How to defer Student Loans Americorps
Managing Your Student Loans
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Welcome to this webinar for VISTAs on "Managing Student Loans."
I'm Calvin Landrum, a training specialist for AmeriCorps VISTA,
and I'll be your host today.
I'm joined today by Jessica Knight and Endi Clark from Education Northwest,
and together we'll be providing online support during the presentation
and facilitating your questions.
Now, student loans can be complicated and daunting to navigate,
so today we're going to talk about the options you have as a VISTA that can
help out with loans both during and after service.
A quick note, while we do discuss the education award during this webinar,
for those of you who want more tips regarding the education award,
we have another webinar you can access on the VISTA campus page.
The link to being that, I believe, is going to be in the chat.
Again, I'm Calvin Landrum, and I'm from Waco, Texas.
I served two terms with AmeriCorps and CCC, as a field team leader and, later,
as a support team liter on projects throughout the Midwest
and northeast regions of the U.S.
Since wrapping up my CCC service,
I filled multiple positions with the Corporation for National
and Community Service,
including working side by side with Natasha at the VMSU,
who is our other presenter today.
So it's my pleasure to introduce her.
From the VISTA Member Support Unit, we have Natasha Douglas,
a member support specialist for VISTA.
Natasha is an AmeriCorps alum.
She served with public Allied Chicago,
and was placed at the National Runaway Safe Line,
the federally designated National Communication System for Runaway
and Homeless Youth.
She earned a bachelor's degree from Louisiana State University
and a Masters degree from San Diego State University.
So, again, I want to say thank you so much to everyone who
joined this webinar, who is attending and listening right now.
Now I'm going to turn things over to Natasha.
Thanks, Calvin.
Today we are going to start off by looking at the most common
types of student loans.
Then we will explore some specific programs to help you postpone your
student loan payments during service, repaying your loans,
and potentially even eliminate your loans long term.
At the end of the presentation, we will open up the conversations
and take questions during a Q&A.
Let's jump in.
As a VISTA, there are three important factors to consider when
thinking about student loans.
First, it is your types of loans.
The types of loans you have will impact the programs you are eligible for.
The second is your decisions to select either the education award
or the stipend.
This will impact some of your loan repayment options.
And finally, the third is your future career plans.
These will impact the possibility of having your student loan balance
forgiven in the long term.
During the presentation we will address all three of these factors.
To start out, we'd like to know what types of student loans you have
and if any of them are already in forbearance.
On the right side of your screen you'll see a poll pop up.
Please take a moment to fill out the poll.
Do you know the types of loans you have; federal loans, federal Perkins loans,
private loans, both federal and private, I don't know,
or I don't have any loans.
I wish we could all be so lucky to not have any loans.
Are any of your loans in forbearance or in deferment yet?
Forbearance, deferment, no, I don't know
or I don't have student loans currently.
It's okay to not know or not have any loans.
Definitely, you know, and a point that you're making,
if you don't know what kind of loans you have, you know, you can
always call and find out.
It looks like our poll is closed, so let's wait a second.
And Sabrina Porter says, "I wish I didn't have any loans."
Me too.
Me too.
Let's see, while our results pop up for us.
Oh, there we go.
All right.
So it's looking like, according to our poll,
most of you have a federal direct loan.
That's what I also have.
I see some people with some Perkins loans, federal and private,
a good mix of both.
Let's see, are any of your loans in forbearance or deferment?
We got 45 people in forbearance, probably through national service.
We got some deferment.
No.
Some people say I don't even know what the status of my loans is,
which is also okay.
Hopefully we'll empower you to find out today.
Yeah, this is great.
So we're going to touch on these things in a few minutes.
Natasha, will you walk us through the types of student loans.
Sure.
Many of the programs we will be talking about today will only apply to
specific types of loans, so it's important that you know which types you have.
Let's start off by clarifying some key differences between
student loan categories.
Broadly, we will be talking about either federal loans or private loans.
In the case of all federal loans,
funds are borrowed from the federal government
and the most basic difference lies in who actually distributes those funds.
For federal direct loans, the lender is directly the U.S.
Department of Education.
Within this category of federal loans, there are several different programs,
as you can see in the first column, including subsidized, unsubsidized,
and Parent Plus loans.
There's also another type of federal loan, called a federal Perkins loan.
With this loan, the lender is actually the school itself.
While the government still provides the money, it is the schools
and the universities that actually distribute the loan funds to the student.
And finally, federal private loans are -- excuse me, finally,
private loans are those borrowed
and administered through private lending institutions.
Some of these include loans from Discover, Sally Mae,
or loans administered by a bank or credit union.
Throughout the presentation, be mindful of which types of loans you have
and which loans are eligible for the programs that we will discuss.
