Stephanie Wells: [00:00:00] Okay, good afternoon everyone. My name is Stephanie Wells here from MEFA to talk to you about managing student loan repayment for graduating seniors. So assuming we have mostly high, uh, college seniors on the line, or folks who might be graduating from graduate school, or, uh, maybe in a few months you’ll be looking at repayment.

All of this is gonna be great information for you. So we do have another one of my colleague Sean Morrissey, who is behind the scenes answering the q and a. So feel free to write all your questions in the q and a and Sean will answer those as we go. And we’ll have time at the end for question and answer as well.

So again, today everybody, uh, the webinar is being recorded and you will get copies of the slides. Just communicate with us through the q and a. So a little bit about MEFA. We are a nonprofit, quasi state authority based here in Boston, mass. We’ve been around for almost 45 years. We were created back in 1982 at the behest of colleges in [00:01:00] Massachusetts, who wanted a nice low cost loan program for their families.

So from that, MEFA was created by the state legislature and since then we’ve gone on to offer additional loan programs for undergraduate students, graduate students, refi, as well as savings plans like the U Plan and U Fund. But one of the biggest things we do here at MEFA is a lot of guidance and education, free guidance and education for students, families, college administrators, and school counselors.

So. We cover a lot here at MEFA and everything we’re doing here is free of charge. So feel free to tap into all of the resources we’re gonna talk about today. So here’s our agenda. Pretty big agenda, but we will get through all of it. Um, so we wanna talk about just, okay, what do you do first? What’s, what’s the first thing you need to do to get, to get in, in line and get, take steps in the right direction towards student loan repayment.

We’ll go through some loan repayment tips. We’ll get into a little bit of details about the different federal loan [00:02:00] repayment options, as well as how to manage your loans if you have a private student loan. We’ll talk a little bit about the forgiveness options that are available to students as well as the consequences of delinquency and default.

So that’s one of the biggest, uh, you know, hurdles that we wanna help you face is making sure that you are not delinquent or default on your education loans. ’cause that can have a big, uh, issue with your credit later down the line. So that’s one of the things we’ll talk about too. Is how this might impact your credit and the importance of good credit as you move on in your, in your career.

We’ll also end towards the end with just some updates and some, uh, little tips about loan consolidation and financing. Understand the differences between the two. It might be an option that you might, might wanna look at in the future, as well as free resources, recommended resources, reputable websites that we can recommend to get you additional help, um, on your journey.

So let’s talk about the first [00:03:00] steps. So the first thing you’ll wanna do if you haven’t already done this, is make sure you know who the loan servicer is for all of your loans, both your federal loans, and if you have private loans, you wanna know who is the organization that is servicing them. Meaning they’re taking in your payments, they’re managing your payments, uh, communicating with you if you’re late on a payment, things like that.

And that is the company that you will be making your payments through. Now, the that company may be a different company than who you actually borrowed through. So for example, the Federal Department of Education has different loan servicers that work for them. So you will be assigned to one of those for your federal loans, but you might also have a private loan.

Um, serviced by a different organization than your original lender. So just keep in mind that if you have a loan, it might be you might be making payments to a different organization that they’ve hired out to service your loans. So that’s the first step. You wanna [00:04:00] know who they are. Download the app. Uh, understand.

And once you get into your account, look at what your loan debt is. What’s your total debt that you owe right now? What is the interest rate for each of your loans? Now when you’re looking at interest rates. You’ll wanna start paying off, you know, the highest interest rate debt sooner. Uh, and that might even include a credit card.

So you might wanna pay that off before your student loans. If it has a, you know, 15% interest rate. Uh, you’ll wanna look at what is that monthly payment gonna be, even if you’re in a grace period and you don’t owe payments, let’s say till maybe October or November. Six months after you graduate, you still wanna know and start budgeting, preparing for those monthly payments.

And of course, one of the most important things to know is what is, when is the first payment due. So have that you know, ready to go so that your budget’s in order. And once those payments come due, after you graduate, you’ll be ready to go. Now, in order to get your federal student loan information, [00:05:00] you can log into student aid.gov.

Now, only your federal loans will be on here. Your private loans will not be on here. So for example, if you have a loan through MEFA, you won’t find any of the private loans on the federal department website. But I will, uh, click in here for you and just show you real quick. All the great options that are on this federal website.

So you can use a loan simulator to compare the different repayment plans we’re gonna talk about today. You can actually log into your account and fig find out who your loan servicer is that’s here on this website. There’s direct consolidation applications here for you if you’re interested in that, as well as if you need to apply for an income driven plan.

Or maybe you might be going to grad school and you might need to fill out that FAFSA once again. So those are all options that are available to you on this website, as well as some great repayment tips. So this is the website you’re gonna go. This is where you filed your FAFSA, and that’s where you’ll be finding information about your federal student loans as well.[00:06:00]

Now for your private student loans, if you have any of those, let’s say maybe you co-signed on a loan or your parents co-signed for a loan with you, then you would look under that, uh, lender’s website to figure out where are you gonna be making your payment. So look on, if you’re on MEFA, go on MEFA.org and you can find access to our loan servicer, a ES on that website.

