
to consolidate or refinance. All right, so based on some of the things
we’ve talked about, we’re gonna use that chat again: what do you think some of the
benefits of loan consolidation are? It’s kind of a review for you to practice in
the chat . And what do you think some of the limitations are to loan
consolidation? And we’re just gonna be focused on consolidation, but if you’re
thinking more about refinancing, just enter that. So there’s one payment for
consolidation, possibly a lower payment, lots of one payments, that makes
things easier. For those of you that haven’t been in repayment, if all of your
federal loans go to the same servicer, you’re still only gonna have one payment,
even though you have multiple loans. So it might not be necessary to do a
consolidated loan if they’re all going to the same servicer anyway… All right so
in that sort of time we’re going to continue. So we’re gonna talk a little
bit about loan forgiveness; there are several types of loan forgiveness, so
there might be the income based repayment, the page you earn, and vice
pay-as-you-earn cancellations, after so many years of payments for instance, I
think IBR does 25 years of repayment after that if you still owe money, you
can get the rest of it cancelled; but you could have to pay income tax on that,
any amount that’s cancelled, but that also depends on what the tax laws are at
the time that the amount is canceled or forgiven. Teacher loan forgiveness if
you’re a teacher you could qualify for partial or limited teacher loan
forgiveness; there’s a lot of qualifications for that and it varies
pretty drastically so we’re not going to focus on that, but we did put or we’re
going to put in the chat a link to more information on teacher loan forgiveness.
and then we’re going to talk about public service loan forgiveness that’s one of
the big things because it’s a little bit broader, so we’re going to talk more
about what the requirements are for that, and what the benefits are. So the public
service loan forgiveness program or PSLF forgives the remaining balance on your
Direct Loans after you have made 120 qualifying monthly payments, under a
qualifying repayment plan, while working full time, for a qualifying employer. Is
anyone overwhelmed with the qualifying features of this program? I’m raising my
hands, you can’t see it, but I am a little overwhelmed.
But we’re going to talk through it together. The big thing with this particular
program is that it’s intended to encourage individuals to enter and
continue to work full-time in public service jobs like teaching, or police work, or be a fireman or be a doctor, and you may qualify for the forgiveness of the remaining balance on your direct
loans, after making 120 qualifying monthly payments. That’s basically 10
years if you do it consecutively, which is the same as the standard repayment plan. So let’s talk
about the qualifying monthly payments real quick. So, these payments must be made after
October 1st, 2007, most people in our payment will be making their payments
after October 1st, 2007 since that was a very long time ago. It must be for the full
amount as shown on your bill, so it can’t be a partial payment, any amount
over that doesn’t really count, only for the full amount as shown on the bill
available through your servicer; and it can be no later than 15 days after the
due date. So if you are 16 days late, that one doesn’t count, just FYI. Any payments that you make while you’re at school, while you’re in your grace period, while you’re in
deferment or forbearance, or while you’re in default, do not qualify and
it can be difficult to get out of default in order to qualify for public
service loan forgiveness through these payments. So those are things to be
mindful of and we have more information on the qualifying monthly payments in
the chat too. So there’s only five repayment plans that are the qualifying
repayment plans; basically all the income-driven repayment plans, and then
the standard repayment plan, but like we said before the standard repayment plan
is for ten years or 120 qualifying payments right, so you wouldn’t receive
any forgiveness if you stayed in the standard repayment plan because you
would have already paid off the entire amount of your balance; so there would be
no benefit to doing that unless you just want to be debt-free. There’s obviously
some differences you have to qualify for income driven repayment
plans, so if you make too much, even if you’re making qualifying
monthly payments, and you’re working for the right employer, if you don’t qualify
for income driven repayment plans, then it might not be an option for you to
take advantage of public service loan forgiveness even if you have the other
options available, right. So those are things to remember when you’re
considering public service loan forgiveness. And then the employers, it
can be a government organization (federal, state, local or tribal), so for instance
University of Illinois employees or any state institutions that employ borrowers,
their employees could be eligible. Any not-for-profit organizations that are
501(c)(3) tax-exempt or other nonprofits that don’t have that 501(c)(3) exemption,
but provide qualifying public service. And there’s more details on this on the
website, but for example if you’re a full-time in AmeriCorps or the Peace
Corps, those count as qualifying employment for this
particular program. So those are just a couple examples of what things might
qualify for qualifying employer; you know I use the word qualifying a lot but
they’re very serious about the qualifications for this particular
program. You might have noticed in the news that a lot of people are applying
for public service loan forgiveness and not getting it, there’s a lot of
information about legislative changes that could happen to public service loan
forgiveness, it’s not sustainable in its current form, so all those proposed
legislative changes could impact what’s available later. So it could be
eliminated completely, it could be limited, so one of the legislative
suggestions is to max it out is $57,000 as the max
forgiveness or limited forgiveness available. Most likely the people that
are in school now would be grandfathered into whatever changes made, and then one
of the big considerations is that there are some abuses of the system that are
going to be considered and any changes that are made; what we want to just
stress here is that public service loan forgiveness can change, and so can your
career path, so think about what your longer-term goals are, and how your
current and potential future situation can either help you make a decision on
taking advantage of this program or if you want to expedite your your repayment
options in a different way to help you manage repayment. So it kind of depends
on your individual situation, but we just wanted to let you know that there could
be changes to this program and that could impact what’s available later. So
I’m going to hand it back over to Sasha to talk about avoiding defaults.
