Undergraduate Exit Loan Counseling

"Undergraduate Exit Loan Counseling" submitted by SchoolGrantsfor Editorial Team and last updated on Sunday 8th January 2012

Undergraduate Exit Loan Counseling Will give you idea for:

It is designed to explain the options available for repaying your student loan and is a required for each federal Stafford loan student borrower and will be reviewing your rights and responsibilities, repayment options and how to avoid delinquency and default.

Key Industry Players

Loan types & interest rate

Provides an overview of loan industry players. Now that you have borrowed a federal Stafford loan, knowing who’s who in the loan process will help you keep in touch with the right people as you work to repay your loan. Here are the key industry players you may need to contact if you need assistance repaying your loan. Students can request a copy of their credit report from the 3 major credit bureaus once every 12 months. Students may be asked to read a different industry player role from the slide. Then, supplement each description with additional information. (For example, lender, guarantor and other industry player contact information.)

Subsidized Stafford Loans

Provides an overview of subsidized Stafford loans.While in school, you may have borrowed one or both types of federal Stafford loan. The type of loans you borrowed will determine how much you owe when you begin repayment.

If you borrowed a subsidized Stafford loan, the federal government has been paying the interest on your loans while you have been in school at least half time, and will continue to do so during your grace period and any periods of deferment.

Unsubsidized Stafford Loans

Provides an overview of unsubsidized Stafford loans and loan capitalization. If you borrowed an unsubsidized Stafford loan, you have been responsible for paying the interest which began accruing when the loan was first disbursed. You had the option of either paying the interest while in school or having interest capitalize. If you chose not to pay the interest while in school, interest will be capitalized when you begin repayment. Capitalization is when the unpaid interest on your student loan is added to the principal, resulting in a higher loan balance and possibly a higher monthly payment.

Interest Rates and Loan Fees

Explains Stafford loan interest rates and fees. Student loan interest rates are fixed at 6.8% for loans taken after July 1, 2006. Stafford loans made to undergraduate students, with a first disbursement date on or after July 1, 2008, the interest rate on the subsidized Stafford will gradually reduce. Unsubsidized Stafford loan interest rate will be fixed at 6.8%. Student loan interest rates are variable for loans taken before July 1, 2006 and adjusted annually every July 1, even while in repayment. Federal Stafford loans have an interest rate cap of 8.25 percent. (Insert current interest rate information to customize the slide.)

Federal Stafford loans also carry fees. A fee of up to two percent may be deducted from the amount borrowed—One percent for origination from the lender and a one percent default fee from the guarantor. Fees are subtracted from the loan before each disbursement, so you will receive a little less than the amount you applied for. For example, if you borrow $1,000, you will receive a disbursement of $975. However, you are still responsible for repaying the entire $1,000 originally borrowed.

Stafford Loan Interest Rates

Disbursed Stafford Subsidized Stafford Unsubsidized
Prior to 7.1.2006 Variable Variable
7.1.2006 – 6.30.2008 6.8% 6.8%
7.1.2008 – 6.30.2009 6.0% 6.8%
7.1.2009 – 6.30.2010 5.6% 6.8%
7.1.2010 – 6.30.2011 4.5% 6.8%
7.1.2011 – 6.30.2012 3.4% 6.8%
7.1.2012 and later 6.8% 6.8%

Explains new undergraduate subsidized and unsubsidized Stafford loan interest rates. Legislation lowered interest rates for a five year period for undergraduate subsidized Stafford loans for both the FFEL and Direct loan programs. Beginning July 1, 2008, the interest rate on subsidized Stafford loans made to undergraduate students, with a first disbursement date on or after July 1, 2008, will be reduced as shown in the chart. Unsubsidized loans will remain at a fixed 6.8% for loans disbursed after July 1, 2006.

The Grace Period

Explains the grace period for Stafford loans. After you graduate, leave school or drop below half-time enrollment, you are entitled to a six-month grace period. Whether or not you are required to pay interest during this period depends on your loan type. For subsidized loans, the federal government pays the interest during your grace period. With unsubsidized loans, you are responsible for the interest. Do not forget monthly payments are due the day after your grace period ends.