So go to the loan servicer’s website. Um, if you have one private loan, all of those loans should be on the same with the same servicer as they are with MEFA, for example. And that is the company you’re gonna be paying back. So your loan servicer can provide details on when your payments will start, what your total debt is, what that, you know, um, monthly payment will be.

And if you have any trouble making any of those payments, you can contact your loan servicer, but I would also download their app. Okay. That’s a easy way to keep track. You know, when you’re waiting for an appointment or you’re on the train, you’re kinda, you know, looking at your finances, you can keep track [00:07:00] of everything on an app.

It makes it easier to manage everything. So while you’re waiting for those payments to start, and you know we have a little bit of time, maybe after graduation, a little bit of a grace period there, you can create your loan, your accounts for the loan service providers, so your federal account, make sure you have that ready to go with the loan servicer, download the apps, as I mentioned, and start creating a budget.

So we’ll go on the next slide. We’ll talk a little bit about creating your monthly budget. But make sure if you have those payments in your budget, you can even add those monthly payments technically to your budget now and put them in a savings account. Pretend you’re paying your loans off right now so that it’s part of your budget, but you’re putting that payment into a savings account so that you’re getting used to making those payments before you even have to begin.

That’s a good way to get started. And make a note, you know, a month in advance, set yourself a reminder of when your loan is gonna go into [00:08:00] repayment for each loan. Keep in mind, you may have a grace period before you have to start making payments after you graduate or leave school. Typically, with a federal loan, it’s about six months.

Um, with MEFA, if you have a deferred loan, it’s gonna be about six months as well. So. It is a period of time that gives you a little wiggle room just to, you know, get a job and get your monthly budget in in order so you can start paying your back your loans in a few months. So creating a budget is real, a really good, um, way to start and get yourself in some good financial habits before you get out.

Out of college, maybe get a job and start, you know, pilot, you’re gonna get a lot more bills. Once you’re out on your own. You have an apartment, uh, you’ll have utilities, maybe start paying your own phone bill and health insurance, things like that. So there’s gonna be a lot more bills coming in. So you wanna get, make yourself a budget and just understand where, where that money’s going each month.

Uh, one of the things I like to do. If I feel like I’m spending [00:09:00] too much, it’s just track what I’m spending for a month. Track every penny. Put them into little categories like food or eating out or you know, veterinary care if you have an animal, things like that so that you know where that money’s going and maybe you can make different decisions.

Um, if you see, you know, you’re spending too much eating out, for example, you can save a little money there. Identify all the sources of income, whether it’s interest on an interest bearing account, or you know, a salary, maybe bonuses, things like that. You wanna track your income versus your expenses to make sure you’re not overextending yourself each month.

Now you, while, while you’re doing this and you’re figuring out, geez, you know, I’m, I’m spending a little bit, um, maybe in, in the entertainment category or the personal care category, um, you know, is that a need or is it a want? You have to pay your car payment, you have to pay your student loans, uh, but maybe you don’t have to, you know, use as much on some of the entertainment [00:10:00] spending.

Um, for example. And then you can revise it each month as needed. There’s also a lot of great apps online that you can take a look at. Um, there’s one that I just downloaded. It’s called Spending, that I find very easy ’cause it’s just basically income and, and expenses. And it helps me track what I’m spending each month.

Uh, and I really like that ’cause I can create different categories. So, you know, there’s different apps out there to create a budget. I think that’s the easiest way. But if you like a spreadsheet, create your own spreadsheet and you can get as sophisticated as you want. But even if it’s just, you know, just using your debit card for one month, make all your spending on one debit card so you can go online at the end and track everything you spent and where you spent it.

It really is eye-opening to figure out your budget. All right, so now that we’ve talked a little bit about what, what you need to do to get started, let’s talk about the actual loan repayment and some good tips. And this stuff is really important because paying your bills on time, all of [00:11:00] your bills is going to directly impact your credit.

And if you’re paying them on time. And you’re not racking up a lot of credit card debt, for example, then you, you are gonna have a good credit score. You’re gonna build up a good credit score, and your credit score is gonna be a key number that’s gonna determine a lot of your expense going forward. For example, if you, uh, wanna get an apartment.

You know, the landlord’s gonna might check your credit score. If you’re looking for an employment, the company you’re looking at might look at your credit score to see how good you are with your money. So these are things that’s not just derogatory credit that could hurt you, but you know, good credit can help you as well.

So how do you establish good credit? Pay your bills on time, make at least the minimum payment, and we’ll talk about your student loans and the different. Repayment options that are available To make that a little bit easier, I like to use auto debit for all of my bills if I can, even if it’s just for the minimum payment, and I can add on to those payments [00:12:00] if I want to.

That way I don’t have to think about it. It’s always paid on time. That’s really important. Making sure everything’s paid on time. If you or maybe, uh, parents or, or any, you know, relatives might have a 5 29 college savings account for you and there’s anything left over, uh, you can use up to $10,000 of that 5 29 account to pay off student loan debt.

