Please note that this transcript was auto-generated. We apologize for any minor errors in spelling or grammar.

[00:00:00] Then we’ll get going. So again, thank you for joining us. This is, um, managing student loan repayment for graduating seniors,

and just a little bit about how to participate. So we have, um, the chat disabled, but if you have any questions, please um, enter those in the q and a section. Stephanie will try to answer those, um, behind the scenes, but if she has something that she thinks we should talk to the whole group about, she’ll stop and bring that up to me and we’ll answer that live for you.

Um, if you want to have closed captioning enabled, you can use the live transcript button at the bottom of the screen and, um, that will enable that for you. We are recording this webinar and we’ll be sending out a link to that recording as well as the slides, um, within a couple of days of the webinar. So first of all, a little bit about [00:01:00] MEFA.

So we are a state authority that we were created by the Commonwealth of Massachusetts in 1982 at the request of local colleges in Massachusetts. Um, they requested that the Commonwealth start a, an entity to give low cost student loans to families in Massachusetts. Since then, we’ve expanded and we help families plan, save, and pay for college, and our loans are now available nationwide, um, to help families no matter where they come from or where they’re going to school in the United States.

So let’s talk a little bit about the. Agenda for today. We’ll be talking about the first steps towards loan repayment, some loan repayment tips. We’ll talk about federal loan repayment options, private loan repayment, forgiveness options that are available, um, avoiding and recovering from delinquency and default loan consolidation [00:02:00] and refinancing and resources.

We have a lot of information to go through, um, but hopefully we’ll be able to get through that for you. So the first steps, um, after you graduate is to create a post-graduation budget. So you really want to be, um, honest with yourself when you’re creating this budget and. You can create a little spreadsheet for yourself and put in there all of the expenses that you have during the month, and you want to try to identify all those different expenses that you do have.

For example, um, rent, housing, food, utilities, transportation, health insurance, cell phone. Make sure you put in all of those expenses that you will be incurring every month. Um, you also want to put in there expenses that you normally have every month for things like entertainment, recreation, those things that are a little bit more flexible, but you [00:03:00] know that you usually spend, um, that amount each month so that you can be really truthful about yourself as to what your real costs are every month.

And you can also take a look at where you might be able to cut expenses if you need to. Um, between, I. Things that are needs and things that are wants. And then you also want to put in there what your income is, um, and identify all the different sources of income that you may have, um, so that you can see what you have left of your income every month, um, that you may be able to use towards savings, um, or other bills.

And you wanna distinguish between those needs and wants. Make sure that you have enough money to meet the needs every month and what’s left over for the wants, that you’re not spending too much on that. Um, you can revise that as needed. Um, take a look and if you do need [00:04:00] to revise that budget because the income that you have in is not.

Meeting what your needs and wants are. See where you can make changes on that every month. And if you do end up going over budget, um, some months, you wanna take a look at that budget to make sure that you have everything listed on there and see what that discrepancy is so that you can make sure you try to keep to the budget every month.

And you can then see your cost per year, your cost per month, and make sure that you have, um, you’re able to make those expenses every month for yourself. And then you want to take a look at your student loan information. The first step to do to that is if you have federal loans, you’ll wanna log into student aid.ed.gov.

Um, you log into your account there, that’s the same password that you used to fill out your FAFSA, as well as your master [00:05:00] promissory note. Um, you may have done entrance or exit counseling through the site as well to use that same F-S-A-I-D to log in there. And there you’ll see all the information about your federal loans.

Your private loan information won’t be included in there. I. All of your federal loan information will be there. You’ll find out there who your servicer is. That’s important because the servicer is who you’re going to be paying your payments to every month. Um, so you wanna make sure that you know who your federal loan servicer is, not only so that you can, um, go to their website to set up payment information, but also they may be sending you communications via email and in the, um, regular mail as well.

And you don’t want to avoid reading that information from your loan servicer. So that may be really important information. So when you do see something come through from your loan servicer, make sure you take the time to [00:06:00] read that. They’ll be sending you some important information about loan repayment.

Um, so make sure that when you do receive that, that you don’t just think that that is, um, spam or junk email and disregard that. Your loan servicer will also be able to provide you with your loan payment amount and when your first payment is due. So once you have your loan servicer information, you can go out to their website, set up an online account, and you can see all the information about your loan there as well.

Um, to get your private loan information, you can check with your financial aid office to get a list of all of the private loans that you may have borrowed. Um, if you are in graduate school, you’ll probably want to check with both your graduate school financial aid office and your undergraduate school to see what private loans you may have taken out while you were there.

And then you can check with the lender’s website to find out [00:07:00] who the servicer is for those private loans. Um, the company that you repay is often different than who you borrow the loan through for your private loan. Um. For example, if you bought a loan with MEFA, the repayment company is a ES, um, and that will be the company that you will repay.

So you wanna find out who that servicer is and again, set up an account with that loan servicer to find out what your first payment is and when that first payment is due. Um, so you’ll go to each of those different servicers to find that out. If you have, um, private loans from several different companies, you may have several different loan servicers.