Thanks Andrea! So we really want you to be… you know
there may be a time of your life when you can’t pay your student loans so what
do you do with them? So let’s find out so that’s one thing
we’re going to talk about. So the term delinquent actually comes from the first
day you miss a payment, so it can just be one day past due, and it’s delinquent.
And it’s considered delinquent and reportable after 90 days, so after three
months; and the loan stays delinquent until the past due amount is repaid or
other arrangements are taken care of. So the other term you should be aware of is
called, default ; so default is a failure to fulfill an obligation especially to
repay that loan, and you have not made any payments for at least 270 days, so
that’s about nine months and about 11.4% of borrowers
are either delinquent or in default. So this is something we want you to really
be aware of, because you can just be delinquent by one day but that default
is what we really want you to stay away from. So there are some really big
consequences when it comes to default, these can be very very severe and we
want… I almost… I’m not trying to scare you but
I really am, because default is a real thing that does happen to people and we
want you to know about. We… there’s one thing called acceleration, and this is
when the entire balance of your loan including any interest becomes
immediately due. That’s a very scary thing especially depending on how much
you have; of course you can lose access to federal aid and loan benefits, such as
deferment and or forbearance, which we’ll talk about here in a minute,
and you may lose the ability to choose repayment plans, you may not be able to
switch from one plan to another. Any kind of student
loan default stays on your credit report indefinitely for a very very long time.
A lot of people say oh well maybe they’ll stay on there for seven years;
from my understanding, you loan default stays on there forever, forever! So just
something to be aware of . And if you default, you could have your wage
garnished, you may have your tax refunds taken away by the federal government, and
other federal benefits maybe withheld from you. So these
are things just to be aware of, you know if you also are on default, you know your
school may withhold your academic transcript especially if you’re like
trying to get into a new school or if you’re trying to just send off to a new
job; this is something that you should be aware of when we’re talking about student
loans. So consequences are, defaults are very harsh, so we definitely want to keep
you out of default. So let’s talk about some of the ways to do that. So some of
the ways you can work with your loan servicer to avoid default,
I think a lot of people have… they usually don’t ask the questions, so the
answer is no, so if you don’t ask the answer is no; but I always think that
some loan servicers are looking to help you. So maybe choosing an alternative
repayment plan, so maybe you are in the standard repayment plan and it’s just
not working for you, you know you can always talk to that person and see if
you know you can get a change. And then we’re going to talk about
deferment and forbearance on the next slide. So I want to just like also say
like I used to be a debt collector, I collected medical debt, and you know like anyone
who’s working with you wants to help you get back on track, we don’t want people
to end up in default or having to have you know, their wages garnished
or anything like that, because it’s a lot of time for everyone all around so we
want to keep you out of that. So deferment is a period in which repayment
of the principal so that… basically that however much you took out plus the
interest in your loan is temporary delayed. You can apply for deferment for
a multitude of reasons like if you’re in school, so like for example I went to
undergrad, I took a few years off I was paying on my loans, then I went back to grad school, so all my loans were back in deferment. If you’re having an economic
hardship, if you have a fellowship, if you’re unemployed, or if you’re an active
duty in the military, so these are some things to be considerate of, you don’t
need to make payments in deferment, which is really nice, but there
will be interest accruing especially if you have unsubsidized loans .So a loan
servicer can grant you a forbearance if you can’t make your scheduled loan
payments, but you don’t qualify for a deferment, so you can request a
discretionary forbearance for either a financial hardship or an illness; so
that’s something to be aware of, but if you request a mandatory forbearance for
several reasons like if you’re a medical or dental internship or a
residency program, like for doctors, if you’re performing a teaching service
that qualifies you for teacher loan forgiveness, or you’re a member of the
National Guard, in an active duty, or among other things. So if you request a
mandatory forbearance the following reasons like I said that teaching ,the
dental internship you’re servicing, if you are in the military, you get a
national service position which you’ve received an award. So there’s lots of
things to be aware of, but just know that you can work with your loan servicer to
get one or if you don’t qualify for one you can probably try to qualify for the
other. It’s …again, remember that the interest will accrue on your student
loans even if you’re not paying them, even if you’re not able to pay them. So
looking forward, definitely when you are working with your loan servicer we
want you to make payments on your they want you to make payments on your
student loans so they’re going to work with you to kind of help you with the
the differences there of course you can request changes to your payment plan. So
I’ve done this in the past where I was in the standard repayment, I switched to a
graduated repayment because at that time, I really wasn’t making very much money, and then I was able to you know pay that off. You can apply again for student loan
forgiveness if that’s something that you’re interested in.
