Managing your student loan debt bank of america

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Managing Your Student Loan Debt

Changing How America Overcomes Financial Challenges

How well you manage your student loans and other personal finances will impact how quickly you achieve your financial goals.

Handling your student loan responsibly will build a solid financial foundation and positively influence your future consumer purchases such as buying an automobile, buying a house, and obtaining credit cards.

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MONEY MANAGEMENT INTERNATIONAL

Defaulting on a student loan occurs when the borrower fails to fulfill the repayment terms as defined in the promissory note. A loan goes into default after 270 days without a payment.

The consequences of default are severe and include the following:

You can be sued for the entire amount of the loan

Your credit rating can be severely damaged, making it difficult to borrow money for a home or car or receive credit cards

Record of the default will remain on your credit report for seven years after the loan has been paid in full

Loss of your eligibility for all federal and state student aid programs, including any future student loans

Loss of deferment and forbearance options

Federal tax refunds, Social Security earnings and state income tax refunds may be withheld

Up to 15% of your disposable income could be garnished

Non-renewal, revocation or suspension of certain professional licenses, jeopardizing your chances for certain types of employment

Assignment of your loan to the U.S. Department of Education for collection, resulting in additional collection fees

You will be liable for the costs associated with collecting your defaulted loan, which could be as much as 25% of your principal and interest balance plus court costs and attorney fees

What are the keys to managing your student loan debt successfully?

Know your loan and your lender/servicer Choose the right repayment plan Avoid loan default Manage life events

Know your loan and your lender/servicer

What type of student loan(s) do you have? Federal Private

What if I don't know what kind of loans I have or who holds or services my loans?

1. NSLDS. 2.

This central site allows you to request a free credit report, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.

Who are the parties involved?

borrower

lender holder servicer

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? 2013 Money Management International, all rights reserved. 12_1030_6 | 06-13

See Appendix A for complete definitions.

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Communicate with your lender/servicer

When should I contact my lender/servicer? If you...

need copies of your loan documents need help making your loan payment change your name, address, or phone number have a question about your bill want to change your repayment plan need a deferment or forbearance

have a question about loan forgiveness return to school drop below half-time enrollment graduate or stop going to school transfer to another school

Keep the lines of communication open, both ways. Be sure to open any emails or correspondence from your loan servicer.

Be sure to keep accurate records including: dates, who you talked to, reason for contact and what action is to be taken or what the next steps are. Be sure to include a follow-up on any actions.

Important Documents Master Promissory Note Borrower's Rights and Responsibilities Repayment Information

Choose the right repayment plan

Impose a strategy to learn and compare the options to choose the repayment plan that best meets your individual needs and circumstances based on: 1. Your financial goals 2. What you can afford to pay each month

To help make informed decisions, you should compare the: Amount of interest Monthly payment Length of the payment period Total cost of paying the loan off, including principal and interest Tip: There are no penalties or charges for paying off your student loans (private or federal) early, and you will save money by paying less interest. Tip: Discount for Direct Debit -- You may receive a 0.25% reduction in your interest rate by setting up direct debit to make your monthly student loan payments. Check with your lender/servicer for more information. Discount varies by lender for FFELP and private loans.

Be sure to talk to your lender/servicer regarding which repayment plan best meets your financial situation and helps you maintain successful repayment of your student loans. If the terms of another plan better meets your needs, you have the option to change your repayment plan.

Loan Repayment Tradeoffs

Longer repayment periods give a lower payment, but can result in a much higher overall cost of the loan, including total interest paid.

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Comparing Direct Loan and FFEL Program Repayment Plans and Options

Repayment Plan

Eligible Loans

Standard Repayment Plan

For Direct Loans & FFELP

? Direct Subsidized and Unsubsidized Loans

? Subsidized and Unsubsidized Federal Stafford Loans

? all PLUS Loans

Graduated Repayment Plan

For Direct Loans & FFELP

? Direct Subsidized and Unsubsidized Loans

? Subsidized and Unsubsidized Federal Stafford Loans

? all PLUS Loans

Extended Repayment Plan

For Direct Loans & FFELP

? Direct Subsidized and Unsubsidized Loans

? Subsidized and Unsubsidized Federal Stafford Loans

? all PLUS Loans

Time-Driven Plans

Monthly Payment and Time Frame

? Payments are a fixed amount of at least $50 per month.

? Up to 10 years

Quick Comparison

? You'll pay less interest for your loan over time under this plan than you would under other plans.

