If you borrowed federal student loans, you are required to complete an exit interview prior to graduation. It is a federal financial aid requirement that you do so before you graduate. You will learn about the loan repayment process, schedules, federal loan consolidation options, deferments, grace periods and more.
At the in-person session (option #3) we will also talk about the public interest federal loan forgiveness program, Pay As You Earn, and the Income Based Repayment plan. Both offer forgiveness on the balance of your federal loans after 120 payments or 20 or 25 years respectively.
You have a choice of 3 exit counseling options:
- To exit on-line, please see www.nslds.ed.gov. Click on Exit Counseling.
- Or, if you prefer to watch a video (to be viewed in our law library), you may do so during regular office hours (Monday & Thursday 9:00-6:00; Tuesday, Wednesday & Friday 9:00 - 4:30. Please note that office hours are 9:00-4:30 Monday - Friday when classes are not in session).
- And/or, you may attend an in-person exit counseling session on Tuesday, April 16 in C6 from 12:00 to 12:50 or Thursday, April 18 in C7 from 5:00-5:50 p.m. Please bring your address book in order to provide reference information (references are used only to locate you if you move).
Note: If you choose #2 or #3, it is still recommended that you complete the online option (#1) in order to see your individual federal loan data.
Bar Loans: The bar loan application (credit check required) suggested deadline is May 7. Bar loans are available to help cover bar exam costs, prep course fees and some living expenses while studying for the bar. You may borrow from any private lender you wish that may offer a bar loan, but please review the terms and conditions of the loan carefully. Deadlines vary according to lender (credit check required). Although you may borrow from any lender you wish, this is a list of lenders our law students have used in the past who offer bar loans (availability of private loans by these lenders is subject to change):
You will learn about the various loan repayment options during exit counseling. You are welcome to meet with us with any questions. These are the basic repayment plans (please see http://www.studentaid.ed.gov/repay-loans for more detailed information):
- Up to 25 years of a fixed payment depending on loan debt volume.
- Up to 25 years. The payments start out lower but then increase every two years. Total interest paid may be greater than plans with similar terms and fixed payments.
- Similar to Income Contingent but offers lower payments and public service loan forgiveness. Based on loan debt, adjusted gross income and family size. You must be eligible for a partial financial hardship. Payments at 15 percent of discretionary income. After 25 years, any remaining balance on the loan will be forgiven, but under current law you will have to pay taxes on the amount forgiven.
- Based on your adjusted gross income, family size, and loan debt. As your income increases or decreases, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.
- Similar to Income Based Repayment but offers lower payments. It is based on your adjusted gross income, family size, and loan debt. You must be eligible for a partial financial hardship. Payments will be at 10 percent of discretionary income .After 20 years, any remaining balance on the loan will be forgiven, but under current law you will have to pay taxes on the amount forgiven. Eligible for federal public service loan forgiveness.
- 10 year fixed payment. Highest monthly payment but lowest total interest over the life of the loan. If you do not select a different payment plan you will be automatically enrolled in this plan
There are some complex issues to think about regarding federal student loan consolidation.
If you received a student loan disbursement prior to July 1, 2006, that Stafford loan has a variable rate, unless you consolidated it prior to July 1, 2007. For loans disbursed prior to July 1, 2006, the interest rate is variable, adjusted annually on July 1. The variable rate is based on the 91 Day Treasury Bill (as of the last auction prior to June 1) plus 1.7% during in school and grace period, or plus 2.3% in repayment, not to exceed 8.25%.
If you want to lock the variable rate or combine it with your fixed rate Stafford loans, you want to wait until about a month to two before your six month grace period ends before consolidating so you do not lose the remainder of your grace period (consolidation loans become due within 60 days after they are booked).
You will need to decide whether to only consolidate any variable rate loans separately or to consolidate them with your other 6.8% fixed rate loans. Because consolidation uses the weighted average rounded up to the nearest one-eighth of a percent, it may be more advantageous to keep the low variable rate loan consolidated separately, but you may prefer to have only one consolidation loan with all your loans together.
The interest rate for federal loan consolidation is the weighted average of all the federal loans you wish to consolidate rounded up to the nearest eighth of a percent. As of July 1, 2013 there is no cap on the consolidation rate. The rate is then fixed for the life of the loan (10 - 30 years depending upon your debt load). Most lenders, including Direct Loans, offer a .25% interest rate reduction for automatic electronic payment. This perk to lower your interest rate is strongly encouraged.
Remember, if you have variable interest rate loans, the rates will change July 1 every year unless you consolidate. There will be an additional .6% added to the rate after the 6 month grace period ends; the repayment rate will be based on that higher rate if you do not consolidate.
A consolidation loan comes due 60 days after it is booked. See http://www.studentaid.ed.gov/repay-loans/consolidation and www.loanconsolidation.ed.gov for more information.
- Direct Loans are eligible for public interest loan forgiveness after 120 on-time payments in eligible public interest work.
- Direct Loans are eligible for Pay As You Earn (PAYE) loan forgiveness after 20 years, Income Based Repayment (IBR), or Income Contingent (ICR) loan forgiveness after 25 years. At this time any balance forgiven is taxable except under Federal Public Interest Loan Forgiveness.