Andrea kind of talked about that in more detail. There is loan cancellation but
those are typically those income-based that we talked about earlier, and then of
course you can request for deferment or forbearance. So like I said, if the one
thing I want you to take from this is if you are struggling, or you know you’re
going to be struggling like the next month or something, let someone know; you know just be really honest with your loan
servicer about your decisions, and where your finances, and what they look like,
because they’re going to try to help you no matter what. So just something to be
considerate of, I know sometimes for us it’s hard to reach out and say hey I am
struggling, but I want you to look at it from a different perspective of that
they want to help you get this taken care of. So there’s all sorts of
different types of loan servicers out there, there was one that was just
mentioned earlier by one of our people in the chat, but these are just some
really some of the bigger ones that are out there: Navient, Nelnet, MOHELA, these are some of the loan servicers out there that are
you know helping us to repay those loans back. So I have a question for all of you:
Is it better to wait after graduation to start paying money for loans, or make
monthly payments while still in college? Hoping you guys answer in the chat,
monthly payments in college, that’s definitely if you can right? We
want you to you know make wise decisions, but yeah definitely if it’s doable.
So let me just give you an example, so we wanted to show you what the interest
rate on an unsubsidized student loan looks like; so if you paid interest
while in school versus not paying in school, you can see that these loans
these amounts went up significantly and the interest rate went up. So this
assumes a 5% annual interest rate, so we just wanted to show you the the real big
difference here between the two of you know paying interest while in school, and
then not paying interest while in school. So I have another question: So what are
some ways to pay off student loans faster? “get rich”, oh I wish, “live with your
parents” hey that’s not a bad way I mean if you if you enjoy being with your
parents that’s that’s not a bad way to do that. “roundup in the payment” , that’s a
great idea… okay we wanted to just give you some of our ways we wanted to show
you to expedite that loan payoff; definitely looking at the next slide
please… limiting what you spend while in school,
I think that’s probably one of the bigger reasons; I know most of you are in
school, some of you are really literally about to graduate, so… but if you’re
looking at maybe a graduate program this might be something you want to think
about, or if you’re a junior looking to be a senior next year, limiting what you
spend in school especially how much you take out. You know you can do bi-weekly
student loan payments if that’s something you are interested in doing, of
course take advantage of that Direct Debit discount that that we mentioned
earlier, and if you are paying more than the minimum make sure that, that amount
is directed directly to the principal. We kind of talked about that a lot in the
chat, but we haven’t really talked about on the webinar, but we want you to
definitely wanna make sure that if you make an extra payment whether it’s $50,
$100, even $10, that that money goes directly to that principal. And of course
you can use the snowball method or the waterfall method to help you pay down
those as well. We’re getting kind of getting toward the end and we just want
you to know that you do have rights, we don’t want you… you don’t have to pay for
help on student loan issues; you shouldn’t have to pay someone to help
you figure out what’s going on and how to work through that, you know you
always should just be wary of people who who do that. And even if you have
defaulted on your loans, so again that nine months cutoff like you really
haven’t really been paying on it, you still do have rights, you should just
know that those are there and available for you. If you have a bad student loan
servicer, you definitely want to report them to this Consumer Financial
Protection Bureau, the CFPB they take a lot of
those bad loan servicers into account, and they actually do find them, and so
that’s really great you know we’re trying to change some of that. And then
if you are accosted by student loan debt relief scams, please let that be
reported to the Federal Trade Commission, you know we want those things to be
abolished because we don’t want people to be scammed out of their money,
especially those who are really struggling to repay. So just to show you
some of the complaints filed with the CFPB so far in 2019, about between… oh
this is from December 2018 to…or January 1, 2018 to December 19, 2018
there were 8,300 complaints filed with the CFPB, 64% were federal student loans,
and 36% were private student loans. So this is just… we just wanted to show you
like that you know they really do care about what’s going on and you know they
want to help you if you are having struggles.Like I said, there’s at least
20% of those people who are struggling with repayments, there are problems with the
credit reporting agencies or their credit score, so something to be aware of.