So if you do have any extra money laying around in that 5 29 and you wanna, you know, put it down towards your student loan, you can do that without penalty. Also if you have extra funds, so you do your budget and you realize, geez, you know, I have a few hundred extra bucks each month, even after I put money towards savings.

Um, think about paying off some of your debt. Quicker. So making double payments, adding an extra 50 bucks, whatever it might be, pay the account, whether it’s a student loan or a credit card or a car payment. Pay off the loan with the highest [00:13:00] interest rate first. Not necessarily the highest balance, but the highest interest rate ’cause you wanna get, get those accounts under control and paid off earlier.

Uh, your student loans are. Gonna tend to have lower interest rates than maybe a credit card. So you wanna, you know, kinda look at all your debt and find out which debt has the highest rate. Then if you determine, yeah, I wanna put extra towards my student loan payments, and you can do that through the loan servicer so that you can make more than your minimum payment each month.

You can even have that set up auto debit so that the extra goes towards your principal account and you can pay it off sooner.

Okay, so a little bit more, uh, detail about maintaining good credit and the importance of it. Again, I mentioned paying your bills on time. That’s gonna help you establish good credit, a good credit score, avoiding delinquency and default. You can review your credit report [00:14:00] [email protected], but also if you have a credit card or you have a.

A credit app, you can find your credit score there as well. Uh, I like to look at the credit score because that is the overall, um, evaluation of my annual credit report, but the credit report is gonna have all the details of what’s on there, all of your debts and things like that. Now, your credit, your credit score can be as low as three 50 and as high as eight 50.

So we’re not gonna get too much into credit scores today, but. The higher your credit score, the lower your interest rate. If you go to take out a car loan, for example, or you’re looking maybe for a private loan for graduate school. So that is not only gonna help you, you know, stay healthy with your credit, but you could actually get better rates by having a good credit score for future purchases.

As I mentioned, landlords might look at your credit to make sure you’re able to pay your bills on time before leasing. And if you do make bad credit [00:15:00] decisions such as bankruptcy or even late payments, that stuff can stay on your credit report. A bankruptcy will stay on there for seven years, so it’s gonna stay on, it’s gonna stay a while before you can, uh, build that credit back up.

So the best way to do that is to avoid, um, getting in bad credit habits to begin with.

So again, follow up with your loan servicer. If you have any questions, give them a call. Don’t ignore their phone calls. If you’re having trouble making your payments on time, they’re gonna call you. If you’re late on your payment, answer the phone. They can help you with maybe modified payment terms or short term of, you know, maybe no payments.

Three months for three months until you get yourself up and running, or you get yourself a job. Something like that. So definitely, you know, work with your loan servicer. Don’t be afraid to talk to them. Their goal is to make sure that you are not late and that you don’t go into default. So they wanna help you avoid that.

You can also potentially [00:16:00] deduct your student loan interest from your federal taxes each year if you’re under a certain income level. So for folks who are filing their 2025 taxes right now, if you’re under a hundred thousand dollars for a single filer or under a 200,000 for a joint filer. You may be able to deduct your, uh, education loan interest from your taxes each year.

That number is evaluated, but that is what it is for 25, uh, tax filers right now. So you could get a little boost there as well. Alright, so Sean, I’m gonna keep going, but stop me if you want me, if you have any questions that you think we need to address right now, just let me know.

Shawn Morrissey: I think we’re good.

Stephanie Wells: Great. Thank you. Okay, so let’s dig in a little bit about federal loan repayment options. ’cause there’s a lot of different options and there could be some strategies here that you might wanna look at depending on your situation. So everybody is going to be put into a standard 10 year repayment plan.

That [00:17:00] is the basic plan that everybody’s gonna be put into when they go into the repayment on their federal loans. Now, if that payment is too high for you, there are other options that we’re gonna talk about. So you could potentially extend repayment, and these are just your federal loans we’re talking about.

So extending the repayment beyond that 10 years can help lower that payment. But it’s also gonna have a higher cost ’cause you’re taking longer to pay off that loan. Maybe paying, you might be paying more interest over the long term as well. Now the Federal Department of Education has a great federal, uh, student loan simulator.

So there’s a link right here, you can check it out. And there’s actually three different types of simulators you can use to determine what your um, best repayment options might be to help you if you are in default or delinquency. So there’s different ones you can look at as well as, you know, if you’re thinking about taking on another loan, maybe you’re looking at graduate school.

How will that impact your. Payments. [00:18:00] So take a look at that loan simulator, if you wanna play around with some numbers before you actually have to start making your payments so you know what your plan is going to be. So here are the current, uh, federal loan repayment options. So as I mentioned, the standard 10 year, there’s also the graduated 10 year repayment, and that’s a nice option if you wanna stick with that 10 year loan so that it’s not too costly.