? This plan has the highest initial payment.

? Payments are lower at first and then increase, usually every two years.

? Up to 10 years

? You'll pay more for your loan over time than under the 10-year standard plan.

? Payments increase incrementally.

? Good alternative if you anticipate a large increase in income over several years.

? Payments may be fixed or graduated.

? Up to 25 years

? Your monthly payments would be lower than the 10-year standard plan.

? This plan has the lowest Initial payment without considering income.

If you are a

? Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans.

? FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans.

For example, if you have $35,000 in outstanding FFEL Program loans, and $10,000 in Direct Loans, you can use the extended repayment plan for your FFEL Program Loans, but not for your Direct Loans.

? For both programs, you must also be a new borrower as of Oct. 7, 1998.

? You'll pay more for your loan over time than under the 10-year standard plan.

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? 2013 Money Management International, all rights reserved. 12_1030_5 | 06-13

See Appendix B for repayment plans and options.

Repayment Plan Options

Time-Driven Standard Repayment Plan Graduated Repayment Plan Extended Repayment Plan

Income-Driven Revised Pay As You Earn (REPAYE) - Direct Loans Only Pay As You Earn (PAYE) Income Based Repayment Plan (IBR) income Contingent Repayment Plan (ICR) Income Sensitive Repayment Plan (ISR)

Use the Standard Repayment Plan Table below with an interest rate of 6.8 percent as a starting point. You can explore other repayment plan options if this does not fit your budget. Visit StudentAid.Repay-Loans/Understand/Plans for more information.

Loan $ Amount

$3,500 4,500 5,500 7,500 8,500 9,500 10,500 12,500 15,500 17,500 20,500 23,000 25,000 30,000 35,000 40,000 45,000 50,000

Monthly $ Payment

$50.00 51.79 63.29 86.31 97.82

109.33 120.83 143.85 178.37 201.39 235.91 264.68 287.70 345.24 402.78 460.32 517.86 575.40

# of Payments

89* 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120

Interest $ at 6.8%

$971 1,714 2,095 2,857 3,238 3,620 4,000 4,762 5,904 6,667 7,810 8,762 9,524 11,429 13,334 15,239 17,143 19,048

Total Repay $ Amount

$4,471 6,214 7,595 10,357 11,738 13,120 14,500 17,262 21,404 24,167 28,310 31,762 34,524 41,429 48,334 55,239 62,143 69,048

*The minimum month payment is $50.00. The loan will be paid off in less than 120 months. These repayment estimates assume that the interest on the loans is either subsidized by the federal government or the borrower paid the interest prior to the conversion to repayment. If the borrower has multiple loans with different interest rates, add together the monthly payment for each loan to determine the total monthly payment amount. Apply the same calculation to determine the total interest and repayment amounts.

Federal Loan Repayment Plan Forms

To apply for a repayment plan, visit:

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Compare Using Calculators

The federal loan programs offer various repayment plans to make your monthly payment affordable and fit in your budget. A repayment estimator is available online to estimate your budget and monthly payments under each plan. To help make informed decisions, you should compare: interest rate monthly payment length of the payment period the total cost of paying the loan off, including principal and interest

Online calculator: Repayment Estimator (Calculator across all plans) MyDirectLoan/RepaymentEstimatorLoginRedirect.action

Logging in to the repayment calculator with your FSAID will give you access to import your loans into the repayment calculator. This will give you the most accurate repayment estimates across all plans you are eligible for. The repayment calculator will also display any forgiven amount at the end of the repayment term for income based plans, including Public Service Loan Forgiveness (PSLF).

Note: For income based plan residual balances forgiven at the end of the repayment term that are not part of PSLF, the residual balance is taxable income under current tax law.

Loan Consolidation Pros Cons

Consolidate Direct Loans: myDirectLoan/launchConsolidation.action

Loan consolidation is an option that is primarily beneficial to those borrowers who:

have student loan debt that currently has a variable interest rate

have multiple loan holders and want to have a single loan to repay each month, or

are hoping to qualify for Public Service Loan Forgiveness (PSLF) and currently have loans in the FFEL program (Please note that only payments you make on the "new" Direct Consolidation Loan will count toward the required 120 qualifying loan payment requirement for PSLF).

To consolidate your Direct loans, go to .

You can consolidate your loans for free online or by downloading an electronic form. You will need your FSAID and a few pieces of information such as income, marital status, etc., if you wish to repay your consolidated loan under one of the income based plans.

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