If you are unsure about which type of loans you have,
connect with your loan holder for more information.
Now for those of you who have selected the education award as your
end-of-service benefit,
you can put your federal student loans into a state of forbearance with the
National Service Trust so you don't have to make loan payments while you're
serving as a VISTA.
I'll refer to this as "National Service Forbearance."
Most federally-backed student loans qualify for
national service loan forbearance.
For example, federal direct loans
and federal consolidation loans can be placed in national service forbearance.
However, there are two exceptions to this.
Parent loans and federal Perkins loans are not eligible for
national service forbearance.
Private state of the union loans also do not qualify for
national service forbearance.
Similarly, if you choose a stipend as you end-of-service benefit
instead of the education award, you are also not eligible for forbearance.
In both case, you'd want to explore loan deferment,
and we'll talk about that a little more in a bit.
The most immediate benefit of having loans in forbearance is that you don't
have to make loan payments; however,
even in forbearance your federal loans will accrue interest.
So another great benefit of national service forbearance is that once you
complete your entire year of service,
you can ask CNCS to pay off the accrued interest.
There are a few things to know about interest accrual payments.
It doesn't happen automatically.
You need to submit a request on myamericorps.gov
to have the interest paid for you,
the interest accrual payment is an additional benefit to the education award.
The payment doesn't come out of your education award balance,
and the interest accrual payment is considered taxable income,
so you'll need to report it as such
and be prepared to pay the tax on the payment.
We'll come back to tax locations a little late in the presentation.
Note that forbearance does have its limits,
so let's review a few things you'll want to keep in mind.
National service forbearance is only an option if you choose the
education award.
Forbearance and interest accrual payments are contingent upon
successful completion of your service term.
If you end service early,
you'll not only forfeit the education award but also the forbearance
and interest accrual payment.
This means you will owe the lender for any interest that accumulated during
your forbearance period.
VISTA members who extend their service are not eligible to receive an
education award during the extension period.
During an extension you are only eligible for the end-of-service cash stipend.
Since the education award is not available,
requesting a forbearance for existing loans
and interest accrual are not available during the extension period.
Now let's say that you get to the end of your service
and decide to stay on for three months to wrap up your project.
For those three months you're only eligible to receive the end-of-service
stipend that accrues at $125 per month.
Once you enter the extension period you're not long in a period of national
service forbearance and your lender may request for payment.
Now remember that forbearance is not guaranteed.
If you have not already done so
and would like to put your loans into forbearance,
you can find the request form in your my AmeriCorps account, shown here.
When filling out a request form, if your lender is not listed,
click on the "institution not found" link and follow the directions.
You should expect to see your account, if your request was
accepted by the lender, within three to five business days.
Now, while we're on the topic,
this is also where you would request to have the interest that accrued during
the forbearance period paid, after your service is complete of course.
Typically the interest accrual payments will also take about three to five
business days to process, so make sure you follow the request process
and timeline carefully so as to avoid fees or late payments.
A request for forbearance can be made the old-fashioned way, through paper,
but please be advised that will take significantly longer to process.
And for whatever reason you would like to fill out a paper request,
call the National Service Hotline directly
and they can guide you through the process.
Now let's take a quick second to talk about a scenario that some of you may
find yourself in later down the line.
For VISTAs who opt to do a third term of service,
you are able to receive what is called a "Zero Value Education Award" for your
third term of service.
This means that if you already received two education awards you wouldn't get
additional funds but you would be able to place your loans into forbearance
with the National Service Trust
and have the interest paid off at the end of your service term.
The important thing to consider in this situation is whether having your loan
interest for the year paid off by the National Service Trust would be worth
the $1,500 cash stipend.
As so, the Zero Value Education Award might save you more than
$1,500 cash stipend.
For those of you with private federal loans
or those of you who select the cash stipend who don't qualify for national
service forbearance, there is an option for you to explore.
It's generally known as loan deferment.
Deferment differs from forbearance in a few ways.
First, you request deferment directly from your lender.
Different lenders may use different names for this,
so you might need to explore with them a little bit.
Basically you want to request that they temporarily defer your payments due to
economic hardship created by your low income during your year of VISTA service.
Secondly, not all lenders offer loan deferment,
and if you find that you lender doesn't,
you'll want to explore options to lower your monthly payment.
The third difference between loan deferment
and forbearance is that deferment may not offer an option to pay off the
interest that accrues while the loan is in deferment.
For federally subsidized loans,
accrued interest may be paid by Department of Education
if the loan is deferred.
Check with your lender for specifics and remember, like forbearance,
deferment is not guaranteed.
Now let's transition to loan repayment.
Once you are no longer able to postpone your loans during service,
there are several options to repay and reduce your payments.