But with the graduated repayment, you start out with smaller payments for a few years, then your payments go up a little bit for a few more years in the last few years. You have sort of a balloon payment, a larger payment than what you did at the beginning. So it kind of, you know, graduates and goes up a little bit every few years, but it’s, you’re still paying it back within 10 years.

And that’s great, especially when you’re first getting, getting started. You might have a lower maybe, uh, entry level salary, but hopefully that’ll go up over the years. Now there’s also the [00:19:00] extended repayment option where you can, uh, if you have at least 30,000, you can extend it up to 25 years. So that’s another option, um, to look at.

Now there are two options here that I wanna mention that will be, um, going away as of July 1st, 2028, but you can take advantage of them for the next couple years if you want to. And that’s gonna be the pay plan and the income contingent plan. So ICR and pay, so pay is gonna be payments that’s gonna be 10% of your discretionary income.

The loan debt’s forgiven after 20 years. If you haven’t paid it off in 20 years, whatever’s left over is forgiven. Um, and then there’s also the ICR, which is 20% of your discretionary income or 12 year fixed payment. And again, it’s paid off within, you know, 25 years. And if there’s any debt after 25 years, that is forgiven as well.

However, both of those plans are going [00:20:00] away as of July 1st. 2028. So if you’re in one of those plans, or if you use those plans for the next couple years, um, just know that as of July 1st, 2028, you’ll have to get yourself set up in one of the other plans such as income-based repayment, IBR or the new plan that’s coming up, RAP, repayment assistance plan.

So I’ll talk about those in a second. Um, so just know if you wanna use, uh, pay or ICR, you’ll have to change plans as of July 1st, 2028. And if you don’t. Make the effort on your own to make change those plans, then the Federal Department of Education will automatically move you into the repayment assistance plan.

So the repayment assistance plan is going to be available as of July 1st, 2026. So those payments are gonna be from one to 10% of your A GI and that debt is gonna be forgiven if you haven’t paid it all off after 30 years. So you can see the new plan is actually. It [00:21:00] takes a little bit longer to get that debt forgiven.

There’s also income based or IBR repayment as it’s called, and those payments are gonna be 10 or 15% of your discretionary income, and that debt will be forgiven after 20 or 25 years, depending on, uh, how much you pay back. If there’s anything left. So let’s look at in numbers. What do all these repayment options mean?

There’s a lot of ’em here. Um, and we’ll just use an example, Victoria, she has $40,000 in debt, 20,000 in unsubsidized federal direct loan, and then the other 20,000 is a subsidized version, and the interest rate is 5.5% fixed. She has a $45,000 income and she’s living here single in Massachusetts. Now she’s anticipating that her income or these calculations are anticipating that her income will increase at a rate of 5% a year.

And again, you will get these slides, so you’ll be able to see these numbers, but you can see that 10 year [00:22:00] standard. That’s gonna have the highest payment ’cause you’re paying it off the soonest. So that’s also gonna give you the lowest total payment in interest and the lowest total cost of the loan. So you can see those costs go up as you push out repayment or as you extend it.

So this multiple options to choose from, and you’ll have the calculators to help you and you’ll have your loan servicer to help you as well once it comes time to start repayment. The only calculation that’s not listed on this chart is the new RAP, the repayment assistance plan, because the calculator isn’t available yet.

’cause it doesn’t start until July 1st, 2026. But once that calculator’s available, we’ll add that, um, calculation to this slide as well.

Okay. So just a little re summary of those Income based repl, income based, um. Income driven plans that we’ve talked about. You know, this isn’t the standard of [00:23:00] the graduated, but these are those income based, uh, repl, income driven plans and how, how they can be calculated. And again, the calculators are right on the federal website, student aid.gov to help you.

Um, but for each of these plans, there’s two types of formulas that can, that they’ll use to determine which formula will give you the lowest monthly payment. And that will be the plan, um, that you be. That you’re put into. So let’s say you’re looking at ICR, um, and if 20% of your discretionary income, if that monthly payment is lower than, um, this 12 year standard payment plan that’s adjusted based on your income, then that’s, you know, the payment that you’ll get, so on and so forth for each of these plans.

Now, I do wanna just give you a heads up that. The term discretionary income for each of these top three plans. The way, the way each of these three plans calculate discretionary income might be slightly different. So you so just know that it’s not, [00:24:00] you know, an apples to apples comparison. But again, not to be too, too confused.

There is, um, great art. Great. Feature right here on student aid.gov that talks about the income driven plans that can help you apply for them and, and understand them a little bit better. So there are, there are lots of tools and resources after today that will be available to you to help make those decisions.

Alright, so that’s a little bit about federal loan repayment. Now I’m gonna talk about private loan repayment. Unless Sean, unless you want me to stop for a quick question?

Shawn Morrissey: No. Um.

Stephanie Wells: We’re good.

Shawn Morrissey: What a good point to keep going.

Stephanie Wells: Okay, great. So some of you may have private loans in addition to your federal direct student loans.