So make sure you go to all of those different servicers to set up, um, your online account to find out that information still. So then your next steps is again, to create that online account with each of the servicer. Some of the [00:08:00] servicers will have mobile apps. If you wanna look, download that mobile app onto your phone or tablet that may make a.

Managing that loan a lot easier for you to have that right there at your fingertips. Um, you wanna add those loan payment amounts to your monthly budget and make a note in the calendar when that repayment amount is. Um, you may have a grace period. A grace period is the time between the graduation and start of repayment.

Um, for federal loans, that’s usually about six months. Um, for private loans, there may or may not be a gross, a grace period for those loans. Um, you can also on your servicers website, set up automatic payments for yourself. This is a great way to make sure that you’re not missing payments every month. Um, but if you do set up automatic payments, make sure that you do have enough in your bank account to pay for those payments each month so that you don’t end up having that payment rejected.[00:09:00]

So, some loan repayment tips. You wanna gather all the information. Understand your options for repayment, and we’ll be talking about all the different options in just a moment. You wanna know the interest rate on each loan. If you have, um, some loans that are at a much higher interest rate, you may wanna think about paying off those higher interest rate loans first.

Um, and you wanna know what the total amount of each loan is so that you know how much you have to pay back over time. Please make sure that you do repay your loan on time. That’s really important. If you are late on any payment that does get reported to the credit bureau and may affect your credit rating.

So if you can make those on time payments, you’ll always be best off. Um, that will help with building good credit for yourself. You always wanna make at least the minimum payment. And like I said earlier, if you can set up [00:10:00] automatic payments that will simplify it for you so you don’t forget a payment each month.

But again, make sure that you do have the amount in your account to cover that payment each month. If you do have a 5 29 account, um, a 5 29 plan that you still have a balance left on that you didn’t use to pay for expenses while you’re in school, you can use that to pay up to $10,000 in loans, um, repayment if you have anything left.

So that is a good option. If you still have leftover funds in those 5 29 accounts, you can use that towards loan repayment if you need to. And if you have extra funds, after making the minimum payment each month, you can consider, um, making voluntary payments on your student loans. There are no prepayment penalties on student loans.

You can send in extra funds if you want to, um, pay towards those loans. You can request to pay off the loan [00:11:00] with the highest interest rate first. That’s usually a really good, um, policy to do that if you can, and tell your loan servicer to put those extra payments towards your loan principle if possible, because anytime that you are reducing the loan principle, that means less interest will be accruing on that loan once that principle, um, is.

Made lower. If you are in a situation though, where you are pursuing some kind of forgiveness program, which we’ll be talking about later, you may not want to make, um, voluntary payments if you think you are going to receive some forgiveness towards the loan, but we’ll talk about that in just a moment.

Let’s talk quickly about the importance of good credit. Um, paying back your loans on time really helps you maintain good credit. And maintaining good credit is important because if you do want to, um, have, uh, some other type of loan, like a car loan, a mortgage, [00:12:00] um, and apartment, they. Usually would check your credit and if you don’t have good credit, that could mean either higher interest rate or being denied credit altogether.

So you wanna make sure that you do keep your credit rating good. Um, each time that you make a late payment that is reported to the credit bureau and each time you make a credit, uh, payment on time, that’s also reported to the credit bureau and it will help your, um, credit rating. So it’s really important to make those on time, um, payments because landlords and rental companies check your credit as well.

And you may have a hard time getting an apartment if you’re bad credit. Um, and bad credit decisions can stay with you for a long time. If you end up defaulting on your loan, meaning that you’ve, um, made late payments for more than six to nine months, then you, um, could end up in default and that can stay on your credit rating for up [00:13:00] to seven years.

So please make sure that you pay those bills on time to avoid default. Um, you also want to check your credit report to make sure everything is accurate on there and everything is, um, things that you really did borrow. Um, you can check that [email protected] for free. Um, take a look at that, make sure everything is.

Entered in there properly, that it all belongs to you and that there aren’t any errors in reporting of information on there. If you do see any errors on there, you want to contact the person that reported that, um, information and try to resolve that with them. So you follow up. Um, you wanna contact your loan servicer at any time if you have questions or if you can’t pay on time.

If you’re having a hard time making payments, don’t just [00:14:00] delay making that payment or miss that payment. Contact your servicer to see if there are any options, um, for you to. Either change to a different payment program, which we’ll be talking about in a few moments if it’s a federal loan or if there are any ways that you can create a payment arrangement, um, to make smaller payments for a period of time if possible.

But it’s always better to ask the question of your loan servicer to see if there are any other options for you before just missing or avoiding a payment. Um, that’s always the best practice. And you can also deduct your student loan interest currently on federal taxes. So you want to, um, make sure that you take advantage of that when you are filing your tax returns.

And your servicer will send you information about the amount that you paid in interest that you can enter that in your tax, on your tax return. So let’s talk about some different federal loan repayment options [00:15:00] that are available for you. So standard repayment for your federal loan is 10 years. So usually payment begins after your grace period, which is six months, and then you have 10 years to repay that after the grace period.

So what they do is they take the principle of your loan, um, and just divide that over 10 years, and that becomes your monthly payment. Um, if that standard repayment is a payment that is too high for you, there are other options available for you, um, to make those payments lower each month. Um, you can possibly extend the repayment to a longer term.