And we definitely want you to file a complaint,
identify the issue, and then record the facts; whether that’s email, phone
conversations, you know we want you to collect that documentation. Like I
said, I used to be a debt collector, I would always tell clients “you know make
sure you’re writing this down, because you know we want to make sure that we’re
on the same page about what’s going on with our repayment plan, whether
it’s student loans or debt of any kind, we definitely want you to make sure that
you get that information”, and then it happens if they can send it writing,
that’s a good way too. If you need to file a complaint we can file it with the
Federal Trade Commission, that’s, the CFPB, and we have the
Ombudsman’s group for federal student loans, so if you’re really struggling and
you really need your report we want you to send that complaint to the Ombudsman
and the CFPB for sure. So I’m gonna switch this back over to Andrea, she’s gonna sign us out. So just for review, you want to know what
you owe, who you owe, when you need to pay, what your options
are for repayments, and what tools and resources you have for making informed
decisions on the best repayment or debt management plan for you. Which we have
shared a ton in the chat, we will also follow up with a link to our Moodle
course that has all these different resources and tools and information for
you, to be able to access at any time, even when you are you know 10 years down
the road alumni; as long as the student money management Center exists, and
Moodle exists, the internet exists, it will be there for you. Here are some extra
sites and helpful tools, we went over a lot of these, but I want to just review
them. The Department of Education Student Aid website is a really informative tool,
has lots of information that’s where we got a lot of the information that we
shared today. We also have a repayment calculator or repayment estimator that
can be really valuable because you can compare all the repayment plans that you
may be eligible for based on your adjusted gross income, what your federal
loans are, as well as where you live, there’s are all considerations for
income driven repayment plans so it kind of automatically does that for you all
you have to do is sign in with your FSA ID and I’ll automatically import all
your federal loans. So that’s a really valuable tool that we use even in
coaching sessions and the student money management Center for comparing options. is where you go to get information on your student loans as
well as servicers, is a tool that we shared in the chat, where
you can basically create a debt repayment plan; it’s not just for student
loans it’s for all types of loans and debt, but it can be a really valuable
tool for you to compare your debt snowballs, or the debt avalanche, or waterfall method, whatever you prefer to call it, and kind of compare what would work best
with the given resources that you have. The CFPB’s paying for college website
is really valuable for looking at student loans, and understanding your
funding options if you’re still in school, it can also help you with
answering some of the student loan questions that you have. Cooperative
Extension has some student loans fact sheets that you can check out if you’re
interested as well, and we have put that in the chat. And then if you’re in
Illinois, the state attorney general has a student lending page where there’s also
a state of Illinois Ombudsman that you can file complaints with, or look out
look up information related to student loans originating in Illinois; so that
can be a helpful tool as well. This particular program is a borrowing badge
eligible program, you just take the quiz and you get credit towards one of our
five digital badges. So borrowing, if you complete three borrowing eligible
activities you can receive a digital badge and put it on LinkedIn, on your
online portfolio, wherever you want to put it to show people your knowledge
related to borrowing; so that’s all baked into the digital badges that we produce.
