Module 16: Loan Repayment

Primary vet student loan types?

-Unsubsidized stafford loan (currently at 4.3% interest) -plus loan (unsubsidized, at 5.3% interest) -health professions loan (subsidized, at 5% interest) -perkins loan (subsidized, at 5% interest) most fed student loans have loan fees (1.06% for unsub grad loans, 4.24% for plus loans)

When is refinancing the best option?

-if borrower intends to pay off the loan before it's due -if borrower is comfortable with maximum monthly payment

What is the Armed Forces Health Professions scholarship?

-receive full tuition to vet, med, dental, psych, or optometry program -get $2000 monthly stipend -active duty service obligation (one year of service for every year of tuition covered)

If you're going into graudate or specialty training programs, what is the downside to deferring your loans during this time?

-unsubsidized and private loans will continue to accumulate interest -better to use income-driven repayment and pay small amounts based on low income

Key repayment strategy list?

1. Assess your scenario w/ repayment calculator 2. Consolidate loans if necessary 3. Apply for alternate repayment scheme selected 4. Maintain annual information as required 5. Save for the tax owed at forgiveness 6. Make payments ON TIME and ON SCHEDULE

UF currently administers loans via what program?

Direct Loans program

Which is usually the best repayment plan?

PAYE typically the best income-driven repayment choice -for borrowers who want to pay everything quickly, aggressive repayment is best to minimize interest charges -for borrowers who want to use loan forgiveness, want to pay least amount of money into the loan

What is interest?

a loan expense charged for the use of borrowed money, calculated as a percent of the unpaid principal amount of the loan

What is income-based payment?

based on the borrower's income and the total amount of debt -monthly payments adjusted each year as income changes -caps monthly payments at 10-15% of a narrow definition of discretionary income -at end of 20-25 years any remaining balance on loan will be discharged, write-off of remaining balance is taxable

What is the Public Service Loan Forgiveness Program?

forgives reamaining balance on your Direct loans after you've made 120 qualifying payments under a qualifying repayment plan while working full-time for a qualifying employer -private loans not eligible for forgiveness -qualifying employers: government organization on any level, not-for-profit organizations that are tax-exempt, other types of non-profits that provide certain types of qualifying public services

What is an unsubsidized loan?F

interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan

What is pay as you earn?

loan term of 20 years and payments set at 10% of discretionary income aka PAYE

Which loans are eligible to consolidate?

most federal loans -direct subsidized -direct unsub -subsidized fed stafford -unsub fed stafford -direct plus -fed perkins *private education loans are not eligible for consolidation*

What are student loan fees?

percentage of the total loan amount paid to the lender

Why should you be careful about refinancing your loans?

private lenders will offer refinancing at interest rates that seem appealing (lower than what you pay for student loans), but rules protecting student loan borrowers will NOT apply to these private loans (rules such as allowing changes in payments tied to borrower income and access to repayment schemes based on type of employment)

What is revised pay as you earn?

similar to PAYE, but if you're married both you and your spouse's income or loan debt will be considered, whether taxes are filed jointly or separately -repayment will likely continue into 25 years, due to graduate loans being included

What is income-contingent repayment?

similar to income-based -caps monthly payments at higher percentage of discretionary income -loan term up to 25 years -available only for Direct Loan borrowers *most of us won't use this one as our loans are eligible for better plans!!*

Why might you consolidate your loans?

some loan types (FFEL loans) aren't eligible for some repayment programs, but consolidated loans ARE eligible -eligible to consolidate at graduation, departure from school, or below half-time enrollment -may lose some benefits with consolidation -loans *must* be in repayment or grace period to start consolidation process -no cost to consolidate!!

What is graduated repayment?

starts off with lower payments, which gradually increase every two years -loan term is 12-30 years -monthly payment can be no less than 50% and no more than 150% of monthly payment under the standard repayment plan -monthly payment must be at least the interest that accrues

What is capitalization?

the addition of unpaid interest to the principal balance of a loan this increases the outstanding principal amount due on the loan and may cause your monthly payment amount to increase

What is an interest rate?

the percentage at which interest is calculated on your loan

What is principal?

the total sum of money borrowed plus any interest that has been capitalized

What is extended repayment?

this plan is like standard payment, but allows a loan term of 12-30 years depending on amount stretching out payments over longer time reduces size of each payment, but increases total amount repaid

T/F: You will have to pay income tax on any amount that is forgiven for the standard income-driven repayment schemes

true! entire tax bill will be due THAT year

What is the standard repayment plan?

under this plan you will pay a fixed monthly amount for a loan term of up to 10 years depending on amount, loan term may be shorter than 10 years

What is the Veterinary Medicine Loan Repayment program?

will pay to up $25,000 each year towards qualified educational loans of eligible vets who agree to serve in a NIFA designated veterinarian shortage situation for a period of 3 years