Paying Of Your Student Loans

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Paying Off Your Student Loans

COURSE DESCRIPTION

Paying Off Your Student Loans is a 60-minute course intended to provide awareness of student loan debt management strategies so that learners can improve their current financial situations, avoid student loan delinquency and default and repay student loans as quickly and inexpensively as possible.

If possible, request learners bring any information on their current student loans to class. You should become familiar with student loan types and management options before teaching this course. Additional background information on specific student loan types and interest rates can be found in the Paying for College section within this curriculum. Additionally, it is recommended that you learn to navigate the different resource websites discussed in this course.

LEARNING OBJECTIVES

Terminal: Upon completion of this course, learners should be able to understand the student loan management options available to them and take steps to apply repayment options to their loans.

Enabling: O During the Where Do You Stand? activity, learners will list their current educa-

tional loan(s), estimate loan balances and determine the information necessary to evaluate repayment options. O In the Test Your Knowledge activity, learners will correctly answer eight questions about student loan types and the features of each. O In the Management Options activity, learners will summarize content material on managing student loan debt and present their summaries to the rest of the class.

REFERENCES

Department of the Navy. (2005). SECNAV Instruction 1754.1B: Family Support Programs. Office of the Secretary of the Navy, Washington, D.C.

Department of the Navy. (2010). OPNAV Instruction 1740.5B Change Transmittal 2, United States Navy Personal Financial Management (PFM) Education, Training, and Counseling Program. Chief of Naval Operations, Washington, D.C.

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Department of the Navy. (2009). Command Financial Specialist Training Manual. Commander, Navy Installations Command, Washington, D.C.

Barshay, Jill. "Heaviest College Debt Burdens Fall on 3 Types of Students." , June 8, 2015. U.S. News and World Report LP. Web. news/articles/2015/06/08/heaviest-college-debt-burden s-fall-on-3-types-of-students

Berman, Jillian. "Class of 2015 has the Most Student Debt in U.S. History." MarketWatch. May 9, 2015. MarketWatch Inc. Web. August 15, 2015. story/class-of-2015-has-the-most-student-debtin-us-history-2015-05-08

Berman, Jillian. "Student Debt Balance Around 60 Percent of Graduates' Annual Income on Average: Study." , June 19, 2013. The Inc. Web. August 15, 2015. huffingtonpost. com/2013/06/19/student-debt-graduates-income_n_3464924.html

Petraeus, Hollister and Seth Frotman. Overseas and Underserved: Student Loan Servicing and the Cost to Our Men and Women in Uniform. , July 2015. Consumer Financial Protection Bureau. PDF. August 15, 2015. http:// files.f/201507_cfpb_overseas-underservedstudent-loan-servicing-and-the-cost-to-our-men-and-women-in-uniform.pdf

"Student Loan Volume and Default Rates." NCES., May 2015. The National Center for Educational Statistics. Web. August 15, 2015. programs/coe/indicator_cug.asp

Useful Websites

Consumer Financial Protection Bureau:

Federal Student Aid Ombudsman Group:

National Consumer Law Center, Student Loan Borrower Assistance:

National Student Loan Data System (NSLDS): nslds_SA/

U.S. Department of Education Federal Student Aid:

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COURSE PREPARATION

Handouts: O Student Loan Resources O Test Your Knowledge O Where Do You Stand?

Materials (vary depending on activities chosen): O Pens, pencils O Paper O Calculators O Internet connection (where available) O Paying Off Your Student Loans PowerPoint slides

SUMMARY OF LEARNER ACTIVITIES

Where Do You Stand?: A task-driven activity in which learners determine their overall student debt and service providers so that they can better evaluate educational debt management options. Test Your Knowledge: A quiz activity for learners to identify student loan types, features and repayment aspects. Management Options: A review activity in which learners summarize the content material and present it to the rest of the class.