How many of you plan to relocate after graduation? Make sure your lender has your current address. Even if you do not receive a bill from your lender, you are still responsible for the payment.

National Student Loan Data System (NSLDS)

NSLDS is the U.S. Department of Education’s central database for student aid records. NSLDS provides a centralized, integrated view of your federal Title IV education loans and grants, tracking from when they’re approved through when you pay off your loans. May be accessed using a PIN. Web address.
Overview of NSLD

Explains the availability of federal loan information online. Provide students with the average student loan debt for students at your school or in the same program of study. How much did you borrow while you were in school? How many of you know your total student loan debt?

One way to find out is to contact the financial aid office. Another way is to use the National Student Loan Data System, more commonly known as NSLDS. NSLDS is an online central database for the U.S. Department of Education's student financial aid programs, which contains a history of all your federal loans.

To access NSLDS, you must have a Personal Identification number or PIN. You can request a PIN by going to www.pin.ed.gov. After you successfully submit a request, the U.S. Department of Education will mail your PIN to you, usually within seven to 10 days. If you provide an e-mail address, you will receive an e-mail within three to five days explaining how to retrieve your PIN at a secured Web site. Be sure to keep your PIN confidential. The National Student Loan Data System (NSLDS) is the Education Department’s main database for student financial aid records. NSLDS provides a centralized, integrated view of your federal Title IV education loans and grants, tracking from when they’re approved until they are paid off.

Loan Repayment Chart

Federal Stafford Loans (subsidized & unsubsidized)
Interest Rate 6.80% 8.25%
Total Amount Borrowed Number of Payments Monthly Payment Total Interest Number of Payments Monthly Payment Total Interest
$2,000 45 $50 $271 47 $50 $347
$3,500 89 $50 $966 95 $50 $1,278
$4,000 106 $50 $1,332 117 $50 $1,827
$5,000 120 $58 $1,904 120 $61 $2,359
$7,500 120 $86 $2,857 120 $91 $3,539
$8,000 120 $92 $3,047 120 $98 $3,775
$10,000 120 $115 $3,810 120 $123 $4,718

Notes: Interest rates on federal Stafford loans taken after July 1, 2006 are at a fixed 6.80%. Loans taken before July 1, 2006 are variable and adjusted annually every July 1 with a cap of 8.25%.

Illustrates sample monthly repayment amounts based on a range of loan amounts. Have students to estimate their monthly payment using the Loan Repayment Chart in their counseling guide. Your lender will give you a repayment schedule that lists your payment amounts, due dates and choice of repayment plans. Lenders offer four different repayment plan options. Your lender will automatically set you up under the standard repayment plan, unless you indicate otherwise. This chart illustrates sample monthly repayment amounts based on a range of amounts borrowed using the standard repayment plan. (Review chart.)

Standard Repayment Plan

Provides an overview of the standard repayment plan. You will be given the opportunity to choose from one of the following repayment plans—standard, graduated, income-sensitive or extended. Take the time to compare repayment plans and select one that fits your finances. If necessary, you may change repayment plans at least once a year to meet financial obligations.

Graduated Repayment Plan

Provides an overview of the graduated repayment plan.

Income-Sensitive Repayment Plan

Income-Sensitive Repayment Chart

Loan  Amount Gross Monthly Income First 5 Years  Interest Only Remaining 10 Years Total Paid*   (Loan + Interest)
$10,000 $1,500 $60 $112 $17, 082
$50,000 $4,000 $283 $575 $86,048

Sign Denotes: *A subsidized Stafford loan repaid at 6.80 percent interest, assuming you request the monthly payment to be based on 4 percent of your gross monthly income.

Provides an overview of the income-sensitive repayment plan.

Income-Contingent Repayment Plan

Income-Contingent Repayment Chart

Loan Amount Gross Monthly Income Family Size Monthly Payment Total Paid* (Loan + Interest)
$10,000 $1,500 1 $63 $20,743
$50,000 $4,000 3 $495 $73,475

Sign Denotes: *A Stafford loan repaid at 6.80 percent interest based on borrower living in the continental U.S. This is an estimated repayment amount for the first year and total loan payment.

Provides an overview of the income-contingent repayment plan.

Extended Repayment Plan

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