Um, but doing that. Means a lower monthly payment, but a potentially higher overall cost over time because more interest will accrue the longer you are repaying that loan. And we’ll look at a little bit about what that looks like in just a few moments. But you can also use the loan simulator that the federal government has on, um, [00:16:00] student aid.gov.

If you go to student aid.gov/loan simulator, you can put in, um, information about your student loans, how much you owe, and take a look at what that will look like under all the different repayment plans. And we’ll be talking about those in just a moment to see what your, um, payment amount will look. Each month in how much you pay over the life of the loan each month under all those different situations.

Um, and that’s a free to use tool. You can go to student aid.gov/loan simulator to do that. And again, we’ll be sending you copies of these slides. You’ll have all the links that we have in here available to you, um, for you to explore. So let’s talk about the different federal loan repayment options. We talked a little bit about standard, which is fixed payments over 10 years.

There’s also a plan that’s called Graduated, where it’s still a 10 year [00:17:00] period, but your payments start out lower and then step up each year over the 10 years. So you have lower payments at the beginning, higher payments at the end. The thought with that program is that your, um, income may increase each year as you get.

Raises hopefully each year in your job, um, and your payments will rise accordingly. Um, extended repayment has fixed or graduated payments. So you can choose extended, fixed, or extended graduated, and that extends from 10 years to 25 years. You have to have a minimum of $30,000 in a balance to choose extended repayment, but that’s going to extend the period that you’re paying back that loan to 25 years.

So your loan payments will be smaller under this program, but if you’re paying that for 25 years, you’ll be paying, um, [00:18:00] more interest over time through that. There is another repayment program that is currently not available, um, for students to enroll in, and that is called the save plan. That one is currently in, uh, there’s a court order blocking that.

Um, there are some borrowers that are currently in that program, but they are in a, an administrative forbearance, so they are not making payments at this point. Um, and they’re in a forbearance, so you can’t currently enroll in that because it is currently blocked. But there are other income, income-based repayment programs and how those income-based repayment programs work is there based on a percentage of discretionary income.

And what discretionary income is, is they take what your income is and subtract, uh, portion [00:19:00] of what the, um. The poverty rate is, the federal poverty rate is in your state from that discretionary income. And then they take a percentage of that and that is what your loan payment is. So it, um, for some of the programs, it’s 150% of the federal poverty level that’s subtracted from your income to determine your discretionary income.

Others are 200% of the poverty level is subtracted from your income to determine what your discretionary income is. And then they take that 10% of that for pays you earn and that becomes what your payment is each month. And then. For income-based repayment, it’s either 10 or 15% of your discretionary income, depending on the amount that you have.

And, and for income contingent, [00:20:00] it’s either 20% of your discretionary income, um, the lesser of 20% of your discretionary income or what that payment would be over a 12 year fixed payment. So what they do is take a look at your loan balance, divide that over 12 years, see what that monthly payment would look like, and take the lesser of either 20% of your discretionary income or 12 years of your fixed payment.

And then, um, loan debt is forgiven after 20 or 25 years for income-based repayment and 20 or 25 years underpay or income contingent, um, repayment. However, for. Pay as you earn the pay P-P-A-Y-E in income contingent. Right now, the time-based of forgiveness is currently blocked as well by a federal court order and may not return.

[00:21:00] So what would happen under those programs is you would pay, um, currently until the balance, um, is completely paid off. So you would keep, you can make those payments monthly based on your income. However, um, there’s no forgiveness after a certain period of time. Currently, under IBR, the loan debt is forgiven after 20 or 25 years, depending on how much you have for a balance, excuse me.

And, um, for both, for all of the income-based repayment programs, you do have to submit income information annually in order for them. To set the rate each year, so you’ll have a different rate based on your income each year, and that can either be done by submitting your tax returns to your loan servicer, or you can sign up to have your [00:22:00] information pulled directly from the IRS automatically each year.

Um, and that will then automatically set a new loan amount for the next year. Um, if you fail to certify your income each year, you’ll be taken out of the income-based repayment programs and put back into standard repayment automatically. So if you are in one of those plans, make sure that you do take the steps to verify your income each year.

Also, if you have set up automatic payments on one of those, make sure that you know, um, what your new loan repayment amount will be once your income is recertified, so that you have enough in that account to cover that new payment each month. Let’s take a look at an example, um, here. Um, and this is kind of the same information that [00:23:00] you’ll see if you use that.

Loan repayment calculator that we linked to earlier. But this is just an example, um, that we’ll talk about as well. But if you use the loan repayment calculator, you can use your actual, um, information and get what this looks like for you. ’cause for every student, it’s going to look just a little bit different, um, based on how much you owe, what your income is going to be and what that repayment amount is going to look like.

But for this example, Victoria has $40,000 in direct student loan debt. 20,000 of that is unsubsidized. 20,000 of that is subsidized and her interest rate is 5.5%. Her income is $45,000. She’s single and she lives in Massachusetts. And her income increases at a rate of 5% per year, um, for these income-based repayment programs.