CONTENT OUTLINE

1. Welcome and Introduction (5 minutes) a. Student Loan Troubles b. Agenda

2. Your Current Financial Situation (10 minutes) a. Determine Your Debt Balance b. Identify Loan Servicers c. Assemble Documentation d. Consider Options

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e. Stay Current with Loan Payments f. Make a Budget g. Learner Activity: Where Do You Stand? 3. Student Loan Programs (15 minutes) a. National Student Loan Data System (NSLDS) b. Federal Loans c. Private Loans d. Learner Activity: Test Your Knowledge 4. Student Loan Debt Management Programs (10 minutes) a. Learner Activity: Management Options, Part 1 b. Time Extensions c. Payment Reductions d. Loan Forgiveness e. Service Member Only Options 5. Managing Private Lender Debt (15 minutes) a. Terms b. Options c. Documentation and Assistance d. Learner Activity: Management Options, Part 2 6. Summary and Conclusion (5 minutes) a. Sources of Help

CONTENT MATERIAL

WELCOME AND INTRODUCTION

Student loans provide the opportunity to get an education to many people who otherwise would not be able to afford the cost of college. However, student loan debt can cause financial hardship long after graduation.

Student Loan Troubles

In and out of the military, students and former students carry significant amounts of educational debt. According to the Consumer Financial Protection Bureau, the total amount of student loan debt crossed $1 trillion in 2013, surpassing credit card debt and second only to the amount owed on home mortgages. In 2015, the average college graduate owed more than $25,000 to public and/or private lenders. And student loan debt must be repaid regardless of whether the student

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completes a degree or program. Current studies indicate that student loan payments could take up to 60 percent of a borrower's monthly income and that 17 percent of borrowers are behind in their loan payments.

There are a number of ways student borrowers get into financial trouble with their student loans.

Overborrowing: Especially when accepted from high-interest private sources, Overborrowing is one of the most common issues people face with student loan debt. Borrowers are often surprised by how deep their debt is at the end of two, three or four years because they have been focused on their finances one semester at a time. And, as many people later discover, it is easy to spend a lot of money on a credential that does not have much market value.

Discontinuance: Not everyone who starts a program of study finishes it. Many students stop taking classes, drop out or flunk out. They are no better off than they were when they started, only now they have student loans to pay on top of other expenses.

Life circumstances: Finally, life throws curve balls. Career fields go through cycles of boom and bust. Career fields get saturated with new graduates. And issues can occur within a family, such as accidents, relocations or even unplanned pregnancies.

Even with proper planning, many things can make student debt harder to pay on a standard repayment plan.

Agenda

Fortunately, there are programs in place to help student borrowers. Your job is to navigate the best course to effective student debt management. This course will help you to assess your current financial situation and student loan debt, provide information on student loan programs and outline different student debt management programs and strategies.

YOUR CURRENT FINANCIAL SITUATION

For those who carry it, managing student loan debt can be challenging ? especially on a junior service member's salary. Service members who fall behind on their debt or do not properly manage their educational indebtedness could experience career-disrupting consequences, such as letters of indebtedness (LOIs), lost security clearances or even administrative separation.

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Paying Off Your Student Loans

The goal of this course is to help you assess your personal student debt circumstances and choose repayment options that will help you to maintain financial readiness and meet your future financial goals.

Determine Your Debt Balance

The first step to managing your student loan debt is to understand where you stand with your debt. Student borrowers typically draw loans from multiple sources. With military moves, address changes, variable due dates and the passage of time, it is easy to lose track of one or more outstanding loans. It is important to know how much you owe, and to whom, so that you can stay on top of repayment.

Identify Loan Servicers

Most students will have been issued multiple loans, each potentially assigned to a different servicer. A loan servicer collects payments from borrowers. Any or all of colleges or schools attended, banks and other lenders, or private companies specializing in loan management and operating under contract can be student loan servicers. You should make sure that you know, and have contact information for, your loan servicers.