- If you consolidate with Direct Loans and need a deferment, any subsidized portion of your loan will not accrue interest.
- You will retain the repayment incentive you received at disbursement after 12 on-time payments for loans disbursed prior to July 1, 2012.
- All your law school federal Stafford loans are through Direct Lending so the application process is simple.
For more information and to apply for a Direct Loan consolidation, please see www.loanconsolidation.ed.gov or call 800.557.7392.
- Some private lenders offer repayment incentives in addition to the .25% automatic debit reduction that are attractive, such as a 1% interest rate discount after 20 to 48 month on-time payments or a 5% principle reduction, depending on the lender. These incentives are lost if payments are late and the benefit may be revoked under certain deferment situations. These days most of these lenders have eliminated these incentives and many lenders who used to offer consolidation no longer do so.
- If you consolidate with a private lender, the Direct Loan origination fee rebate you received at disbursement (prior to July 1, 2012) will be added back in to your loan balance.
The basic information for May graduates applies to your situation as well. You will receive exit counseling information at the time of your graduation. Please let us know if you have any questions regarding your situation.
If you are no longer enrolled in school, you may consolidate through Direct Lending or through another lender in the FFEL program. If you did not consolidate previously, you may consolidate during your grace period or during repayment. Your loan will come due within 60 days after it is booked. Student loans may be deferred while enrolled at least half-time. If interested in the public interest forgiveness programs, you should consolidate with Direct Loans and may do so for the purposes of loan forgiveness.
Federal student loans include Stafford, Perkins, Grad PLUS, PLUS and SLS. You may consolidate undergraduate federal loans with your law school federal loans. If interested in the public interest or PAYE or IBR forgiveness plans, do not include a parent PLUS in the consolidation (Grad PLUS is fine) or the loan will not be eligible.
If you have a federal Perkins loan, you may wish to consolidate for the convenience factor. Please consider carefully whether or not the convenience outweighs the fixed 5% interest rate. Depending upon the weighted average, it may or may not alter the consolidated fixed interest rate. Please note that there are some cancellation options related to the Perkins loan that may benefit you if you qualify (see https://www.mycampusloan.com/static/html/forms/index.html#one). If you consolidate you will lose these cancellation benefits. You will also pay more interest over the life of the loan if you consolidate the Perkins loan because the Perkins repayment period is 10 years. If you consolidate through lenders other than Direct Loans, the subsidized interest benefit for periods of deferment will no longer exist. Depending upon when you consolidate, you may lose most of the 9 month grace period. You have 180 days in which to add another loan to your consolidation loan.
The Grad PLUS loan may be consolidated with your Stafford loans and is eligible for public interest loan forgiveness (private loans are not). The interest rate is fixed at 7.9% and consolidation will reduce the Grad PLUS rate somewhat and raise the overall Stafford rate. By how much will be dependent upon the weighted average – see Calculators below.
Note: A parent PLUS loan that is consolidated or paid off by consolidaton would make all loans within that consolidation ineligible for the PAYE, IBR plan, and federal loan forgiveness. If interested in PAYE or IBR loan forgiveness, do not consolidate a parent PLUS loan. A Grad PLUS is eligible.
If you have private (credit based) student loans, you cannot consolidate your private loans with your federal loans, but you may list them for total student loan indebtedness purposes – it will extend your repayment period.
Although you cannot consolidate private loans (Sallie Mae, Chase, Citibank, Discover, etc.) with your federal loans, there are some organizations out there encouraging you to do so. We strongly advise against this because it will convert your federal loans into a commercial loan and you will lose the federal deferment and forbearance options and federal tax benefits. If you want to consolidate your private loans from different lenders together after graduation, you may do so, but consolidating your private loans together does not fix the interest rate (if a fixed rate is offered, it is typically fairly high); it simply provides a consolidation of two or more separate lender bills into a single lender statement. Along with a credit check, you may end up paying origination fees and more interest or lose some deferment options that may be offered by specific private lenders, although you also may be able to find a better variable interest rate and improved repayment options.
For repayment calculators see http://studentaid.ed.gov/repay-loans/understand/plans, www.loanconsolidation.ed.gov or http://www.finaid.org/.
Loan Repayment Assistance
Seattle University School of Law's Loan Repayment Assistance Program (LRAP) and the new federal public interest loan forgiveness plan, the Civil Legal Assistance Attorney Student Loan Repayment Program and the John R. Justice Student Loan Repayment Program offer help for those working in public interest employment.
More Info on Pay As You Earn (PAYE), Income Based Repayment (IBR) and the Federal Public Interest Loan Forgiveness Programs
This site by Heather Jarvis, Student Loan Expert (formerly of Equal Justice Works), is a great resource on these topics. Also refer to http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF.jsp, http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn, http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp, and http://myfedloan.org.
Federal Public Interest Loan Forgiveness documents are now available!
Alumni working in this area should note it's important to keep track of your on-time and eligible payments (in the right repayment plan) and eligible employment for 120 payments. The forms may be found at http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF.jsp or http://myfedloan.org.
Please contact Student Financial Services at 206.398.4250 or firstname.lastname@example.org should you have any questions.