Right now we're going to talk about these options separately,
and then later on in the presentation we're going to talk about ways you can
combine some of these options to get the most out of your benefits.
Loan consolidation is a process that allows you to combine one
or more federal student loans into one new payment, loan payment.
As a result of the consolidation,
you will have to make only one payment each month on all your federal loans
and the amount of time you have to repay your loans could be extended.
Some of the benefits of loan consolidation include lowered monthly payments,
centralized payments, potential for better interest rates,
and access to alternative repayment plans.
You can apply for direct consolidation loans through studentloans.gov.
The process offers both electronic and paper options.
Private education loans are not eligible for federal direct consolidation.
Since most private education loans do not compete on price,
a private consolidation loan is merely replacing one
or more private education loans with another.
So the main benefit of such a consolidation is obtaining a
single monthly payment.
Also, since the consolidation resets the term of the loan,
this may reduce the monthly payment, at a cost of course,
of increasing the total interest paid over the lifetime of the loan.
For more information on private loan consolidation,
this is a link that we placed in the chat window.
Next, for those with federal direct loans,
you may want to consider some of the different income-driven repayment options
that are available through the government.
And since it's an income-driven repayment plan,
adjust your monthly loan payment as a fixed percentage of your income
and family size.
To qualify for an income driven repayment plan you need to have
some degree of financial hardship.
Meaning that the balance on your loans needs to represent a significant
portion of your annual income.
Basically, they want to make sure that payments at 10 to 20%
of your annual income would be less than a standard repayment plan.
You can also enroll in an income-driven plan at any time,
and your payment will only go up once your income does.
If you enroll now, while in service,
payments on your income-driven plan can be as low as zero to $5 per month,
since VISTAs live at the poverty level.
The upside to an income-driven plan is that your monthly payments are lower,
often much lower.
Another benefit is that these payment plans are set to forgive the balance of
your loan after 20 to 25 years,
depending on which programs you're eligible for.
However, one onus to be aware of is that if you stretch out the time
over which you are able to repay the loan, more interest will accrue,
and you might end up paying back more interest in the long run.
So there are three income-driven repayment plans offered through student
or federal student aid.
One is the Income Based Repayment plan, also known as the IBR plan;
and there's the Pay As You Earn repayment plan, and lastly,
there's the Income Contingent Repayment plan, the ICR plan.
The differences between the plans lie in the year when you took out your
student loans, your annual income, and household size.
There is a detailed chart found on studentloans.gov,
and we'll drop a link in the chat box below.
To apply, you must submit an application,
called the Income-Driven Repayment Plan Request.
You can submit the application online at studentloans.gov, or on a paper form,
which you can obtain from your loan servicer.
If you selected the education award, once your year of service is complete,
you can begin using your education award to make payments on any
federal student loans.
To start the process of using your education award through
myamericorps.gov portal.
Once you have completed your service term,
you will be able to access a link from your home screen to create an
education award payment request.
You will have to access a form, where you will enter the payment type,
the amount authorized,
and the institution where you want to the payment to be directed.
When you click on "Submit," a notice will be sent electronically to your
educational or loan institution.
A record of your request will appear on your member homepage.
The school or loan lender will complete their portion of the form
and return it electronically to CNCS.
They will fill in the amount for which you're eligible.
If the request for current educational census,
they will provide the payoff amounts
and loan types if the request for a student loan.
Once you initiate a request, payment generally takes place within 48 hours.
Please note that the request cannot be automated,
so you will have to create a request for each payment that you wish to make.
If for some reason the institution denies the request for a payment,
they should have entered comments explaining the reason for the denial.
Any time you use the education award you will need to remember that
you will be taxed.
So now we're going to pause and check in about tax liability.
Calvin, can you start us off.
Definitely.
Thank you, Natasha, for a wonderful overview of how to pay off your tax -- or,
sorry, how to pay off your loans, you know, some options for you.
Now we're going to go to a topic that generally raises a lot of questions for
VISTA members, and that is taxes.
So, as you all know, the education award
and any interest payments made on your behalf during your service are all
considered taxable income.
As we move through this next section of the webinar,
please remember that we're approaching the topic of taxes as it specifically
relates to your education award,
and we won't be able to address questions about taxes in general.
We can't really give, you know,
straightforward tax advice because we are not tax people.
So, the first big piece of information to take away, again,
that any use of the education award is considered income that is taxable.
You will be taxed on the amount that was used in the year that it was used.
This also means that if a year goes by
and you don't use any of your education award,
you don't have to pay taxes on it.
Your education award is only taxed in the amount that you use in the
year that you use it.
So, while you will need to report any amount of education award used
when you file taxes,
a 1099 miscellaneous form is going to generate for you if you use $600
or more in a given year.