So you see here under, um, standard repayment, she’s [00:24:00] paying $434 a month, um, for the entire 10 years. It’s a fixed, um, payment. Each month she pays a total of $52,093, um, on that $45,000 that she borrowed. So that’s. Total in 40,000. I’m sorry, that she borrowed for a total interest of 12,093, and she makes those payments for a, for the whole 10 years.

Graduated repayment, again, she’s paying for 10 years. Her payments start out a little lower at 247, but her final payment is going to be 741. In between there. It’s gonna step up a little each year, so every year they’ll be a little bit higher. She’s paying a total of 55,270 under that program for total interest of 15,270 because she’s making those lower payments initially.

Uh, the principal’s not going down as fast, so more interest is accruing on that loan. [00:25:00] Excuse me, if she chooses extended fixed. Um, she’s paying there, um, for 300 months and she’s starting. Ending with $246. So that’s just extending that over 300 months rather than 120 months. So that’s going to be for 25 years, um, that she’s paying that for a total of 73,690 with a total interest of 33,690.

So her payments are much lower each month, but she’s paying a lot more in interest over the life of the loan because she’s paying that for 25 years. Extended graduated, um, again, over 25 years. She’ll start out with $183 for her initial payment and a final payment of $384 for a total paid of 80,351, [00:26:00] and a total of interest of 40,351.

We have what the safe plan would look like. Unfortunately, that’s not available to enroll in currently, but you can see that information there for page. You earn that one’s based on her income, and as we said, her income’s going to increase at a rate of 5% per year. So it starts out at $223 and her final payment is $434.

She pays that for a total of 180 months, and she’s paying a total of six $66,022 with a total interest of 26,000 over the life of the loan income contingent. Looks very similar for her payments. Um. The income-based repayment looks very similar. It starts at 2 23 and then’s at 4 34. [00:27:00] Um, again, she’s paying that for 180 months.

The total paid is a little bit lower on that one for 61,881, with a total paid in interest of 21,881 because income-based repayment, excuse me, does have, uh, a statute in there that allows for if the interest, the amount that you’re paying each month doesn’t cover the interest. A little bit of that interest is forgiven each month on the loan, so it’s, it doesn’t keep adding to the amount of the principal.

So you do end up paying a little bit more, less in interest, um, on the income-based repayment than you would on pay as you earn, which does not have, um, that. Feature to it. And for income contingent repayment, um, because they’re taking a little bit more of your discretionary income. Under the income contingent repayment program, [00:28:00] you start out at $336 for your payment.

And at 380 on the total paid is 56,602 with a total amount of interest of 16 6 0 2. And you’re only paying that for 157 months. And the reason being because with those higher payments, um, that balance is paid off earlier under the income contingent plan than it is under IBR or pays you earn with those lower payments.

So, um, let’s, this summarizes the repayment plan. Um, most of them have a little bit formula on. What, how if they determine that monthly payment, um, and the borrower always pays the lesser of those. So for ICR it’s 20% of discretionary income or 12 year standard repayment, [00:29:00] whichever is less, they will base it on that for IBR and pay as you earn, it’s based on the 10 year standard repayment.

So if your 10 year standard repayment is um, lower, it’s going to go on that rather than the 15% of your discretionary income or 10% of your discretionary income as pay as you earn, repay. And save UN unfortunately are not available right now. Um, but those are based just on discretionary income. But for more information on the different income based repayment plans, you can go to this link to student aid.gov and they have extensive information on all of the different repayment plans.

Um. You can go to that link, and again, we’ll be sharing these slides. You’ll have that link available for you. Let’s talk a little bit about private loan repayments. Um, private loans are different than federal loans, so in most cases there are not income-based [00:30:00] repayment programs available for your private loans.

And each of the private loans will have different, um, options for you. So you want to review with each lender and servicer. Your billing statements on there, see how much your monthly payment is going to be. Um, find out what options they have for repayment. They, you may be limited to just a standard repayment on there.

So if the terms of the loan that you borrowed were 10 years repayment, um, they’re just going to take the balance of that loan and divide that over 10 years. Some maybe 10, some maybe 15. There are others that are five or seven years depending on what the terms of the loan were when you signed, um, that promissory note for that loan.

And that’s going to vary from lender to lender. So check what those are. And, um. Follow what those are. They may not have any income-based repayment plans available to you. [00:31:00] Um, but if you are having difficulties making a payment, call your servicer to see if there are any temporary programs that they can put you on, um, to see if you can make lower payments for a period of time, um, rather than missing a payment.

It’s always best to see if there are any options available to you so that you can, um, make those payments or keep on, um, time with your loan repayment and not miss a payment. Let’s talk about some forgiveness options for loans. Um. What is loan forgiveness? So loan forgiveness is a situation where the balance of your loan is basically forgiven.

So that means that you’re, you don’t have to pay that anymore, so the rest of the loan will be canceled for you. Um, and it’s usually two reasons that you would receive loan forgiveness, either if you’ve done something [00:32:00] good or if something bad happens. So, um, for doing something good. That would be something like public service loan forgiveness, which I’ll talk about in more detail about what public service loan forgiveness is, is if you work for a nonprofit while you’re making payments on your student loans for 10 years, after 10 years, if you’ve done both making those on time payments and you’ve been working in at a nonprofit, the balance of your loan will be forgiven.