And those private loans could be from private lenders like MEFA or a local bank, credit union, whoever you, you may have borrowed through. And it could be most likely if you’re a student that you co-signed with, maybe [00:25:00] parents or someone, um, who, you know, who’s, who has good credit, helped you with the co-signing of those loans.

So those are private loans and there’s different, um. Regulations and guidelines with private loans because they are not federal, so they are not housed under the federal loan requirements. So it is a little bit different. So let’s talk about that and how you can, uh, make the best of paying these loans off.

So just keep in mind with private loans, you most likely would’ve set up in a applied for your repayment option when you apply for the loan. So for example, with MEFA, we have multiple repayment options to choose from when people apply for approval. And whatever that repayment option was that you chose at the beginning, that’s gonna be your continued repayment option for the life of that loan.

So there is limited repayment and deferment options if you’ve already selected one. You can contact the loan service if you have any questions about other options, especially if you’re [00:26:00] having trouble making your payments, you wanna talk to them. And, you know, just get all of that detail about the loan, what the payments will be, all of that, and make sure you’re adding those private loan payments into your budget as well.

It’s also good to know if, if it is a co-signed loan, let’s say you co-sign with parents or they gonna continue making those payments, they may continue making those payments, or maybe they want you to pay half of the payments, uh, whatever that might be. And then you can easily do that by downloading the app and doing that right online.

All right. Let’s talk a little about, a little bit about forgiveness and what the options are for forgiveness, if at all. Which you, you might not be eligible for forgiveness, but some students might be depending on their situation. So forgiveness is a term that is basically says it’s a situation where some or all of your student loans are forgiven.

So typically it happens for a couple of reasons. It could be a reward [00:27:00] for doing something good, like on time repayments or getting into public service. Um, uh. Occupation, or it could be relief if something bad happens and you need, you know, a short break of no payments, um, or something like that. So it could be relief if something bad happens and we’ll talk about what, what that could be, such as, for example, maybe the school you’re attending goes outta business, um, or commits, you know, some sort of crime and it enables you to be forgiven for those loans.

So I have a couple slides on that we’ll talk about, but, um. On the reward side for doing something, you know, if something good happens. Um, some of the common programs are public service loan forgiveness, PSLF, if it’s as it’s commonly called, teacher loan forgiveness. There’s a Department of Defense loan repayment, AmeriCorps and Peace Corps loan Repayment and Perkins Loan forgiveness.

So public service loan forgiveness is one of the more [00:28:00] common, um, programs, and that’s a program that your balance on your loans are forgiven after 10 years. So 120 qualified monthly payments. Those payments don’t have to be consecutive, but it has to be 120 of them. Now, if you read between the lines, you’ll know that after 10 years, if you’re on a standard plan of a 10 year plan, your loan’s gonna be paid off by then.

So you’ll wanna get on one of those plans that extends repayment in order to qualify for PSLF. You do have to be working full-time with a qualify for a qualifying employer during repayment. So a government organization, a 5 0 1 C3, other not-for-profit organizations providing qualifying services. You can find out what those types of employers are on student aid.gov/psf.

So for example, you know, uh, government, maybe you’re [00:29:00] in. A police officer, things like that. Those are types of careers that might be eligible for PSLF. Now, only your federal direct student loans are gonna qualify for this forgiveness and only payments that are made that were made after October 1st, 2007 will qualify.

So you do have to submit the application after making all 120 of those qualified payments. So take a look at the self-help tool if you need help with that. But that is something that you know you’ll wanna consider if you’re going into public service. Um, what repayment option you’re gonna choose. ’cause you’ll wanna choose one that extends beyond those 10 years.

So there might be something to forgive at the end. A couple of others that, uh, you know, a lot of students might be eligible for at some point in time is a teacher loan forgiveness. So that requires you to teach full time for five complete consecutive years, and you must teach in a school or agency that serves low [00:30:00] income families only your federal direct and Stafford loans are eligible for, for forgiveness.

And up to 17,500 can be forgiven. And you can find more information on [email protected] as well as including the applications. There’s also Perkins loan cancellation and discharge. So for some of you may have some of the old Perkins loans that are no longer available for new students. Uh, in certain public service positions, you may be eligible for cancellation or discharge.

Of these, a percentage of the loan is canceled for each complete year of service. Some of the qualifying positions could be Peace Corps. Teacher, armed forces nurse, law enforcement, head start, family service for servicers, you know, social work, early in intervention workers, things like that. Um, and you can contact the school that awarded the Perkins loan for forgiveness.

’cause you would be paying it through that school, the school you attended at the time. [00:31:00] All right. So what are some other reasons that you might get your loan discharged? Excuse me. Some of these are, you know, they’re not, they’re terrible reasons, but it’s good to know, you know, what, what could happen? Um, some of the other reasons why loans might be discharged in case of total and permanent disability of the student, or god forbid, death of the student, a borrower.

If the school that the student attended while taking out these loans violated some sort of law, they might be eligible for discharge or forgiveness on that. If the school closed while the student was enrolled and they weren’t able to get their degree, there could be a potential for loan to start in those reasons.