Assemble Documentation

If you have several loans, payments can become overwhelming. If you want to change repayment options because of financial hardship, you will have to be able to document the hardship. You will have to show that your situation is not likely to change in the short term. Tax returns, medical evaluations and other documents may be required to prove financial hardship.

Consider Options

Trainer's note: Distribute the Student Loan Resources handout.

Most repayment options are specific to one or more loan programs and cannot be used with others. There are more than 20 different federal student loan programs under repayment at the present time, though most service members and family members will have been funded by just a few of them. The Student Loan Resources handout provides information on repayment and management options. It is important to remember that for requests for payment relief, you have to start with the loan servicer. If you have multiple instances of the same loan type, each assigned to a different servicer, you must make the same request to each one.

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Stay Current with Loan Payments

The standard repayment schedule for student loans is 120 equal monthly payments, or 10 years. The interest rate on federal loans is fixed at the time a loan is signed and does not change during the life of the loan. Some private loans have adjustable rates. You should not reduce or change payments until you are directed to do so by loan servicers. Delinquency and/or default on student loans can have severe negative consequences for future credit, housing options and employability.

Make a Budget

Knowing your current situation includes accounting for more than just your student loan debt. To ensure that you understand your overall financial status, you should make a budget or spending plan. This will help you to see how your student loan payments and debt fit into your current financial spending. Additionally, a budget can help you to establish and meet financial goals. For additional information on budgeting, you may wish to attend a Developing Your Spending Plan class at your local Fleet and Family Support Center (FFSC). You can also talk with your Command Financial Specialist (CFS) or with an FFSC financial counselor for budgeting assistance.

LEARNER ACTIVITY: Where Do You Stand? Time: 10 minutes

Materials: Where Do You Stand? handouts

Procedure: Distribute the Where Do You Stand? handouts. Tell learners that this handout is a worksheet to help them determine their overall student debt and service providers so that they can better evaluate educational debt management options. Instruct learners to fill out as much information as possible concerning their student loan(s), balance(s), type(s) and current monthly income. Give learners a few minutes to complete this worksheet.

Ask if any learners feel that all the information they listed is 100 percent accurate. Encourage all learners to use the information they listed on the handout as a starting point to clarify their student loan debt information. Explain that they can use this handout to take notes on information and options to manage their current debt.

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STUDENT LOAN PROGRAMS National Student Loan Data System

Trainer's note: If an Internet connection is available, navigate to the National Student

Loan Data System (NSLDS) website () and walk learners through the pages and features. You may also want to explain to learners that they should start with the NSLDS to complete the worksheet from the previous activity, if they did not have complete information.

For most borrowers, the place to get information about their loans is the National Student Loan Data System (NSLDS). Most borrowers will have logged in to NSLDS to complete receipt of their loans. If the NSLDS is unfamiliar to you, your loans may be private; NSLDS only records federally funded student loans.

NSLDS records transactions in federal loan programs and references 21 different loan varieties. The NSLDS can help you find the name and contact information for each loan servicer by clicking on the number next to each loan to open a detail page. The status history of each loan will be part of this detail page. Any deferment, forbearance, delinquency or default will be noted in the loan detail page.

Even with NSLDS data, you may find that loan servicers disagree about balances or when payments were made. You should first attempt to resolve any discrepancies by working with the loan servicer, but should that prove impossible, you can contact the Federal Student Aid (FSA) ombudsman. The FSA ombudsman's contact information is included on the Student Loan Resources handout.

Federal Loans

Federal student loans fall into two categories: Direct Loans and Perkins Loans. Since 2010, these low-interest loans are funded through the federal Direct Loan Program (DLP).

Direct Loans

The majority of loans made since 2010 have been Direct Loans. "Direct" means that the federal funding comes to the financial aid office of the school or college rather than being funneled through a commercial bank. Direct Loan programs include Direct Subsidized Loans, Direct Unsubsidized Loans, PLUS Loans (for parents of undergraduates and graduate/professional students) and Direct Consolidation Loans. Direct Loans differ in purpose, in interest rate and how interest is

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