There’s also teacher loan forgiveness for certain types of loans that if you, um, are working as a teacher in a, um, low income district, you may receive. Loan forgiveness for certain types of loans. Also, if you are working for the Department of Defense or AmeriCorps or Peace Corps, um, you may have part of your loan forgiven or repaid by doing that [00:33:00] service.

Um, if you had do have a Perkins loan, um, Perkins loans haven’t been available in the last few years, but you may have a Perkins loan if you’ve been in school for a period of time. And those do have specific forgiveness available within those as well. Um, there’s teacher loan forgiveness, there’s nursing loan forgiveness that are specific to the Perkins Loan Program.

So if you do have Perkins loans, um, contact your Perkins loan servicer or the school that awarded you your Perkins loan to find out more about the forgiveness that may be available to you under those programs. Let’s talk specifically about public service loan forgiveness that forgives the balance of your loan after you made 120 qualifying monthly payments on, um, your loan.

Uh, your payments don’t have to be consecutive, so there can be a break in there of either payments or service. But once you do complete those 120 [00:34:00] qualifying monthly payments while working at full-time at a qualifying employer, which is either a government organization, a 5 0 1 C3, which is a not-for-profit organization, or in another not-for-profit organization that’s providing qualifying services, you have to be doing that while making those qualifying payments on the direct loan.

Um. Direct loans only. So this has to be federal direct loans. If you do have federal loans that aren’t direct loans, you can consolidate those into a direct loan. I’ll be talking about consolidation in just a moment to make those qualify. But only direct loans do qualify for that. And payments made only after ten one oh seven qualify.

And you can go to student aid.gov/psf to find out more information about that. But you do have to be in, um, a qualifying [00:35:00] um payment program as well. So standard repayments and all of the income-based repayment programs that we talked about for federal loan repayment do qualify for. Public service loan forgiveness.

What does not qualify are the graduated, um, repayment program and extended, um, repayment program. So you do have to be under either standard or under one of the income based repayment programs. If you’re under standard only, you’re going to pay off your loan before, um, you ha you hit the forgiveness period because that’s 120 payments under standard to, um, pay off your loan anyway.

But if you are part in income-based and part and standard, um, all of those payments in both of those programs can count towards, um, the 120 qualifying [00:36:00] payments. You must submit the public service loan forgiveness after making all of the 120 payments in order to receive the forgiveness. But we recommend that you do that.

Um. Annually not wait until the end of that, you make all of your 120 payments. Because if you wait until the end, you may have a hard time, um, submitting all of the information that you need to, to receive the public service loan forgiveness. Because part of the application is to have that signed off by your employer saying that you were working at a government organization, 5 0 1 C3 or another, um, not-for-profit.

And sometimes, um, records in human resources may not go back that whole 10 years. So if you can’t have your employer sign off on that at the end of 120 payments, so after 10 years, then you may [00:37:00] not be able to prove that you worked there at the qualifying employer. So if you do that annually, um, and just have your employer sign off that you did the work, then um, you can submit that.

Every year. And not only is that good because you’ll have the record from your employer that you did do that qualifying employment towards public service loan forgiveness. You’ll also be receiving a yearly summary from your servicer showing, showing the qualifying payments as well as your qualifying employments.

You’ll have that for your records as well, so you can help keep record of, um, me working towards your goal of public service loan forgiveness. And again, this is available only for the direct loan program. Other forgiveness is, uh, teacher loan forgiveness, like, and this is again for, um, the direct loan program.

And [00:38:00] also for the Stafford Loan Program and for teacher loan forgiveness, you must teach full-time for five complete and consecutive years in a school or agency that serves low income families. So it has to be in a low income area, and you can have up to 17,500 of your loan forgiven under this program.

And you can complete that teacher loan forgiveness application on student aid.ed.gov and find out more information on that. And for the Perkins Loan Program, um, there are some forgiveness in cancellation and discharge available for each year that you do service under the Peace Corps as a teacher in the armed forces.

Nursing law enforcement, head start worker, family services, and early intervention workers. And so if you do have a Perkins loan, you can contact the school that awarded your loan to find out about the forgiveness on that as [00:39:00] well. And for each of those, that’s yearly, um, cancellation that you receive on that loan.

It’s not after five or 10 years, like the public service or the teacher loan forgiveness. Now the reasons for loan discharge if something bad happens, um. Those include total and permanent disability of the student. So if something really unfortunate happens and you end up with a permanent disability, um, then you would be able to submit a doctor’s note saying that you are not able to, um, work ’cause you’re permanently disabled and they can discharge your loan.

Um, in that situation, if unfortunately the student does die, the loan is discharged. Also, if, um, your school violated a law or was closed while you were enrolled, your loan will be discharged in those situations as well. [00:40:00] Um, that’s a rare situation, but that is, um, a reason that the loan can be discharged.

And if you are in a situation where you have think you might be total or permanent, just. Permanently disabled. You can, um, go on to student aid.gov and fill out the application, um, to, to show that you are permanently disabled. Uh, we do have a resource here about from free student loan advice.org about different forgiveness programs, and you can go to that link for more information about the different forgiveness programs as well.

