Student Loan Survival Guide - American Student Assistance

American Student Assistance
Student Loan
Survival Guide
A Reference Guide for Keeping
Loans Healthy and Manageable
American Student Assistance, ASA, American Student Assistance logo, and Think About Tomorrow are registered trademarks of American Student Assistance. All rights reserved.
©2011 American Student Assistance. All rights reserved.
Successfully Manage Your Student Loans
With American Student Assistance
Who is American Student Assistance?
American Student Assistance® (ASA) is a nonprofit organization that helps borrowers ensure their
financial wellness through comprehensive education debt management services.
Why does ASA have information about my student loans?
ASA® partners with many servicers and schools to obtain data that will enable us to support your needs.
Our goal is to prevent student loan delinquency and defaults by giving borrowers the right information at
the right time throughout their student loan repayment.
We can guide you to successfully manage your student loan debt by helping you:
• Understand your repayment options.
• Budget and plan for your monthly payments.
• Know what to do if you miss a payment.
How can I contact ASA?
For more information on your student loans and to contact us, visit our website at www.asa.org.
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Table of Contents
Finding All Your Student Loans...................................................................... 2-3
Having trouble knowing where to start? Find out about your federal
student loans using ASA’s guide to successful education debt
management.
Repayment Options.............................................................................................4-5
Find the best repayment plan for your federal loans by reviewing all
the options.
Postpone Your Payments......................................................................................6
Learn how you can delay your federal loan payments using
deferment or forbearance.
Consequences of Missing Payments............................................................... 7
Find out the consequences of missing federal student loan payments
and how missing payments could impact your life.
FAQ (Ask American Student Assistance)....................................................8
Read commonly asked questions and responses from our student
loan experts.
Online Tools and Resources.................................................................................9
Learn about our online tools for managing your student loan debt.
Financial Wellness Tips........................................................................................ 10
Learn our top 10 tips on how to manage your finances.
Budgeting Tips........................................................................................................... 11
Read our top tips for successfully budgeting for your future.
Budget Worksheet.................................................................................................. 12
Plan your finances for the month with our easy-to-use budget
worksheet.
Glossary............................................................................................13-15
Is there a financial term you don’t know? Find it here, or visit
www.asa.org/define.
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Finding All Your
Federal Student Loans
The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s
federal student loan database. Use NSLDS to locate your federal student loan information
and then use the student loan portfolio on the next page to record it. If you forgot your
NSLDS Personal ID Number (PIN), visit www.pin.ed.gov.
Step 1
• Sign in to www.nslds.ed.gov by
clicking Financial Aid Review.
Step 2
• Click the blue numbers in the far
left column to find the details of
your federal student loan.
Step 3
• Once you get to the details
screen, you can find your servicer
information at the bottom.
• Log this information in
the green section of your
student loan portfolio on
the next page.
To see the details of any private student loans
you may have, look at your credit report on
www.annualcreditreport.com.
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American Student Assistance
My Student Loan Portfolio
Current Servicer/Servicer Website
First visit
NSLDS.ed.gov.
Get information on
all your federal loans
from NSLDSSM, the U.S.
Department of Education’s
federal student aid
database.
Forgot your NSLDS PIN?
Visit www.pin.ed.gov.
Servicer:
Website:
Servicer:
Website:
Servicer:
Website:
Servicer:
Website:
Then get your credit
report.
This will help you to confirm that
you have found all of your loans.
Use www.annualcreditreport.com
to ensure your report is free.
Type of Loan
Subsidized Stafford
Consolidation
Unsubsidized Stafford
Perkins
Loan Amount/
Monthly Payment
Repayment Plan
$
$
Interest
Rate
Fixed
Variable
%
PLUS
Subsidized Stafford
Consolidation
Unsubsidized Stafford
Perkins
$
$
Fixed
Variable
%
PLUS
Subsidized Stafford
Consolidation
Unsubsidized Stafford
Perkins
$
$
Fixed
Variable
%
PLUS
Subsidized Stafford
Consolidation
Unsubsidized Stafford
Perkins
$
$
Fixed
Variable
%
PLUS
Servicer:
Website:
$
$
$
$
$ 0.00
$ 0.00
Servicer:
Website:
Total
ASA Is Your Resource to Successful Debt Management
If you have any questions about your student loans, contact ASA at www.asa.org.
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Repayment Option Summary
Standard Repayment
Pros
You have a shorter period of repayment (usually 10
years), and therefore accumulate less interest.
Cons
You have a higher monthly payment amount.
