Pslf & Ibr Oct. 09


Published on

Public Service Loan Forgiveness and Income-Based Repayment under the College Cost Reduction and Access Act

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • Recommend especially for borrowers in default
  • Screen shot of
  • Pslf & Ibr Oct. 09

    2. 2. Today’s Agenda<br />Income-Based Repayment Overview<br />Which Loans are Which and Why It Matters<br />Public Service Loan Forgiveness<br />Qualifying employment<br />Qualifying payments<br />Special issues for married borrowers<br />Hypothetical examples<br />Tax issues<br />Other LRAPS<br />John R. Justice & Civil Legal Assistance<br />Traditional LRAPs<br />
    3. 3. What You Can Expect to Take Away<br />You’ll know:<br />how to determine how much you stand to benefit<br />the requirements of the programs<br />what steps you need to take to qualify<br />You’ll also know:<br />what’s still being worked out and<br />where to go for more information.<br />
    4. 4. If I Say It, I Post It<br /><br />
    5. 5. College Cost Reduction and Access Act<br />
    6. 6. What is Income-Based Repayment?<br />Not your mother’s repayment plan<br />
    7. 7. IBR Monthly Payment Amount<br />
    8. 8. Who can choose IBR?<br />High debt relative to income<br />
    9. 9.
    10. 10. Who Has a Partial Financial Hardship?<br />Source: Jeff Hanson, Ph.D. , Director of Borrower Education, Access Group, Inc.<br />Assumptions: Interest rate = 6.8%; 2009 Poverty Guidelines;<br />Household size of 1 residing in 48 contiguous states<br />
    11. 11. Adjusted Gross Income(Oversimplified) <br />Wages plus<br />Interest income<br />Alimony received<br />and minus<br />Alimony paid<br />Student loan interest deduction<br />Deduction for IRA contribution<br />
    12. 12. Married Filing Jointly<br />
    13. 13. Married Filing Separately<br />
    14. 14. Eligible Loans<br />Know Your Loans<br />
    15. 15.
    16. 16. Commercial and Alternative Student Loans Are Never Eligible<br />
    17. 17. FFEL and Federal Direct Loans<br />Students borrow:<br />Stafford Loans, subsidized and unsubsidized<br />GradPlus Loans<br />Federal Consolidation Loans<br />From either of the two major federal student loan programs:<br />Federal Family Education Loans (FFEL)<br />Federal Direct Loans<br />
    18. 18.
    19. 19. Find Out What Kind of Student Loans You Have<br />National Student Loan Data System:<br />
    20. 20.
    21. 21. FFEL and <br />Federal Direct Loans<br />Eligible Loans for Income-Based Repayment<br />
    22. 22. ONLY <br />FEDERAL DIRECT<br />Eligible Loans for Public Service Loan Forgiveness<br />
    23. 23. FFEL Loans Must Be Consolidated Into Federal Direct<br /><br />
    24. 24. Which loans are not eligible?<br />Loans that are currently in default<br />Parent PLUS Loans<br />Consolidation loans that repaid a parent PLUS Loan<br />Alternative or commercial student loans<br />
    25. 25. Learn How Rehabilitation or Consolidation Can Help You Get Out of Default<br /><br />
    26. 26.
    27. 27. What about loan forgiveness?<br />IBR will forgive remaining debt, if any, after 25 years of qualifying payments.<br />If you work in public service, you could earn forgiveness after 10 years of qualifying payments. <br />
    28. 28. Public Service Loan Forgiveness<br />
    29. 29.
    30. 30. Public Service Loan Forgiveness<br />The balance of principal and interest on eligible Federal Direct Loans is canceled by the federal government after:<br />120 qualifying loan payments while working full-time in a qualifying public service position after October 1, 2007.<br />
    31. 31. ONLY <br />FEDERAL DIRECT<br />Eligible Loans for Public Service Loan Forgiveness<br />
    32. 32. FFEL Loans Must Be Consolidated Into Federal Direct<br /><br />
    33. 33. Perkins Loans are Special<br />Federal Perkins Loans are only eligible when part of a Federal Consolidation Loan, and borrowers are urged to seek advice about the pros and cons regarding consolidating Perkins loans.<br />
    34. 34. Qualifying Employment<br />
    35. 35.
    36. 36. What Counts as a Government Job?<br />Government employment includes work for:<br />local, State, Federal, and Tribal governments<br />government organizations, agencies, and entities<br />but not service as a member of the U.S. Congress<br />
    37. 37. What Counts as a “Public Service Organization”?<br />The organization provides specific listed services including “public interest law services” and:<br />gets at least some government funding and;<br />is not &quot;a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities…&quot; <br />
    38. 38. Qualifying Employment<br />Full-time, paid work<br />
    39. 39. Definition of “Full-Time”<br />Working in qualifying employment in one or more jobs for the greater of—<br />An annual average of at least 30 hours per week, or <br />For a contractual or employment period of at least 8 months, an average of 30 hours per week; or<br />Unless the qualifying employment is with two or more employers, the number of hours the employer considers full-time.<br />
    40. 40. Qualifying Payments<br />Income-Based Repayment<br />
    41. 41. What is a Qualifying Loan Payment?<br />A person must be working full-time in an eligible public service position AND making monthly loan payments for 120 months on eligible Federal Direct Loans as part of:<br />Income Contingent Repayment (ICR) plan, or<br />Income Based Repayment (IBR) plan (available July 2009), or<br />A standard 10-year repayment plan, or<br />At least the monthly amount required under Standard Repayment over a 10-year repayment period.<br />
    42. 42. Non-Qualifying Payments<br />Any term of years longer than 10-years<br />
    43. 43. What is NOT a Qualifying Loan Payment?<br />These payments do NOT count toward the 120-month requirement:<br />Payments made under a fixed term repayment plan with a term of more than 10-years<br />Payments made while not working in full-time qualifying public service employment<br />Payments made on non-qualifying loans (e.g., FFEL loans, commercial loans, Parent PLUS loans)<br />
    44. 44. Hypotheticals<br />Crunch your own numbers<br />
    45. 45. Hypothetical Recent Grad AttorneyIBR & PSLF after 10 years<br />Eligible Debt: $120,000<br />Starting Salary: $40,000<br />Monthly Payment Year 1: $297<br />Monthly Payment Year 10: $447<br />Total Paid: $44,102<br />Total Forgiven: $168,898<br />
    46. 46. Hypothetical Recent Grad Attorney30 years<br />Eligible Debt: $120,000<br />Starting Salary: $40,000<br />Monthly Payment Years 1-30: $860<br />Total Paid: $309,495<br />
    47. 47. Hypothetical Experienced AttorneyIBR & PSLF after 10 years<br />Eligible Debt: $60,000<br />Current Salary: $70,000<br />Monthly Payment Year 1: $672<br />Monthly Payment Year 10: $690<br />Total Paid: $82,635<br />Total Forgiven: $422<br />
    48. 48. Hypothetical Experienced Public Interest Attorney – 20 more years<br />Eligible Debt: $60,000<br />Current Salary: $70,000<br />Monthly Payment Years 1-20 $458<br />Total Paid: $109,922<br />
    49. 49. What About Taxes on Loan Forgiveness?<br />
    50. 50.
    51. 51. Higher Education Reauthorization LRAPs<br />