So, as Natasha mentioned earlier,
interest accrual payments are also considered taxable income
and will need to be reported during the year you received those payments.
If your interest accrual payments were over $600,
you should expect a 1099 miscellaneous form that is automatically generated to
be delivered to you.
So let's take a second to consider tax liability.
So VISTAs do have a lot of questions about this,
and we understand that you'd like a specific estimate for your specific tax
liability when using the education award.
But I really want to take a second to clarify why it's not possible for us to
give a standard universal estimate.
This is because your tax liability depends on several personal
and situational factors.
What we can show you is a list of those primary factors that impact tax
liability so you can sort of make your own estimate.
So, as a general rule,
your tax liability will always be tied to your income during a given year.
The education award is considered income, so when you use it,
it will be added to whatever your annual income is for that year.
So for a given that you use all or part of your education award
what you owe in taxes will depend on the five factors listed here.
The first one being your total annual income during the year that you
use the education award.
Number two is the amount of the education award that you used.
Number three is any tax credits
or deductions which would reduce your taxable income.
Number four is the federal tax rate.
And number five is the tax rate of the state that you earned your income in.
So to wrap that up,
your total annual income plus the amount of education award you used,
along with tax credits and deductions based on your personal circumstances,
gets you your total taxable income.
That total taxable income amount then gets taxed at the federal tax rate
and taxed at the state tax rate where you earned the income.
I just saw tax a whole lot of times, so I hope you're following me.
These are just basic factors, but as you can see,
there are many unknown variables going on.
So let's take a look at how this might play out in some hypothetical example.
So let's start with a hypothetical VISTA who just finished their
service in 2015.
Let's say this VISTA had $10,000 of income in 2015.
For 2015 in one version of the scenario,
they used only $500 of their education award,
and the other version on the right-hand side,
they used the entire education award, the full $5,775.
So, in both cases they have about $8,000 in tax credits and deductions.
But as you can see, the added income from using the entire education award
increases the overall taxable income for the member of the right.
So this is a hypothetical example,
but you can see how important it is to be aware of how much education award
you're using relative to your other income for a given year.
In this example, one had a higher taxable income than the other,
but both would be taxed at the same federal tax rate, because they, you know,
fall into a certain bracket.
But let's take a look at how this might look a few years down the road,
maybe with a different income level.
So in another scenario to consider,
let's say it's been a few years after service
and this VISTA is now making $40,000 a year at a job where they're still
paying taxes throughout the year.
They then decide to use their entire education that year, the full $5,775,
which is added to their taxable income for that year.
The total income is now $45,775, and after some subtracting credits
and deductions from that,
you can see taxable income of $37,775 has brought the VISTA into a higher tax
bracket, which means they would have to pay more taxes.
So, again, that’s a really broad overview of taxes
and sort of how that all works,
but it's really going to depend on your own personal situation to decide when
you want to use your education award.
You know, having more income, versus having higher income,
using part of the education the full amount,
these are all things that you're going to want to consider, you know,
when making decisions about your education award.
Again, you know, taxes are complicated and personal,
and one way to estimate your own tax liability, another way,
is to download a recent 1040 form
and estimate filling it out with your most recent tax rates
and your estimated information for the come year.
You can sort of kind of guess,
based on how much your current living allowance is,
how much maybe you'll make for the entire year.
Yeah, so when making a decision about your education award,
we suggest that you first test this out to plan for your tax liability.
The 1040 form comes with instructions and the irs.gov
website has many added resources to get you started.
And speaking of resources, let's talk about those for a second.
When it comes time to filling out your tax return,
there are lots of different programs available online, and in person,
that can help you out.
For those with an income less than $53,000, you can receive free,
in-person tax prep through VITA,
that the Volunteer Income Tax Assistance program.
Often, the organizations that run VISTA tax prep sites can also assist you with
resource sharing and make sure your tax questions get answered.
Free file has a great online option to consider if you're looking for a quick
and easy way to file your taxes.
When it's time to file your return, you simply choose a free file service,
you know, and they connect you with that, with a provider.
You download their software
and they walk you through your entire filing process.
At the end, it will automatically submit your return to the IRS,
and then it's pretty easy and then you're done.
Free file services are available for those with a household income of $60,000
or less, and we'll drop a link to the chat to the different programs.
If you do have a lot of questions about your taxes,
we do suggest that you connect directly with someone from the IRS
or a tax professional.
You know, we do realize that this is a very, very important topic for VISTAs,
but please be aware that we're not able, again, you know,
to give you personal tax advice.
And while taxes may sound daunting,
there are several ways that you can contact the IRS and ask your tax questions.
The irs.gov website has a help and resources section, a contact us section.