Extended Repayment
Pros
Extended repayment offers you the ability to lower
your payments by extending your payment period
(up to 25 years).
Cons
You pay more in accumulated interest overall.
Graduated Repayment
Pros
Make lower payments for up to 4 years.
Gradually increase your payment amount for the
length of your repayment period (usually 10 years).
Note: If your loan is consolidated, you may have a
longer repayment term on the graduated plan.
Cons
You pay more in accumulated interest over the life
of your loan, especially if your repayment period is
longer than 10 years.
Income-Based, Income-Contingent, and Income-Sensitive Repayment
Pros
These repayment options can reduce your monthly
payments to be compatible with your level of
income. Your repayment period will also be
extended on these plans, and in certain cases, you
could qualify for loan forgiveness. Contact ASA to
find out which one works best for you.
Cons
All of these plans will increase your accumulated
interest over time. There will also be an increase
in your total loan amount with an extended
repayment period.
Important:
These repayment options only pertain to federal
student loans. For your private loans, you will
need to contact your lender directly to find out the
repayment options.
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Sample Repayment Option Comparison
The chart below compares three different federal student loan repayment plans based on a
total Stafford loan amount of $35,000 and an interest rate of 6.8 percent.
$$$
NOTE: For the graduated repayment
plan, your final payment may be up to
three times your first payment.
Standard
$$
You must have more than $30,000
in loans to qualify for extended
repayment.
Extended
$
Graduated
1st
Year
5
Year
10
Year
20
Year
25
Year
If you would like to compare other
repayment plans that are available, go
to www.asa.org/MyOptions.
If your loans are consolidated, the
number of payments you have on the
Standard and Graduated payment
plans may vary.
Repayment
Options
5
Total Number
of Payments
Total Interest
Paid
Total Loan Paid Initial Monthly
Payment
Standard
Repayment
120
$13,333.74
$48,333.74
$402.78
Extended
Repayment
301
$29,120.52
$64,120.52
$267.17
Graduated
Repayment
240
$25,146.35
$60,146.33
$201.39
Final Monthly
Payment
$399.78
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Postpone Your Payments
Deferment
Forbearance
How do I qualify?
How do I qualify?
It depends on which type of deferment you are
applying for. However, if you meet the criteria and
have deferment time available, you cannot be
denied a deferment.
It can be granted at the discretion of your lender,
servicer, or the federal government and should only
be used in extreme circumstances.
When is a good time to use deferment?
When is a good time to use forbearance?
• Unemployment
• Economic hardship
• Economic hardship
• Illness or temporary disability
• Half-time or full-time enrollment in school
• Internship or residency
• Graduate fellowship
• National and local public service
• Active military duty
• Natural disaster
• Illness or temporary disability
Why is it better to use deferment?
What makes forbearance different?
The federal government pays the interest accruing
on your subsidized loans.
Forbearance will cost you more than deferment
because both subsidized and unsubsidized loans
continue to accrue interest.
Important:
It is always best to make payments and reserve deferment and
forbearance for times when you absolutely need them most. Contact
your lender or servicer to learn more about your postponement options.
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Consequences of Missing Payments
30 Days: Late fees may accrue.
Early Delinquency
60 Days: Credit history may be affected.
90 Days: Credit damage will affect your
ability to get a car loan, mortgage, etc.
Mid-stage Delinquency
270 Days: Loan has defaulted. Loan
will be due in full.
Default
After 270 Days: Payment and fees
continue to grow until the loan is paid.
Additional consequences may
include wage garnishment,
collection costs, and loss of tax
refund and other government
payments such as Social
Security, welfare, or disability.
Important:
Be sure to contact ASA right away if you ever fall
behind on your student loan payments. We can
help get your loan back on track!
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Ask American Student Assistance
Have a student loan question that isn’t covered in this guide? No problem! Just send us
your question at www.asa.org/answers, and we’ll give you our best answer.
Where do I find my student loan
information?
Q
A
I have been to four schools: One state
university and three private schools. I will
be graduating in less than a year and I have
lost track of what I owe. How can I figure this
out?
My income is very low, and I can’t
make my payments.
Q
I am not financially able to make payments
at the present time. My income meets the
poverty level. Am I eligible for a deferment?
A
If your income is low, you could be eligible
for a deferment, but I would check into your
repayment options first. One option you
should explore is income-based repayment
(IBR). This helps borrowers with low incomes
establish a monthly payment in line with
their ability to pay. This option is particularly
beneficial if you don’t expect your
circumstances to change substantially later
on, as the remaining loan can be forgiven
after 25 years of repayment. If you would like
to learn more about IBR, visit www.asa.org.