So, uh, you’ll see at the bottom here we have a website to free student loan advice.org, and that’s gonna be a website listed under the free resources as well. And that is Tsla. Uh, they have, they’re a great [00:32:00] nonprofit here in Massachusetts that help students and borrowers with their repayment. And they know everything from A to Z about loan forgiveness, discharge, forbearance, and all the repayment options.

Uh, that is their, um, area of expertise. Or their jam, uh, as their president would say. So definitely, you know, reach out to Tsla if you need help. They are a great nonprofit that you can work with as well if, if you need some assistance. And that website will be on the resources page at the end. Alright, so we’ve talked a little bit about the repayment options, so you know, you know, forgiveness and what that means.

Now let’s talk about avoiding. Delinquency and default. And God forbid, if you get into that situation, how you can recover from that. So there is a difference between deferring payments of your loans and forbearing payments of your loans. If you are deferring your payments, for example, you have in-school deferment while you’re in school, [00:33:00] those loan payments are postponed.

Um, and you must meet certain eligibility requirements. For example, if it’s in school, deferment being enrolled at least half time. Um, and then, you know, if you want additional deferment, let’s say you’re going into the military or Peace Corps, you can request additional deferment through your loan servicer.

The nice thing about deferment is that if you have any subsidized loans, loans where there’s no interest accruing on those loans, then the subsidy continues through deferment. So deferment is definitely the way to go if you’re eligible for deferment on a loan. Forbearance is also a suspension of your payments or reduced, um, monthly payment, and you do have to meet eligibility requirements, same process, you know, submit the application through the loan servicer.

But just keep in mind that interest is going to incr, accrue, continue to accrue on all of your loans. So there there is a slight difference between defra, deferment and forbearance. [00:34:00] So some of the reasons that you can apply for deferment. Unemployment, economic hardship. Maybe you’re in a graduate fellowship or rehabilitation training program, the military, or you’re in school, as I mentioned, that’s another one.

There could also be forbearance of your loans. So it’s not a bad term. Um, it’s not gonna hurt your credit to forar your loans. Um, but interest will still continue to accrue for some of these, um, forbearance reasons, but it’s still a great. Opportunity. If you are in a medical or dental internship or residency, for example, you, you know, you can’t work full-time to make those payments.

You can forbear payments during that period. Uh, AmeriCorps teacher loan forgiveness, the Department of Defense, student Loan repayment program, national Guard, and other, uh, medical reasons, for example, are re, are ways that you can bury your loans, repayment on your loans for a short period of time.

So let’s talk [00:35:00] about the consequences of delinquency and default. And, you know, what does that mean? What, what, what do the numbers look like? So, delinquency, your loan is considered delinquent the day after your loan payment is due. If you did not make your payment. So if you make your payment on the due date, you’re good.

If you make your payment the day after the due date, then you’re delinquent Now. One day late on a payment may or may not be reported to a credit bureau. Um, but if you are, you know, 30 days late, then it absolutely will be reported to a credit bureau, even if you’re just one month late on any type of loan, credit card, anything like that.

But with your federal student loans, if we’re talking, you know, really about your student loans, it’s considered late a day after the payment is due. Now default happens after 270 days of delinquency, so you have to make no payments for an extended period of time to go into default. And [00:36:00] there’s lots of ways to avoid default with federal student loans.

So, you know, make those payments, get into a repayment plan that’s gonna work for you. The loan Rs wanna help you avoid default and get you into a, a situation where you can afford your payment. Now if, if you are late on your payments, excuse me, um, again, the loan sources are gonna reach out to you. If you’re not answering the phone or responding to your emails, they might start contacting references and sending out notices, trying to reach you, answer their calls, call them back.

They wanna help you. Um, and they can help you with, you know. Maybe modified payments for short term. If you don’t have a job, whatever the situation might be, reach out to them and they can let you know what, what deferment and forbearance options might be available to you. Okay, so the consequences of default.

So I talked a little bit about the consequences of [00:37:00] delinquency, um, in some of this, you know. It might be true for delinquency, but if you go into default not making payments for 270 days, of course that will be reported to credit bureaus and it will very much hurt your credit score. But you won’t be able to take out any more federal student aid until you are, um, you know, cleared or you are, you know, in, in better position with that default.

And we’ll talk about how to, you know, get in better position there. But your loan could be immediately due and payable in full. It might come due, you know, payable full. You could lose eligibility for repayment plans and deferment or forbearance options. Collection agencies will be the ones that you’re dealing with now, no longer the loans loan service.

So they basically sell off your loan if it goes into default. Um, they could garnish your wages and tax refunds. So look at that last one. Tax refunds we just heard recently that. The IRS at some point will be taking [00:38:00] over handling defaults for the Federal Department of Education. So they are not, you know, garnishing tax refunds or wages right now that I believe, but they will be soon, um, starting that up and it will likely be going through the IRS.