So let’s talk a little bit about avoiding and recovering from delinquency and default and what those. Mean, um, first of all, there are deferment and forbearance options. What does that mean? Deferment is when loan payments are postponed, um, and you do have to meet the [00:41:00] different eligibility requirements of those and submit the request to the loan servicer.

The difference between deferment and forbearance is for appearance of deferment. Interest does not incr accrue on any subsidized loans. Um, for unsubsidized loans, interest would accrue under both deferment and forbearance. Um, so if you are delaying payments by either deferment or forbearance and have unsubsidized loans only, those are always going to accrue interest.

For forbearance, again, those loan payments are suspended or possibly reduced under a forbearance program. You must meet some eligibility requirements. We’ll talk about what those might be. In just a moment, you’ll submit your request to your loan servicer. Um, interest is accruing on all loans, even subsidized loans under a forbearance program.

So what are some different reasons that you might, um, be eligible for deferment or forbearance? [00:42:00] If you are unemployed, um, you can request a deferment, which if you’re unemployed, they may be able to have your payments zero for that period. If you’re in an economic hardship where you’ve either lost your job, your hours have been reduced at your job, you just can’t make those loan payments every month, contact your servicer to see if they can put you in an economic hardship, deferment, um, where your payments will.

Be deferred for a time. If you are in graduate fellowship or a rehabilitation training program in the military, or if you go back to school, your federal loans can be put into a deferment program. Um, and forbearance. There are medical and dental internship. Forbearance is available, um, for loans. So if you are in residency or internship, your [00:43:00] loans can be forebear.

Um, for student loan debt burden, if you’re working in AmeriCorps or towards teacher loan forgiveness, they can put you in a forbearance because they know that after you, um, complete that service, the loan amount will be forgiven. So you’ll want to, um. Not be making payments on that while you’re doing that, so that you’ll have that amount forgiven for Department of Defense.

Again, student loan repayment or National Guard. Again, while you’re completing that service, your loan can be in forbearance, um, and then possibly for forgiven under those forgiveness programs. If you have, um, medical situations are other acceptable reasons, um, you can contact your servicer and request a forbearance.

So if you’re having medical issues and you can’t make your payments, please contact your servicer. Again, um, it’s best that if you can’t make your loan payments each month as scheduled to contact your servicer to [00:44:00] see if there are any of these deferment or forbearance options available to you, or if you can switch to one of those other repayment programs to make your payments lower each month rather than missing a payment or becoming delinquent.

So what is delinquency and default delinquency begins the day after the due date when the full payment was not made. So if you’re a day late on your loan repayment, that is considered delinquent and that can be reported to the credit bureau showing that you’ve made a delinquent payment. So what happens each month is they will report either that you’ve made that payment on time to credit bureau, or that you’re delinquent each month.

Um, so you wanna make sure that you make that payment on time so that you’re not getting reported as delinquent. If you have more than 270 days of delinquency, then you are considered in default. Um, and if your loan goes into default, then that can stay on your [00:45:00] credit. Rating for up to seven years. Um, and there are a lot of other penalties of default that we’ll look at in just a moment.

So you wanna make sure that you don’t end up in the situation where you’re in default. Load services are going to try to do everything to prevent default, and we’ll try contacting your references, sending notices to you, um, to make sure that they can contact you. They usually contact references if you’ve changed address and they’re getting returned mail, they’ll contact your references to see if they have a better, um, address to contact you at in order to get information to you about making payments so that you don’t end up in default.

So if you are receiving, um, information from your servicer because you have been delinquent, don’t, um. Try to avoid those calls. They’re often trying to find ways to help you, um, not end up in default. So they’re trying to see if there’s anything they can do about putting you into deferment, forbearance into one of those income-based [00:46:00] repayment programs to make sure that you don’t end up in the situation where you’re in default.

Um, so they’re going to try to provide you with all that information. Um, but it’s best if you’re proactive and call them if you’re having hardships before they reach out and start trying to help you as well. So the consequences of default, it’s going to be reported to all the credit bureaus that can say on your credit rating for quite some time.

Um, you’ll have no more eligibility for any federal student aid. The loan becomes immediately due and payable in full. Um, you also have collection costs added to that loan. You’ll lose eligibility for repayment plans, deferment and forbearance options collection agencies will start contacting you. Um, they may also garnish your wages, so they might contact your employer and have an amount taken [00:47:00] out of your paycheck each month to pay directly towards your student loan.

They also may take your tax refunds, so if you have any tax refund amounts coming back to you, that may, um, be taken by the federal government immediately to go towards loan repayment rather than you receiving those tax refunds. Because these are federal loans, um, they do have the ability to go after the wages and tax refunds pretty easily.

So please try to keep yourself outta that situation. Um, and there are a lot of other options for you to make sure that you can stay on time with your loan repayments. Um. I should mention that under those income based repayment programs, that if you are unemployed, uh, your monthly payment is zero under those income based repayment programs.

So, um, please make sure that you keep, [00:48:00] take advantage of those different programs rather than end up with late payments or missing payments. There are options to get out of default if you do end up in that situation. One is to repay the loan in full. If you do that, then um, you do come out of default. You could consolidate that loan.