One great way to determine what you owe
(at least for federal student loans) is to go to
www.nslds.ed.gov, which should enable you
to see all your federal loans in one place. To
find information on your private loans, check
your credit report.
Loan Consolidation…
8
Q
What is the best consolidation program?
A
At the moment, there is really only one
option for consolidating your federal student
loans—through the U.S. Department of
Education’s direct consolidation program.
You can find more details at
www.loanconsolidation.ed.gov.
I paid off my defaulted loan. Can I
get financial aid?
Q
Years ago, I defaulted on a loan. It was “paid
off” when the money owed was taken out
of my yearly tax returns. Next year I plan
to return to school. Am I eligible to receive
financial aid?
A
If your entire defaulted loan was paid off,
then you would not be prevented from
additional student loan borrowing.
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Online Tools and Resources
Visit our website to find useful tools to help you stay on top of your monthly payments,
answer your education debt questions, and prepare for your financial future.
Interactive Student Loan Portfolio
Organize all of your federal student loan information in
one place with the interactive version of the student loan
portfolio! Having this information on hand will help you
understand your education debt obligations and make
informed key financial decisions, such as budgeting for a
car or a mortgage. Get organized today
at www.asa.org/MyLoans.
Payment Reminders
Never forget a payment again! Sign up for our e-mail
payment reminders at www.asa.org/remind. We’ll
notify you 12 days before your next payment is due.
Budget Calculator
This handy calculator will help you easily organize your
monthly and yearly finances. We also offer an interactive
budget worksheet PDF, which will allow you to print your
results. Try it out at www.asa.org/budgetcalculator.
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Financial Wellness in Just 10 Steps
Planning for your financial future may seem difficult, but we can help. Here are 10 easy
steps that will get you on the right track.
1. Stick to a budget.
Focus on long-term stability, rather
than short-term fun.
2. Pay off debt.
Commit to paying bills on time, every
month.
6. Look for a deal.
Take the time to look for the lowest
interest rate and fees. When saving,
look for the highest return on your
investment. 7. Plan for the unexpected.
Put away money for an emergency.
3. Invest in yourself.
If you are investing in your future,
remember that debt is not necessarily
bad.
4. Plan purchases.
A college education, a house, and a
car are large purchases that must be
planned wisely.
5. Take a class.
Learn basic financial management and
read financial publications on investing
and savings. Talk to a counselor if you
need extra help with financial issues.
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8. Know your credit score.
Establish a history of good credit early,
and you’ll always get the best rate when
you need to borrow money.
9. Build goals.
Set goals for yourself when it comes to
saving and paying down debt.
10. Review progress.
Every 6 months, look at your debt and
savings. Reassess your plans and goals.
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Budgeting Tips
Not sure a budget will help you? Don’t let the anxiety of your bills piling up get you down.
Planning your spending can actually help you buy the things you want. Here are five tips
that will get you started:
1. Budgeting is important for any income.
Budgeting provides security—especially if your income is limited. With a budget, you’ll know how
much you’ll need to pay the bills and be prepared for any unexpected expenses.
2. Budget even if you don’t have debt.
Budgeting isn’t just for those in debt—it’s for anyone looking to take charge of their finances.
Budgeting can help you start an emergency fund, save for serious investments, and find room to
splurge.
3. You can save money at any income.
Your ability to successfully manage money has nothing to do with how much you earn. Sometimes
having a higher income takes the focus off budgeting and money management—and leads to
wasteful spending.
4. Know where your money is going.
Budgeting organizes what you do with your money, including how you spend it. Once you know
exactly where your money is being spent, you’ll know exactly how much you can spend on fun
“extras.”
5. Use our budgeting guide.
You don’t have to be a math wiz or a financial planner to set up a simple monthly budget. On the
next page is a budget worksheet that will help you stay on track each month. Also check out our
online budget calculator at www.asa.org/MyBudget.
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Budget Worksheet
Income
Monthly Total
Salary (after taxes/benefits)
$
Other income (after taxes)
$
Total monthly income
Expenses
Home
Bills
Transportation
Health
Personal
$
Utilities (electricity, gas, etc.)
$
Internet/cable/home phone
$
Home repairs and maintenance
$
Groceries
$
Laundry/dry cleaning
$
Student loans
$
Credit cards
$
Car payments
$
Insurance (car, homeowner’s, etc.)