There's a number of great FAQs, simulators, quizzes, games, I mean,
so much stuff there to help you really understand your tax implications.
So, and also, of course, these resources are specific to federal taxes.
If you have questions about your state taxes,
the best advice is to look up your state's department of revenue
and contact them directly; give them a call, talk it out.
And they are the experts,
and they will be able to give you all the information that you would need.
So now I'm going to go back to you, Natasha.
Thank you, Calvin, for sharing some important information about taxes with us.
Now we're going to start looking ahead towards the future
and the possibility of eliminating your student loan balance.
To start, take a moment to think about your future career goals.
Are you interested in the public sector?
If so, please share what types of public sector careers interest you.
Please enter your ideas in the chat box
and make sure to send do "All participants."
All right, cool.
Thanks, Natasha.
We'll take a sec to see what people -- nonprofit, refugee assistance,
higher ed pro, interested in joining the Department of Public Health.
That's fun.
Social services, all right.
Probably not staying in public sector for ten years.
That's okay too.
Let's see, we had someone who -- President of the USA.
Come on, Scottie, have some goals.
We've got public health, art, wellness, nutrition, or yoga.
Love me some yoga.
Some wants to work for the State Department.
These are all excellent.
These are great.
Does Peace Corps count, since it's federal?
Peace Corps, I think that kind of depends.
You can get public service loan credit for your Peace Corps service,
and for also working at the Peace Corps agency.
So, yes, I guess the answer is, yes, it does count.
Cool.
Man, these are great answers.
Yeah, thanks for sharing everyone.
So now, Natasha, can you tell us a little bit more about the
public service loan forgiveness program.
Sure.
There are multiple federal programs that go above
and beyond what the VISTA program offers;
that when used in concert with our benefits,
help to maximize the value of your education award.
Public service loan forgiveness, for example,
is a loan forgiveness program that encourages graduates to
choose a career in public service.
It applies only to federal direct loans, so if you have Parent Plus loans
or purchase loans you may consider consolidating them to
take advantage of PSLF.
If you consolidate,
keep in mind that only payments made on the new direct consolidation loans
will count towards the PSLF.
If you make 120 on-time full monthly payments while employed by qualifying
public service organizations,
the remaining balance of your federal loans is forgiven.
Only payments made since October 1st, 2007, counts,
because that's when the PSLF program started,
the balance forgiven is not considered taxable income.
So employment and loan payments don’t need to be consecutive.
So you could work in the public sector for a few years,
then take a corporate job, and then go back to non-profit work.
Only the payments made during your time in public service employment
counts towards the 120 payments,
but this gives you flexibility in how your career proceeds.
Now let's take a quick look at what types of employers qualify as public
service employment.
To begin, in order to qualify, it needs to be full-time employment.
Public service employers include any local, state,
or federal government organizations, non-profit organizations,
as long as they are not partisan political organizations or labor unions.
Public schools, libraries, and related organizations count too.
Some more examples of public service employment that qualify includes
emergency management, military service, public safety,
and law enforcement services, public health services,
public interest law services, early childhood education,
public service for individuals with disabilities, and the elderly.
To apply for PSLF you will need to document your qualifying public service
employment as you go.
So for each year, or at least each time you change jobs,
you will need to complete the PSLF employment certification form
and have your employer to verify it.
Then submit the form to Fedloan Servicing,
which is the part of the Department of Education that manages PSLF.
Fedloan Servicing will review your employment certification
and let you know whether the job qualifies.
Also, if your information is missing or if they need additional documentation,
they'll let you know.
They will also notify you of how many qualifying payment you've made,
and just an FYI for currently serving VISTAs
and VISTA alums who would like to document their VISTA service as qualifying
public service employment,
please submit the PSLF form to the VMSU via the national service hotline fact.
Once received, the VMSU will certify the employer section of your form
based on your VISTA's term information
and return the form to you to submit to Fedloan Servicing for processing.
Remember to only submit the form once you've completed your term of service.
After making the 120th qualifying payment,
you can submit the PSLF application form to request forgiveness of the
balance of your direct loans.
For more details, you can look online at studentaid.ed.gov.
We'll also include a link in the resources we share after this session.
In combination with some of the other program we've mentioned,
it's possible to reduce the amount that you owe monthly, and as a whole.
Next, Calvin is going to share about how he personally made the
most of these programs to reduce the student loan burden.
Calvin.
Thanks, Natasha.
All right, cool.
So it's going to get real personal for a second.
Something that we heard from one of the VISTAs on previous webinars was that
they really enjoyed some personal experience with the education award,
student loan, and repayments.
So I just wanted to share my personal experience
and show how some of the concepts
and programs that we have been talking about today apply to a real person,
and what I've learned navigating this whole process.
