This document provides information and strategies for counseling students during the grace period before student loan repayment begins. It discusses the 6-month grace period for subsidized and unsubsidized loans. It recommends connecting with students, preparing them for repayment, asking about their plans, and explaining repayment options. The goal is to set students up for successful repayment by educating them on repayment calculators, plans, and managing debt. Schools can help by identifying questions for students to consider when selecting a plan and emphasizing options during exit counseling. USA Funds also offers default prevention solutions and resources to help students.

1. Grace period counseling: A good start for
repayment
May, 2016

2. Introduction
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George R. Covino
Vice President, USA Funds
Phone: (866) 329-7673, Ext. 0177
Email:
George.Covino@usafunds.org
LinkedIn:
https://www.linkedin.com/in/georg
ercovino
Twitter: @GeorgeRCovino
Default Prevention Forum:
http://defaultpreventionforum.org/

3. Agenda
 The Grace Period.
 Set The Stage For Successful Repayment.
 Your Opportunity To Create Positive Outcomes.
 USA Funds School Services.
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4. The Grace Period
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34 CFR 682.102; 34 CFR 685.102
Subsidized and
Unsubsidized Loans
 Six-month grace period.
 Begins once no longer
enrolled at least half time.
 Available only once for
each loan.
PLUS Loans
 No grace period.
 May qualify for a post-
enrollment deferment
period.
Enrollment Grace Repayment
6 months Length of repayment varies based on repayment plan.
In-school
status ends
Date entered
repayment

5. The Grace Period
During the grace period:
– No payments of principal or interest are required.
– No accrual of interest on subsidized loans, except for:
 Subsidized loans first disbursed between July 1, 2012, and June 30,
2014.
 Borrowers who lost interest subsidy for exceeding the 150 percent
limit, for first-time borrowers on or after July 1, 2013.
– Loan holder or servicer confirms:
 Payment amount.
 How and when to make payments.
After the grace period, the repayment phase begins.
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34 CFR 682.102; 34 CFR 685.102
Unless deferred, the borrower’s first payment usually is
due within 60 days of entering repayment.

6. Set The Stage For Successful Repayment
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Strategy Examples
 Connect and
communicate.
– “We’re here to help.”
– “What is your current contact information?”
– “Do you know who your servicer is?”
 Prepare for
repayment.
– “Are you ready to start making payments?”
– “Is a monthly payment of $xxx going to be
affordable for you?”
 Ask about
future plans.
– “Do you have a job?”
– “Are you serving in the military?”
– “Are you planning to return to school?”
 Explain about
options.
– “Do you need to pay less/postpone payments?”
– “Who will you contact if you run into trouble
later on?”

7. Set The Stage For Successful Repayment
T F A borrower may change repayment plans at any time.
T F
The lowest monthly payment is usually the standard
repayment plan.
T F
Borrowers usually pay the least total amount of interest on
the standard repayment.
T F There are five different income-driven plans.
T F
A majority of borrowers across all school segments are on
the standard repayment plan.
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 Did you Know?

8. Set The Stage For Successful Repayment
T F A borrower may change repayment plans at any time.
T F
The lowest monthly payment is usually the standard
repayment plan.
T F
Borrowers usually pay the least total amount of interest on
the standard repayment.
T F There are five different income-driven plans.
T F
A majority of borrowers across all school segments are on
the standard repayment plan.
8
 Did you Know?

9. Set The Stage For Successful Repayment
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0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Standard
Repayment
Graduated
Repayment
Income
Based
Repayment
Fixed
Payment
Pay as You
Earn
Repayment
Extended
Repayment
Income
Contingent
Alternative Consolidation
2013 CDR Repayment Plan Selections
% of Repayment Base
*Based on sample of school customers
Community Colleges Public 4-year Private 4-year Proprietary

10. Set The Stage For Successful Repayment
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www.repaymyloans.org

11. Set The Stage For Successful Repayment
Assumptions
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12. Set The Stage For Successful Repayment
Initial Payment
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13. Set The Stage For Successful Repayment
Maximum Monthly Payment
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14. Set The Stage For Successful Repayment
Interest Paid
14

15. Set The Stage For Successful Repayment
Total Amount Paid
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16. Set The Stage For Successful Repayment
Years In Repayment
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17. Set The Stage For Successful Repayment
 Help borrowers select the
best repayment plan.
 Encourage use of
repayment calculators.
 Provide information about
student loans and
managing debt.
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“How to Manage Your Student Loans”
“Repayment: What to Expect”
Source: studentloans.gov
Source: studentloans.gov

18. Your Opportunity To Create Positive Outcomes
 What schools are doing:
– Identify three questions to answer
before selecting a plan.
– Explore whether borrowers may
qualify for an income-driven option.
– Emphasize repayment options in
exit counseling.
– Educate borrowers about options at
mid-point and again during the
grace period.
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19. Your Opportunity To Create Positive Outcomes
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20. Your Opportunity To Create Positive Outcomes
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Here’s your repayment checklist:
❑ Compare your monthly payment options using this repayment calculator.
❑ Decide whether you want to consolidate. Consolidation can simplify the repayment
process if you have more than one loan or servicer. In some cases, it can also help you
qualify for better repayment options. Just be sure to weigh the pros and cons.
❑ Choose or apply for an affordable repayment plan. If you take no action, you’ll be
placed on the 10-year standard repayment plan. If you need a lower payment, apply for an
income-driven repayment plan, such as Pay As You Earn, where your payments can be
as low as $0 per month.
❑ Set up your payments. You will not pay the U.S. Department of Education directly. In
most cases, you will make payments to your federal loan servicer.
TIP: Ask your servicer how to sign up for automatic payments. You could receive a 0.25%
interest rate deduction for enrolling!
❑ Know who to contact if you need help with your student loans. You never have to
pay for student loan help! Your federal loan servicer will never charge fees and can help
you for free.
TIP: Save your servicer’s phone number in your phone.
Source: Financialaidtoolkit.ed.gov

21. Top Ten Tips From The Institute for College
Access and Success (TICAS)
 Know your loans.
 Know your grace period
 Stay in touch with your lender.
 Pick the right repayment option
 Don’t panic!
 Stay out of trouble
 Prepay if you can
 Pay off most expensive loans
first.
 To consolidate or not?
 Loan Forgiveness
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Source: ticas.org/content/posted/top-10-student-loan-tips-recent-grads

22. USA Funds School Services
 USA Funds Borrower Connect AdvantageTM.
– Complete default prevention solution that includes award-
winning, patent-pending software; analytics; contact and
counseling; robust reporting and tracking.
 USA Funds Default Prevention Forum Blog.
– http://defaultpreventionforum.org/
 Stayed tuned for exciting information on our new student
success tools at NASFAA in July.
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23. A nonprofit corporation, USA Funds® works to enhance
postsecondary education preparedness, access and success
by providing and supporting financial and other valued services.