$
Cell phone
$
Public transportation/taxis
$
Gas
$
Parking/tolls
$
Car repairs and maintenance
$
Prescriptions
$
Doctor appointments
$
Gym membership
$
Entertainment
$
Gifts/special occasions
$
Travel
$
Dining out
$
Clothing
$
$
Total monthly expenses
$
0
$
0
- Total monthly expenses
$
0
= Total savings
$
0
Total income
12
Monthly Total
Rent/mortgage
Misc.
0
$
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Glossary
Visit ASA’s online glossary at www.asa.org/define
Consolidation Loan
Loan that combines several student loans into a new loan from a single lender.
The new Consolidation loan is used to pay off the balances on the old loans.
Default
Status federal student loans enter if your payments are more than 270 days
past due. Private loans and older federal student loans may have different time
frames for default. Refer to your loan’s promissory note to determine its default
time frame.
Delinquency
Failing to make a full scheduled loan payment by its due date.
Direct Loan Program
(William D. Ford Federal Direct Loan Program (DL))
Student loan program authorized on July 23, 1992, by the Higher Education
Act. The Direct Loan program (DL) offers subsidized and unsubsidized Direct
Stafford loans, federal Direct Consolidation loans, and Direct PLUS loans.
Funding comes directly from the United States Treasury rather than from private
lending institutions.
Economic Hardship Deferment
If you face extreme economic difficulties, you can apply for this temporary
postponement of your payments.
Fixed Interest Rate
Non-variable, or steady, interest rate. A fixed interest rate will not change for the
life of a loan.
Graduated Repayment
Repayment schedule in which your payments start small and then slowly
increase during the repayment period—usually by a small amount each year for
3 or 4 years—so that the loan is paid off in 10 years (or 25 years for borrowers
eligible for an extended repayment schedule).
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Half-Time Enrollment
Half of a full course load, as defined by your school. Definitions of half-time
enrollment vary by school—it’s important to know how your school defines this.
Being enrolled only half time impacts how much aid you receive. Also, if you
drop below half-time enrollment, your loans can enter repayment.
Income-Based Repayment Schedule
Repayment schedule that bases your payments on your income and family size.
Borrowers who have high student loan debt, a low income level, or both may be
eligible for IBR.
IRS Offset
Seizure of the income tax refunds of borrowers with defaulted loans. The U.S.
Internal Revenue Service (IRS) uses this money to repay the defaulted loans. Loan Forgiveness
Cancellation of a loan’s remaining balance—or a portion of the balance—by the
federal government.
Military Deferment
Postponement if you are serving on active duty, or National Guard duty, during a
war, a military operation, or a national emergency. This deferment begins when
you enter active duty and ends 180 days after you are demobilized.
Perkins Loans
Loans awarded by schools to their students with exceptional financial need.
Students can borrow up to $5,500/year (up to $27,500) for undergraduate
studies and $8,000/year for graduate school (up to $60,000 total for undergrad
and graduate school) in Perkins loans. These loans have a fixed interest rate of 5
percent.
Post-Active Duty Deferment
Loan postponement available if you’re enrolled at least half time at an eligible
school at the time of, or within 6 months prior to, being called to active duty
service. You can use this deferment for up to 13 months after active duty service.
There is no form to be filled out, as it is your servicer’s responsibility to apply for
the post-active duty deferment if the borrower is serving on active duty on or
after October. 1, 2007.
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PLUS Loans
Loans borrowed by parents of eligible dependent students (Parent PLUS loans)
or by graduate students themselves (Grad PLUS loans). Borrowers can take
out PLUS loans equaling the school’s cost of attendance—minus any other aid
received.
Private Loans
Loans issued by private lenders that can be used to supplement federal and state
loans.
Servicer
Organization that collects loan payments and provides customer service on
behalf of your lender.
Stafford Loans
The most common federal loans students receive. Stafford loans can be either
subsidized or unsubsidized.
Subsidized Loans
Loans the government pays the interest on during in-school, grace, and approved
deferment periods. Perkins loans are subsidized, and Stafford loans can be
subsidized.
Unemployment Deferment
Loan postponement that allows you to temporarily suspend payments while
your are unemployed.
Unsubsidized Loans
Loans not based on financial need. You are responsible for paying all interest that
accrues on an unsubsidized loan—including interest accrued during in-school,
grace, and deferment periods. PLUS loans are unsubsidized, and Stafford loans
can be unsubsidized.
Wage Garnishment
Process in which an employer withholds part of an employee’s pay to fulfill a
federal debt. This is one of the consequences of student loan default.
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SLSG-0412
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