So I personally used PSLF and IBR to manage my student loan debt.
And before serving my two terms in AmeriCorps,
I had about $34,000 in student loan debt that was being services by
Federal Loans -- or Fedloan and ACF,
which is like -- I think they are a servicer for my federal loans,
but they were all federal loans.
For my time serving -- for my time serving in CCC,
I earned $11,195 in education award funds, $2,900 in interest payments,
and I was able to claim 13 months of credit towards my
public service loan forgiveness.
While serving, I took advantage of the national service forbearance
and the interest payments to reduce the burden of living on a fixed stipend.
However, if I had all the information that I have now,
I probably would have done a couple of things differently.
But before we get to that part,
I want to break down what I actually did for my service.
So when I started, I had graduated college just three weeks before,
and my loans were already up for repayment,
so I immediately put them in forbearance. I was like, "You know,
I'm not ready to pay that.
I'm not ready to pay that yet."
So I put them in forbearance,
I took advantage of that.
At the end of my first year in CCC,
I made an interest payment to both of my servicers.
You know, I knew that I was going to do a second year of service,
so I used my education award to make a payment also for the
month between my two terms.
I ended in November, I started again in January,
so I made a payment on both loans for the month of December.
Luckily it was only one month,
because before I put myself on income-base repayment,
both payments were about $250 each, for a total of about $500 a month,
and it was really nice to have the education award to help with this payment
between my periods of forbearance.
So, going into my second year of service,
I had place my loans in a forbearance again,
and I didn't think about them until my year was up.
At the end of my second year,
I made a lump-sum payment of about $10,670 to one of my servicers, to ACF,
and that was to just kind of get rid of my loans with them
and to bring myself down only having one loan servicer, and that was Fedloan.
My reason for this was because I wanted to have one less payment each month,
and generally rid myself of a large chunk of debt,
and also because Fedloan was just willing to work with me on payments
and really meet me where I was at and what I could afford.
So after my two years of service in AmeriCorps,
during which my loans were in forbearance --
or my loans were in forbearance during both of those year, you know,
after my two years of service.
My salary at my first job was $30,000.
Using income-base repayment and my lump-sum payment,
I was able to get my single Fedloan payment down to a management $100 a month,
a savings of about $400.
So, as my salary has increased my payment amount has gone up slightly.
But with public service loan forgiveness I'm still going to end up playing way
less than the full balance of my loan over the course of my 120 payments.
This whole strategy worked out well for me.
But after doing a few hours of research and calling Fedloan
and calling ACS and talking to the National Service Hotline, you know,
I definitely would do some things differently knowing what I know now.
So if I could go back with my current knowledge I really would have only put
my loans through ACS in forbearance
and used the income-base repayment for my loans through Fedloan.
ACS was way less flexible with the terms of repayment,
and through income-based repayment through FedLoan,
any repayment would have been very small, like almost zero dollars.
And this would have allowed me to get 12 public service learning credits for
my first year of service, 12 credits for my second year of service,
and 12 additional credits for making a lump-sum payment at the end of
my two years of service,
for a total of 36 public service loan forgiveness credits for my
two years of service.
I could have gotten three years out of my two years of service.
Instead, I only made one payment over the course of my two years,
and I earned 12 credits from my lump-sum payment, for a total of 13.
So I really kind of, you know,
gypped myself out of almost 23 additional months,
and that's a really big difference.
You know, I've learned that the distinction between earning public service
loan forgiveness credit from paying out of pocket monthly,
and earning credits from using your education award,
is a very important difference.
You can only receive a maximum of 12 public service loan forgiveness credits
for a lump-sum payment using the education award.
So if I had been paying on my loans during both years of service,
I would have received those 24 credits,
plus an additional 12 from my education award,
instead of just the 12 that I was able to get using the lump sum payment.
So, if you remember back on slide 22,
we showed you how to make an education award request.
Well this is my summary of all of my requests.
This is what I looks like, you know,
sort of when you're done with your service, and this is, you know,
after I made all my moves and paid all my stuff, this is what it looks like.
So, as you can see,
I made a total of seven requests for the use of my education award.
I made four interest payments, which are, let's see, the bottom form.
So if you start at the bottom and go up four, those are my interest payments.
As you see, they're pretty good amounts.
I mean, that's almost $3,000 in payments right there.
I made one lump-sum payment requests, which is that big one, that $10,666,
and I made two monthly payments, which was the 260 and 268.
Those for the year for my gap, in between my two years of service.
So, you can use the education award to make as many payments
as you can towards your loans, but don't forget,
you're only eligible to receive the interest payment once for each loan that
is in forbearance.
