student loan repayment manual table of contents - Tufts University

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seek an Economic Hardship Deferment or a change in their repayment options that may make paymentsdue more affordable. If either of those are not options, borrowers may request mandatory forbearance (seeprior section).Borrowers whose Stafford/Direct Loans were made and disbursed prior to July 1, 1993, and who still hadan outstanding balance on that date when they borrowed a subsequent Stafford/Direct Loan after July 1,1993, remain eligible for internship/residency deferment for a maximum of 2 years. This same rule appliesfor all Perkins Loan borrowers seeking a deferment for internship/residency. The grace period would haveto be expired first before the deferment is applied to the borrowers’ accounts.It has been our observation that the confusion appears to lie in how the general practice residency programconsiders its participants. Some GPR programs at hospitals are affiliated with schools while others have noaffiliation with schools. It has been our experience in noting that school-based GPR program participantsare certified as at least half time students by that school’s Registrar’s Office. Therefore, the studentparticipating in this type of program is actually requesting an in-school deferment from their lender/loanservicer and not an internship/residency deferment. In these cases, the student receives all the benefits ofan in-school deferment (for Perkins, Stafford/Direct Loans and Grad PLUS/Direct Grad PLUS), and if theydo not expire their grace periods (on their Perkins or Stafford/Direct Loans) before entering this deferment,the student normally receives their grace period after their deferment period. Hospital-based programs donot list students as in-school because they are not eligible to do so. Therefore hospital-based GPRparticipants can seek a mandatory forbearance (see previous section).Again, we have no knowledge as to the criteria of what certifies a program as hospital- or school-basednor do we know that ALL school-based programs list students as registered students enrolled at least halftime. Those borrowers who will be participating in a GPR/AEGD are urged to contact their programdirectors or, for school-affiliated programs, the school’s Registrar’s Office for additional information. It isultimately up to the lender/loan servicer who must uphold the provisions set forth by the Dept. ofEducation.Choice in FFELP/Federal Direct Loan Repayment SchedulesRepayment plan options for both FFELP (Federal Stafford Loans, Grad PLUS and Federal ConsolidationLoans) and Federal Direct Loan Programs (Direct Loans, Direct Grad PLUS and Direct ConsolidationLoans) are similar with one minor difference. It’s important to note that borrowers can request a change intheir repayment schedule at any point during repayment. However, borrowers entering repayment need totake some time to review their overall financial picture developing a strategy for repayment of all theirstudent loans. The repayment option selected should be the one that is most suitable to their financialsituation. Remember that there’s no penalty to paying off student loans sooner than expected.14FFELP/Federal Direct Loan Repayment Plan OptionsRepayment Plan OptionFFELP (Federal Stafford, GradPLUS, Federal ConsolidationLoans)Federal Direct Loan Program(Federal Direct Loan, DirectGrad PLUS, DirectConsolidation Loans)Standard X XExtended X XGraduated X XIncome-ContingentXIncome-SensitiveXIncome-Based X X
15Repayment Option DescriptionsThe standard repayment schedule (also sometimes referred to as a fixed repayment schedule) entailsrepaying both principal and interest through the maximum 10-year repayment period. Although this is themost optimal repayment schedule in terms of being the least costly to the borrower, it is often not realisticdepending on a borrower’s overall student loan debt in combination with their cost of living. Borrowersare often provided with the standard repayment schedule initially. It’s up the borrower to contact their loanservicer to request a change in their repayment schedule.Borrowers who wish to keep to a 10-year repayment schedule to the extent they’re financially capable ofcan consider a graduated repayment schedule where the borrower is making minimal payments towardsprincipal during the initial years in repayment yet are making payments on the interest due during thatperiod of time. Most loan servicers will allow borrowers to choose paying interest only for a period of 2 or4 years. After that period of time, the student begins to repay principal for the remainder of the repaymentperiod. Borrowers interested in graduated schedules must consider their income levels at the time whenpayment towards principal is expected.Borrowers may also wish to consider an income-sensitive repayment schedule. Note income-sensitiveschedules are only available on Federal Stafford Loans (subsidized and unsubsidized), Grad PLUS(through the FFELP program) and FFELP Federal Consolidation Loans. Income-sensitive schedules basemonthly payments as a percentage of gross monthly income and borrowers must reapply annually updatingtheir loan servicer(s) with income documentation. These schedules require smaller payments at thebeginning of repayment when your income is at its lowest. At minimum, the borrower must pay theinterest charged. Gradually, as your income increases, the expected monthly payment increases. Thetheory behind this schedule is that when your income is higher, higher payments are more affordable yetthey can increase substantially (based on borrower’s income) since the maximum loan repayment term is10 years. With the help of their loan servicer(s), borrowers may need to forecast changes in annual incometo ensure income-sensitive payment schedules are viable based on their overall financial budget. Whenincome starts to increase, monthly student loan payments under an income-sensitive repayment schedulesmight be too steep considering the 10-year repayment schedule.Borrowers who have Federal Direct Loans (subsidized and unsubsidized), Federal Direct Grad PLUSLoans or Direct Consolidation Loans may consider an income-contingent repayment schedule forpayment of these loans. Similar to FFELP’s income-sensitive schedules, monthly payments under anincome-contingent schedule, are based on income but also consider family size and overall student loanindebtedness. Repayment schedules are adjusted annually based on these criteria and a 25-year repaymentterm is allowed. Any balance remaining after 25 years is forgiven. Note that the amount forgiven isconsidered taxable income during the year in which it was forgiven. Income-contingent schedules allowsfor what is referred to as “negative amortization” where payments can be less than what accrues monthly ininterest.Income-based repayment schedules became available to borrowers beginning July 1, 2009. This type ofrepayment schedules is designed for those that will enter lower-paid career such as public service or nonprofitwork. Income-based repayment caps monthly payments at 15% of your monthly discretionaryincome, where discretionary income is defined as the difference between adjusted gross income (AGI) and150% of the federal poverty line which is published annually by the Dept. of Health and Human Services(http://aspe.hhs.gov/poverty/index.shtml). The monthly payments are adjusted annually based on changesin annual income and family size. The maximum repayment length for income-based repayment is 25years. After 25 years, any remaining balance is discharged (forgiven). Note that the amount forgiven is
Page 1: 2012STUDENT LOAN REPAYMENT MANUALTA
Page 4 and 5: STUDENT LOAN EXIT COUNSELING SESSIO
Page 6 and 7: Financial Aid Exit Counseling Forma
Page 8 and 9: 4) We realize that parts of the gro
Page 10 and 11: DEFINITIONS AND TERMINOLOGY10Oftent
Page 12 and 13: Loans may accrue and capitalize int
Page 16 and 17: considered taxable income during th
Page 18 and 19: Borrower Benefits/Interest Rate Red
Page 20 and 21: Student Loan Lending Relationships2
Page 22 and 23: Tufts University - Student Financia
Page 24 and 25: Income-Contingent (25 years; paymen
Page 26 and 27: Federal Perkins Loan26Loan Amount:I
Page 28 and 29: University Loans (Tufts Loan Progra
Page 30 and 31: Federal Health Professions Loan Pro
Page 32 and 33: Private education loans can’t be
Page 34 and 35: Federal Consolidation Loan Interest
Page 36 and 37: 36half-time. The same is true for s
Page 38 and 39: Planning a Student Loan Repayment S
Page 40 and 41: Helpful Hints for Loan Deferment Pr
Page 42 and 43: Tufts University’s Loan Repayment
Page 60 and 61: LOAN FACTOR TABLE60The Interest Con

student loan repayment manual table of contents - Tufts University

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