You could also earn one in earning, protect, save, and spend. So you have five
digital badges that you can earn from us and we’re kind of advancing the library
that’s available for those badge eligible activities so you can choose
things that are most relevant to you, and learn more in the link that we put in the
chat. Our next webinar is on May 22nd at noon, and it’s choosing a financial Pro
this is the last one of the academic year so I know it’s past when everybody
graduates but hopefully you settled down you taking a look at your finances and
you’re like I need a financial professional how do I choose one so
that’s what we’re gonna go over how to choose a financial professional when
your situation gets a little more advanced you want some more help so
thank you we’re going to stick around and answer any questions that you might
have but don’t feel obligated to stay on I know
people need to go it is 1 p.m. it’s time for lunch it’s time for class it’s time
to get back to work thank you for joining us today so what questions did
we get fascia then focused on not presenting
I feel like Kathy did a pretty good job and I tried to answer while I wasn’t
speaking I have got a song how do you sign his next webinar that’s a really
great question we’re in great question so you go to go open it go dot you’ll
annoy that edu slash get savvy webinars so it’s a same form that we’ve used for
all webinars you just select the last one there and we’ll send you the login
instructions the day before and the day of the webinar will also send anyone
that’s registered for that a link to the recording once it’s available later in
the week so excellent question and then somebody asked yeah we’re gonna send up
a follow-up email so that way you get all the links and all the great
information plus the copy of the power PowerPoint and then the video so great
stuff for those who need it and have you no more questions about it so we have
any other questions that we can try to answer for you while we’re pick it out
and thanks again for everyone for joining us I know it’s a busy week
especially at you I see you is and what you see I’m sure it’s busy in Texas for
our Texas person trying to see if there were any missed No thank you Amy for
coming I thought I saw a question about if your parents borrow and the student
dies oh yes so I know some Marco it’s probably a little further away some
that one’s complicated because I have seen instances where and it still had to
pay I kind of I think it depends on how the loan was taken out you know who the
servicer is he gets worse with private loans but I’ve also seen instances of it
happening with PLUS loans which is tragic to be honest about the army
student loan repayment programs no I need to look it up now I really don’t
but I do have a resource I could reach out to I think it was Marco who asked
that so if Marco if you want to privately send me your email I will send
some information over to my airforce friend and okay cool so you wanted to
send to me privately I don’t get spam emails but I will take a look at it and
send it to her because I really don’t know when I apologize we’ll follow up on
with the UIUC military person – that’d be good yeah I know that sometimes you
get bonuses but I don’t know what all the programs are that’s an excellent
question our grand PLUS loans eligible for income based repayment plans um
yes because they are federal loans but again it depends on how much you’d make
so it depends on how much you owe as well as how much you make kind of what
the calculator will tell you just because they don’t have the calculations
memorize as to whether or not you qualify it’s basically based on if your
standard repayment plan or graduated repayment plan it’s above and beyond
what’s reasonable based on how much make then you could qualify for one of the
income driven repayment plans and they’re even talking about
changing I think the repay option to a second version we repay and then getting
rid of some contingent because so few people use it and it
seems like a pretty expensive option if you look at the overall cost of the loan
by the time you finish paying it off oh yeah there’s definitely an online
calculator I’m pretty sure you put it in the chat right Andrea yep but it’s not a
repayment estimator or repayment calculator and you all you do is log in
with your FSA ID and you can compare all the different things that you are
eligible for based on adjusted gross income and where you are and the more
that’s gonna be also in our email that we send out following up this as well so
good question do some loans plans not allow you to pay
additional money to the principal not that I’m aware of
but if you do run into that oh yeah Cathy’s right with some private loans
yes actually I was gonna say sorry but with federal loans I was gonna say that
if you find a servicer who doesn’t let you uh you should definitely you know
report them to the CFPB and some other those other places that we talked about
yeah and and with the private loans the important thing is to read your fine
print so you know if there is a penalty and to make sure to communicate with
them if you want to change it that might be a reason for refinancing private
loans like looking at your your fine prints on your current loans you don’t
have the best conditions right of the loan so refinancing might give you
different conditions where you’re able to pay off early without paying a
penalty what other questions that we have love answering question any tips or pointers that any of you
personally have to repay loans faster oh man
you don’t even know how many tips that we have but we’re gonna share with you
Marco we’re gonna share them with you would you like to go first
st. Chad the only one I have is just making making extra payments on the
principle that we talked about and I had a very small I had eight loans at one
point and one of the loans is really small and I really wanted that win so
I’m back yeah I pay one off so I made sure that every month I made an extra
payment toward that loan and you know finally got that win and felt better
about it but that’s really I mean I best my only tip other than the things we
talked about already I’ll tell my story so I expedited my payoffs by making
payments on my unsubsidized loans while I was in graduate school still so that