My tax implications were fairly minor,
because even though I used over 10,000 of my education award at once,
the income from my service year was so low that I didn't get bumped
into a new tax bracket.
So keep in mind that this is going to vary wildly from person to person,
so it's really important to look at your full financial picture before you
make any sort of drastic moves.
So now I ended up, I have one servicer to deal with
and I used income-based repayments to keep my payments management while
working towards my 120 public service loan forgiveness payments.
So by using all the resources available, you know,
I have a really comfortable relationship with my student loan debt,
and I feel confident in my ability to pay it off with the least amount of
financial burden.
So thank you, Natasha, again,
letting me salespeople on my own personal experience,
but I'm going to turn it back to you for a little bit,
for information on Perkins loans.
Great.
Thank you so much for sharing that information with us Calvin.
That was awesome information.
For those of you with Perkins loan,
I'd like to point out some of the unique characteristics of those loans,
as they relate to education award and loan forbearance.
Perkins loans are not eligible for IBR or PSLF, however,
for each year of VISTA service you complete,
you can get 15% of your Perkins loan balance forgiven.
To be worthwhile, your Perkins loan balance would have to be at least $37,000.
If that's case, here's what you would do.
Select the cash stipend as your end-of-the-year benefit.
You can't get the ed award and the 15% loan forgiveness.
It's one or the other.
Put the loan in deferment based on financial hardship,
then at successful completion of your VISTA term,
15% of your Perkins loan balance is forgiven,
and the Department of Ed will pay off the interest that accumulated while your
loan was in deferment.
To learn more details about options for VISTAs who have Perkins loans,
please visit the link that posted in the chat window.
Now, for those with federally-backed loans,
here are some thoughts on how to get the most out of what is available.
While serving, you could apply for income-driven repayment
and get your payments down to almost nothing.
This is a great option if you know that you want to participate in the
PSLF program and want to get credit towards the 120 payments
without actually having to pay anything.
Applying for forbearance while in service is another great option to
put your payments on hold
and have the accrued interest taken care of at the end of your service term.
If you're earning a cash stipend,
ask your lender about other programs they may have to help you
manage your loan.
Consider a Zero Value Education Award for future terms of service if you have
reached your maximum amount of education award fund.
This lets you have the forbearance benefits that comes with the education
award while maintaining our two education award maximums.
No matter the decisions in service that you make,
these benefits extend well into your life after VISTA.
When your service is over,
keep making IBR payments in order to receive credits for the PSLF.
Using the education award to make payments a great way to help transition out
of VISTA service and into permanent employment.
Payments from the education award must be done manually each month.
Keep in mind that if you are in forbearance during your service
and would like to get PFLS credits,
you must make a lump-sum payment equal to 12 times what your regular
monthly payment would be.
For example, if your regular monthly payment would be $100,
you would make a $1,200 payment using the education award to
receive PSLF credit for your service.
Remember, you can only receive 12 total credits from a lump-sum payment.
When your 120 monthly payments have been made,
you will be able to apply for loan forgiveness,
and the PSL program that started in 2007 -- or rather,
remember that the PFLS program started in 2007,
so the earliest that anyone could reap the benefit of forgiveness
would be 2017.
Now here are some immediate next steps we recommend that you
take as a follow up to this session.
Know what types of loans you have.
Like, take a look at the education award website.
Check with your lender if you haven't already placed in your loans in
forbearance or deferment.
Explore the Income-Based Repayment Plan
and the Public Service Loan Forgiveness Plan.
Make sure your lender is listed on nationalservice.gov.
To recap, here are some of the resources that we shared
with you during this session.
My americorps.gov, use this resource to submit forbearance requests,
interest accrual requests or associated payment requests.
Use studentloans.gov for all things related to student loans.
IRS.gov provides guidance and assistance on tax-related issues.
My Fedloan provides assistance for PSLF processing and verifications.
You can contact the National Service Hotline if you need to
submit a paper request.
And, lastly, you can call the VMSU for help with forbearance requests,
interest requests, or other benefit-related questions.
All right, back to you now, Calvin.
Thanks.
That was a lot of information, I know.
It looks like we're doing pretty well on time,
so we have plenty of time to answer some questions.
But before we get to the Q&A component,
we want to know what you thought about this.
As you see on the right side,
there is a quick poll where you can share some feedback about this webinar.
So if you, please, would just take a moment to answer the questions,
we really want to able to improve those webinars, and your input helps so much.
Anything that you put there comes straight back to me,
and I do read all these comments and I take your suggestions very seriously,
so please take a moment to fill that out if you can.
So, you know, we've given you a lot to think about
and now it's time for your questions.
We've queued up some that were in the Q&A, that we'll start out with.
You know, so we probably won't get to every question, but we will try our best.