I’ll talk about, again, about consolidation in just a moment. But what that means is you’re taking, um, several loans and consolidating those all into one new loan, and you can agree to repay under an income driven payment plan for that new consolidated loan. Um, you can consolidate your loan after making three consecutive.

On time payments, or you can rehabilitate the loan by making nine on time, repayments within 10 consecutive months. Um, and for all of these, you wanna contact your servicer and tell them you’d like to get out of default, either by rehabilitating the loan, consolidating the [00:49:00] loan, or repaying the loan info, and they can help you enroll in one of those programs in order to get you out of default.

So let’s talk about loan consolidation and refinancing and what those differences are. So federal loan consolidation is again, combining multiple federal loans into one direct consolidation loan. You can only consolidate federal loans. You can consolidate private loans. Um, and what happens is they combine all of those federal loans and they take a weighted average of all of them, and that becomes your new fixed interest rate.

So it’s a new fixed interest rate loan at a weighted average of all the loans that were consolidated. And in order to qualify for loan consolidation, your loans must be in repayment or grace period. So you cannot be in a period of deferment or forbearance, for example. You can’t be in school to, while [00:50:00] you to start your loan consolidation.

You have to wait until that loan’s in grace or repayment. Um, there are. Several repayment plan options under consolidated loans. So those income based repayment plans are available to you for under, um, loan consolidation. Also, public service loan forgiveness is available for public for a consolidated loan.

So if you have a federal loan, like a Perkins loan or an older loan, uh, that’s not a direct loan, you can consolidate those into a federal loan in order to, um, gain eligibility for those income-based repayment programs and public service loan forgiveness. And for. Federal loan consolidation. Um, you can do 10 or 30 years based on the different repayment plans that you choose.

Um, you cannot consolidate a plus loan that was borrowed by your parent into a federal loan consolidation. If you have [00:51:00] grad plus loans under your own name, those can be consolidated. But a plus loan borrow by the parent cannot be, and again, you cannot consolidate private loans. There’s no application fee for, uh, to consolidate your loans.

And in order to do that, you can go to student aid.gov and fill out the application there, and you’re able to choose which loans you do consolidate, um, from your federal loan portfolio factors to consider. With consolidation, you make one, you will receive one bill per month for any loans that you do consolidate.

Um, you’ll have potentially lower monthly payments because you are. That will be one bill. So if you’re receiving several bills, um, or if you’re able to go under one of those income based repayment programs that were not available to you, if you had a non-direct federal loan that you are consolidating, you could get potential [00:52:00] lower payments.

Um, again, you have access to those alternative repayment plans. If you add variable rate federal loans, you can consolidate those to get that fixed interest rate. Um, you do lose any of the borrower benefits with the original loans, like you can, um, consolidate Perkins loans into the federal direct consolidation loan.

Um, we talked about some of those. Forgiveness plans that are available under the Perkins loans. You would lose all of those types of benefits if you do consolidate those into a direct loan program. But you would be qualified then for Publix deliverance loan forgiveness, which is not available for Perkins loans, um, if they’re not consolidated.

So just make sure that if you are using any of the borrower benefits that are available under the old loan federal loan program, that what you are gaining, um, by [00:53:00] consolidating isn’t going to be worse than what you’re, you’re losing. So just take a look at that for yourself. Um, you may be able to increase the length of repayment, which may result in lower payments, but may result in a larger total cost over the life of the loan.

Usually, anytime you’re extending repayment, that’s going to mean more interest over time. Um, there’s also something called loan refinancing. And unlike consolidation, you can refinance any type of student loan, including private loans into a loan refinance. Um, and loan refinancing is through a private lender.

It’s not through the federal government. Um, you can refinance both federal and private loans, but you will lose all the repayment benefits for federal loans. If you do refinance those into a private, um, through a private lender, you’re no longer going to have access to [00:54:00] any of those income-based repayment.

Programs or loan forgiveness, um, with that private loan. But there are many options. Um, your interest rate could be fixed or variable. There may be situations where you are able to refinance several different private loans, um, and or some of your federal loans and end up with a lower interest rate than what you originally took out.

So you want to make sure that you’re looking at what the new interest rate that is available when you are refinancing a loan to see if that’s going to be beneficial for you, um, and have a lower interest rate than what you originally borrowed. Um, you don’t wanna usually refinance a loan if the new interest rate is going to be higher than what you already have.

You want to refinance. If you can look at getting a lower interest rate on those, um. Again, the better your credit is, the lower your interest rate will usually be. Um, [00:55:00] but this is not always the best option for everyone, especially if you’re looking at possible federal loans and getting forgiveness. You don’t want to, um, refinance those loans and lose those options.

You can, um, if you have both federal and private loans, you can refinance just your private loans if you choose and keep your federal loans. Um, in as a federal loan option, you don’t have to necessarily refinance all of your loans. You can pick and choose which loans you wanna refinance when you’re refinancing those loans.

So if you have a couple of loans that are a much higher interest rates and you can get a better rate, you can refinance just those loans as you if you wish as well. So it’s not an all or nothing with loan refinancing. You choose which loans you wanna refinance. So let’s, um, look at consolidation versus refinancing and which loans are eligible for direct loan [00:56:00] consolidation.