helped me minimize the compound interest that was accruing I was working while I
was in grad school so it was an easy thing for me to do and i minimized all
my cost anyway so I was like having roommates and you know watching how much
I spending on food so maybe easy to spend that you know 20 bucks a month or
whatever it towards my unsubsidized student loans and then when I graduated
I tried to do the snowball method where you prioritize how much you pay base how
much extra you pay towards debt based on what the highest interest rate is that’s
typically what the debt snowball focuses on and I was getting really demotivated
so I use the method that they should just describe where I just I decided to
pay off a small one and it felt really motivating and I decided that that
helped me kind of renew focus on debt repayments so instead of having however
many I had I had one less and it helped me I also have a
tendency and this is not the way to do it I would not suggest it to if if I
perceive injustice in my debt repayment or my loan servicers have made me mad i
rage payoffs that is not a good thing it’s a bad thing
Kathy talks about it to me all the time you shouldn’t have rage paid off but it
gets paid off one of my loans after I got a tax return so there’s lots of
different methods you got to make sure to stay motivated and to think about
what are you trading off to one of the things that I think when students come
in for coaching sessions is they pride they look at how much debt they have and
they only want to focus on debt but it’s important to look at if you’re focusing
solely on debt what are you compromising and wealth
building so there might be a balance that you have to consider and I’m sure
that we could talk a whole lot about wealth building and priorities and and
that could also impact you know what your your veteran team is all right
there’s a whole bunch of chat chatter happening so I think Cathy and I are getting to
Lauren’s question about consolidation the way that I understand consolidation
works is that they’re going to take whatever interest rate you have and then
average them so you might be paying more on those 5.8% loans versus the six point
six it’s a weighted average so what they do is they take the amount of debt that
you have five point eight percent rate and they make that let’s say it’s not
the most balanced yeah I’m the highest balance of five point eight percent
that’s going to be a bigger weight to than the six point six percent interest
it has a lower balance so what they mean by weighted balance is it’s based on the
amount that you owe with that particular loan that helped so it’s not just
average it’s weighted average that’s the better yeah
so you might you know if you are yeah hopefully that the answer is that but I
answered Amy’s question so heck yeah Amy but definitely we all we always house
all bar all of our stuff on our YouTube site so
that will come in the email but if you want it now I bet what Andrea I could
grab it for you yes Lorne how about I hope that makes better sense because you
definitely don’t want to try to get a lower rate when you’re doing
consolidation like what Kathy said you if you’re wanting to look for a better
rate you want to do that with refinancing but again then you give up
all your reviews yep so some things to think about and if you are looking for
information related to financial transitions we actually have a life
transitions webinar on our youtube we also have a budget axe webinar that’s
really helpful for life transitions do or just trying to understand
psychology of spending are there any other questions these are all been
really great we just appreciate everyone’s participation today too so
hopefully learn something new and if you you know have questions please let us
know you’re all available to help and I’m gonna get that question for Marco
about the repayments for this the army talked about yes I agree thank you so
much everyone for joining us oh do you have any published videos on retirement
saving or learning how to save efficiently we do have a webinar on
what’s your job word it talks a little bit about retirement options
unlike the value of saving early using compound interest your advantage so
that’s component of the what should job worth but we don’t have anything
specifically on retirement saving but that’s a good suggestion
all right I would tell you if you’re looking at retirement savings especially
if you’re like you’re a new grad about to start a new job is don’t give away
that free money that 401 K if your employer matches up to a certain dollar
amount or a percentage make sure that you are putting at least that much in as
well just see what your options are that’s my short quick tip there’s a 401
K but there’s also some others out there there’s at least four other retirement
plans from a 403 B 457 there’s also like IRA simple IRA which might be available
to startups so there’s so many options and we talked a little bit about then
what’s your job were and kept these steps to investing too can’t a problem
that’s what we try to do and we do these every year too so you
know we might not have one on retirement today but that doesn’t mean it will be
there this fall that’s very true where we’re gonna start
our planning soon for next fall yep Oh Cathy just said that on her Coursera
course there’s more information on retirement and disclaimer that she’s one
of the teachers of this course so excellent resource
oh yeah and everyone’s pretty able to participate we I mean we have people
from extension we have lots of people on so but we also have extension in every
county in Illinois so if you are an in Champaign County you know there’s lots
of things that are going on there as well and I’m a money mentors program I
know all thanks to Kathy everyone all right any more question I keep trying to
shut it down and then we get another really great question I’m so hungry going once going twice
and we’re gonna shut it down thank you so much for joining us today we’ll make
this recording available as soon as we can we’re going to update our course
with all the slide options that we put in here on all the things we put in the
chat so thank you again and have a fabulous afternoon

Paul Whisler

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