So just keep that in mind. You don’t wanna deal with any of this stuff. Um, try to get those minimum payments in. Now, how do you get out of default? There’s a few different ways you can get out of default. You can pay the loan off in full. You can consolidate it and agree to repay under a different income driven plan that might be easier for you to manage.

Uh, you can consolidate af you would have to make three consecutive payments to do that. You could also rehab your loan by making nine on-time payments in 10 consecutive months. So there are ways to do this. Your loan servicer can help you or even, you know, call tsla. They can give you. Advice on this.

Look at the Federal Department of Education website, student aid.gov, um, for [00:39:00] options if you get into the situation. But the whole point of this webinar is to help you avoid getting here. So let’s talk. I’ve mentioned loan consolidation a little bit. Let’s talk about what that is and, and how it compares.

What’s the difference between consolidation and refinancing? So federal loan consolidation and consolidation is only applies to your federal loans, means you’re combining those federal loans into one direct consolidation loan. The new interest rate is gonna be a weighted average of all the rates on the loans that you’re consolidating, so you’re not necessarily locking in a lower rate.

Uh, loans must be in repayment at the time you consolidate or in a grace period, so you can’t do it while you’re in school, for example, in deferment. There’s several repayment options to to choose from. You can find that information on student aid.gov as well. But the repayment terms are gonna be 10 to 30 years depending on the loan debt.

Um, the plan that you choose. Now, a student, [00:40:00] if you’re a student on the line, you cannot consolidate your parents’ Federal plus loan and with your federal student loans ’cause you’re not a borrower on that plus loan. So you also cannot consolidate through the federal government, your private student loans.

There’s no application for you to do this. And it could be a way good way to combine all your loans, make it a little bit easier, um, and take advantage of some of the direct consolidation options. Also, if you’re looking at PSLF potentially and you wanna extend your repayment, that could be a way to do it as well.

Now some of the things to consider, some, you know, you’re gonna have one bill, so that might be easier. But typically, even if you have multiple loans with one servicer, you know, you have your one servicing account, you can see all your loans in there. So it shouldn’t be too hard to manage. Uh, I know with MEFA, with our private loans, it’s everything’s under one account and you can, you know, look at all your loans and pay them all through the same app.

Makes it easier. But consolidation could [00:41:00] lower your payments, especially if you’re extending repayment beyond that 10 years, you know, access to alternative, alternative repayment plans. And if you have any variable rate loans, you might be able to switch to a fixed interest rate with consolidation. If you have any borrower benefits with those original loans, you will lose those benefits ’cause you’re basically combining all these loans into one new loan.

So it’s gonna be a new loan. With new loan terms. Now, keep in mind if you’re extending your term, you might be, you know, increasing, um, the total cost of the loan as well. Now, education loan refinancing is similar, but different education refinancing is not done through the federal government. It’s done through private lender like mefa.

Now with refinancing, you can con, you can refinance your federal and your private loans together, but be wary of doing that with your federal loans because you will lose any repayment benefits. [00:42:00] Everything we talked about today on your federal loans, if you refinance those federal loans, you’re gonna lose all those repayment options and benefits we talked about, so you don’t have to refinance your federal and private loans together.

You could refinance just your private loans if you wanted, uh, let’s say you have a high rate on those and you wanna get a lower rate, you could refinance for a lower rate with your private loans, or if you wanted to pull in the federal loans, you can, um. There’s lots of lenders to choose from. MEFA has a good low cost education refinancing loan.

There might be fixed or variable options. Ours is a fixed rate. Uh, loan was seven, 10, and 15 year repayment options. You do have to have good credit. It is a credit based loan. Lenders are gonna be looking at your income to make sure you have income support, um, taking on this refinancing loan, but it could lower your interest rate, which could also potentially lower your repayments.

So it’s not necessarily something that everybody’s gonna wanna do. Um, but it is an option [00:43:00] to consider, especially if you have any, um, private loans with maybe high interest rates. Maybe you have some regret of maybe who you borrowed through and it’s a high rate and you maybe after you graduate, you’ve established some good credit, you have good credit score, maybe you can lock in a lower rate.

Um, and there are soft credit polls on most of the lenders to, you know, just play around and shop around before you even do any of this, that you can see what your rate might be. All right. So just a couple of differences between the two, between direct student loan consolidation and refinancing. Federal loans are eligible for both.

Private loans cannot be consolidated, but they can be refinanced. Credit checks are not required for federal consolidation, but as I mentioned, refinancing, it’s through the private loan market. So credit is gonna be something that will be considered. Um, now with the. Direct loan consolidation, you’re not necessarily, you’re not lowering your rate ’cause it’s a weighted average of all your rates.

Student loan refinancing, potentially you might be able to lock in a [00:44:00] lower rate and you might be able to save money on both depending on, uh, what the loan terms are. And of course, you’ll get one bill and that’s part of the purpose of consolidating or refinancing. So some things to consider with refinancing as well might be able to lower your interest rate, potentially lower payments, switch to a fixed rate.