Federal loans are eligible, they’re eligible for student loan refinancing as well. Just remember, you’re losing all federal loan benefits when you do refinance those. Um, under consolidation, you still do have all of the benefits of the DI direct loan consolidation loan benefits, but you may lose, um. For example, if it’s a Perkin’s loan, you may lose those benefits.

Private loans are not available to consolidate in with your direct student loans. That’s a big, um, mistake a lot of students make is that they’re like, oh, they think that they’ve consolidated their loans. They only have one loan left. They only have to make one loan repayment, but they’ve forgotten that they have private loans.

Um, and they may miss some payments because they think they only have to pay that one consolidated loan. But remember, private loans cannot be consolidated. So if you have private loans, you’ll have a cons direct student loan, consolidated loan, and you’ll still have your private loans separately from that, [00:57:00] um, to consolidate your loan.

You don’t, there’s no credit check involved in that. So you don’t have to be credit worthy in order to consolidate your loans for loan refinancing. They are going to do a credit check on that. And, um, the better your credits, the lower the rate you may get on that. Um. Can you lower your interest rate? Your interest rate’s not gonna be lowered under the direct loan consolidation ’cause they’re doing that weighted average on the loan to determine what your new loan rate is.

So it’s not going to be a lower rate than what you already have. Student loan refinancing there. It’s possible that you could get a better, um, rate on that, and that’s usually a good reason to refinance. If you can get a much better rate on your loans. Um, for your private loans, you may wanna think about consolidating that into a lower rate.

Um, for the direct loan consolidation, will you save money? Maybe, um, especially if you have some loan forgiveness op, um, options available to you that weren’t [00:58:00] available to you if you, they weren’t consolidated. Um, but generally you’re not going to save more money because you’re usually. Extending the period of your repayment or, um, you have that weighted balance, so it may just be the same amount that you’re paying over time.

So it’s not always a money saving thing to get the direct loan consolidation, but you may get access to those loan repayments programs that make it easier for you to make those payments every month for loan refinancing. Um, again, you may end up saving money if you have a lower interest rate, but again, that depends on what the new interest rate is.

For both of those programs, you will get one bill for all of the loans that you’ve either consolidated or refinanced. You’ll receive one bill for all of those loans. If you’ve kept some of your loans out of consolidation or were not, um, eligible for consolidation, you’ll get a separate bill for those loans that weren’t consolidated or weren’t refinanced by [00:59:00] anything that you do.

Um, refinanced. Consolidate, we’ll receive one bill for all of those loans that are now in that new loan. Factors to consider with I, with refinancing as you receive one bill per month, you could po potentially have lower interest rates. Um, if you had variable rate loans, you could possibly fix that to a fixed interest or the other way around.

Um, if that, that may look best for you. You’re always going to lose the borrower benefits of the original loan and the new loan will have its own terms. Um, and anytime you re increase the length of the repayment, that’s going to be larger total loan costs with all the interest that you’re paying. So let’s talk a little bit about different resources that are available to you.

You have MEFA.org. Which you can always come to us. There’s a lot of information on MEFA.org about repayment. We [01:00:00] also can call our 800 number if you have questions and we can offer advice to you free of charge. Um, if you go to student aid.ed.gov, that’s full details on all your federal loan repayment.

Free student loan advice.org has a lot of fair free advice for students on loan repayment irs.gov. You’ll find out there about any, um, tax benefits that can be out there, bank rate credible. You can compare information there on different loan refinancing options. Uh, your annual credit report.com. You wanna check each year to get your free credit report, credit karma.com.

You can also get free credit score and credit reports and tips and tools there as well. You can connect with MEFA on social media, um, at all these different places. And here’s our 800 number in our email if you ever have questions. And I’ll pause now to ask Stephanie if there are any [01:01:00] outstanding questions that she’d like me to answer live, or if you have any questions, you can enter that in the q and a and I can answer that now.

Realize we’re at the hour right now. Thanks Sean. Um, I, I answered all the questions, but there is one that came up a couple times. If you wanna briefly just clarify the

difference in the repayment options that are available for Graduate plus loans versus Parent plus loans. Yes. So, um, there are different payment options available for Parent Plus versus Grad Plus, and you cannot combine Parent Plus in with. The student’s loans. So the for parent plus the parent is the one that is repaying the loans for Grad Plus, um, the student is the person that is repaying the loan.

So you can’t combine Parent [01:02:00] Plus in with, with Grad Plus. Right. And the repayment options, the standard graduated extended, or for both? Yes, but for Parent Plus it’s only ICR. And for grad Plus, I believe it’s all the IDRs, but if you wanna just clarify that. Correct. Yeah. So Grad Plus all of the different, um, repayment options that are listed here are available for the Grad Plus program for, um, parent Plus.

It’s standard graduated extended in ICR. Excellent. Yeah, that’s all the questions we had. We had a couple questions about using five 20 nines to play off, uh, loans and I answered those and I don’t see any others coming in the door.

Okay, great. Well, thank you very much. We’ll be sending out the slides, Ian, the link to the recording very shortly to you within the next couple of days. [01:03:00] Thank you for joining us. Thank you. Thank you, Stephanie. You’re welcome. Have a great day everybody.