Um, but just keep in mind, you will lose those federal benefits if you choose to refinance your federal loans. And with the MEFA refinancing plan, we actually give a little popup. If you say you wanna add in your federal loans, we give you a little, you know, buyer beware message about losing those federal loan benefits.

’cause those could be important. And again, sometimes with refinancing, if you’re going, let’s say from a 10 year loan to a 15 year loan, it might lower your payment, but that could also, uh, increase the total cost of the loan ’cause you’re taking longer to pay that loan back. All right, so just wrapping up here with a few free resources and then we can [00:45:00] open it up for questions.

We have some great websites here, uh, and you’ll get copies to these slides, so MEFA.org. Obviously we have lots of. Blogs, articles, webinars like this one on our website that you can just, you know, put in a topic in our search bar and find a lot of good resources there. Student aid.gov I’ve been talking a lot about today.

A lot of what you need is gonna be on there. And then I also mentioned Tsla. Which is free student loan advice.org. And that is a great website. If you have any questions about any of this repayment stuff, uh, or if you get into any, you know, tough situations and you need some guidance or, or somebody to advocate for you, they can definitely give you some good advice and help you get on the right track.

And then there’s some other, um. Websites here. So IRS if you wanna look into that student loan deduction. And then the rest here are really more calculators, comparison tools or places to go to [00:46:00] look at your credit or your credit score to see what that’s looking like. Um, I use Credit Karma, that app on my phone, just so I can track.

Um, but non endorsement, just something that I use. But, you know, look on, look online, see what you might wanna use, um, to keep track of your credit ’cause that’s really important going forward. Keep in touch with us on social media, friend us, like us, connect with us. We have all our webinars, webinars on YouTube.

We have a great podcast. If you like a podcast, you can, uh, subscribe to that. And with that, I am going to just leave you with our phone number and website. If you have any questions and you wanna get in touch, maybe you’re looking at grad school and you need a grad school loan. Um, we have some great grad school programs too.

So definitely get in touch with us with anything. Uh, student loan related, and we can help you, um, through that process. All right, so with that, I am going to end the formal part of the presentation and just open it up for [00:47:00] questions, open up live and see if we have any questions here. Uh, let’s see. I do see one here.

Let me just read this one. So the question is, should we be able to log into MEFA and get an expected monthly payment for the current loans we have? And the answer to that is yes. You should be able to see that. Um, in your student loan, uh, servicing account through a ES, uh, an estimated payment that would also be on your loan disclosures that you signed when you took out the loan, which should be, um, on your account as well.

So yeah, definitely give us a call. If you can’t find it in your student loan account through a ES, that’s our loan servicer, um, download the app, set up that account, and you should be able to see all of that information. All right. I don’t see any other new questions coming in. Is there any other, Sean, that were good ones that you wanna talk about with the whole group or are we, um, pretty much okay and done with the questions for the day.

Oh, I have a [00:48:00] couple questions coming in. I spoke too soon, Sean.

Shawn Morrissey: Okay.

Stephanie Wells: Okay, so here’s a couple good ones. So where do we find our loan servicers? So for your federal loans, you can go on student aid dot ed, do student aid.gov. That’s, and for your private loan servicer, just go on the loan, um, the loan company’s website.

So for example. Took out a federal student loan. Go on student aid.gov. You log into your account just like you logged in when you filed the fafsa. If you borrowed through MEFA or another lender, just go on that lender’s homepage, like MEFA.org, for example, and you can find a link to your loan servicer there or give ’em a call and they can transfer you to the loan servicer.

For example, if you were to call me, if it’s 800 number. That’s on the screen here. There’s different prompts and we would, you know, direct you right to the loan servicer if that’s what you’re calling for. Okay, so here’s another good question. If you have four different loans through a private lender like MEFA that are gonna be going into [00:49:00] repayment, do we combine all four payments or are they four separate payments?

So I’m only gonna speak to MEFA specifically ’cause that’s, this borrows, um, borrowed through MEFA with MEFA. It’s an annual loan. So you, if you borrow it all four years, you borrow four separate loans through MEFA. That could have four separate loan terms depending on the repayment options that you chose and what the rates were at the time.

So you do have technically four separate loans. However, it’s consolidated billing and it’s a consolidated account through our loan servicer, a ES. So when you log into your account with a ES, you’ll see all of your loans there and it will make making those payments a breeze. I always recommend setting up auto debit.

So that it just comes out of your checking account each, each month and you don’t have to even worry about, um, making that, but it’s pretty easy to manage ’cause it’s all under one account through the loan servicer. But that’s a good question. Alright, Sean, any others that you wanna talk about or any [00:50:00] other good advice you have before we, before we end?

Shawn Morrissey: No, I think we’ve, you have it covered.

Stephanie Wells: Okay, great. All right, everybody. Well, thank you for, uh, joining us today. It was great seeing, uh, talking to everyone. And I will email you all a link to this presentation, slides and the recording probably tomorrow. So have a great day and we will, um, talk to you soon.

Give us a call if you need any help. Thank you and have a good one.