You know, we're really going to try to focus on questions that are
of interest to the group as a whole, and maybe not so specific.
So you can ask questions asking the Q&A panel located on the
lower right of your screen, but I'll also ask our operator, Crayton,
how to ask questions by phone.
If you would like to ask a question from the phone, please press "*1."
Please unmute your phone and record your name when prompted.
To withdraw your question, press "*2."
Again, to ask a question from the phone, please press "*1."
All right.
So while we're waiting for some questions on the phone, I'll go ahead
and see what we've got in the Q&A.
Let's see, it looks like -- so someone asked,
"Can you specify what the difference between Federal Direct loan
and what Federal Direct Plus loan is? And I will be honest with you,
when I saw that question,
I did some Googling really quick because I didn't know the answer to it.
But I do now.
And it makes sense.
So Federal Direct loans are loans that you get yourself.
They are in your name.
They are for you and your education.
Federal Plus loans are going to be Parent Plus loans.
Those are going to be in someone else's name; that is, you know, your parent.
And they're also for grad students.
So a Plus loan is for graduate students and people getting Masters,
Doctorates, and Parent Plus loan helps the undergraduate student out.
And a Federal Direct loan is just going to be a loan that you have in your
name for your education.
Let's see, we have another question.
Let's see, Natasha, I think you can take this one.
It's says, "Can I change a payment plan after selecting one?
Example, I switch from income-based repayment to pay as you
earn after a few years?"
Sure.
There is flexibility with it.
You can just reapply through your lender if you want to
change to something else.
There are new plans coming out all the time.
There's a new repay plan that has come out recently,
so just contact your lender or lenders if you would like to switch.
Thanks for asking.
Yeah, awesome.
Cool.
So, let's see, Wesley Gooch asked a question.
Would it be ideal to make small payments to the education award over a
period of years or to use the majority of it while your income is low?
That one of those questions that, again,
it's going to depend on your situation and, really,
what your end result is going to be.
You know, if it's going to help you out to use your education award just to
make your monthly payments for -- I mean, for five or six years,
then that's great.
You should do that and consider your tax implications there.
For me, it made the most sense, for my personal situation,
to use my education award all at once while my income was low so that the
tax implications weren't that great, so that I could get rid of a lender,
you know, so that I could just really rid myself of that debt.
That's what made the most sense for me.
But I have friends that I served with who are also just using the education
award to make their monthly payments.
You know, they have pretty good salary jobs,
but it's just something that they don't have to worry about.
You know, they just make their payment each month
and it doesn't directly come out of their pocket.
So that's a really great question, and the answer is, you know,
it depends on what you're trying to accomplish.
I'm going to ask, Crayton, if we have any questions on the phone.
And I show no questions at this time.
All right, cool.
Again, you guys can either dial "*1," call and record your name,
and we'd love to talk to you and answer your questions.
Let's see, what else do we got in the Q&A?
Let's see,
"If you worked at a non-profit before but didn't pay on your loans yet,
do those years count?"
Natasha, do you know that one?
Yes, absolutely.
If you're working at a qualifying non-profit institution,
the payments that you make do count.
You would just have to fill out the PSLF form
and work with the Human Resources Department at that
non-profit to get that form completed.
And once it's certified, those payments can be credited.
Right.
Yeah.
But we do need to make note that, you know,
just because you worked as a non-profit doesn't mean that you're eligible for
the PSLF credit.
You had to have been making payments during that time.
So if you're working there and your loans are in forbearance or you,
for whatever reason, were in a period of deferment
and you weren't making payments, you won't get credit for that.
You have to be in a period of repayment and be actively making a payment,
even if it's five dollars or zero dollars, you or whatever it may be,
you have to be making a payment while working to receive that credit.
Let's see, "With public service loan forgiveness, will the principal
and interest be forgiven?"
The answer is yes.
So after your 120 on-time payments, the entire balance is forgiven;
that's principal, that’s interest,
that's whatever is left on that loan is gone, which is amazing.
Let's see.
Let's see, someone said in the chat,
"What if you worked at a non-profit for three years but only made 12 payments,
only 12 count?"
That's correct.
Only 12 of those payments are going to count.
It's only payments that you actually made while you were serving.
You know, and sort of that goes back to illustrate my own personal situation,
where, you know, I didn't make payments during my two years of service,
so I didn't get any credit at all for my two years of service,
except for the 12 that I made -- except for the 12 credits that I got using a
lump-sum payment.
And your lump-sum payment is going to be -- so once you're out of service,
you know, and you enter that period of repayment,
where you're getting a bill each month, whatever that bill is, finally,
you know, whether that's before income base or after income base,
whatever your bill is for that time,
12 times that is the lump sum that you have make in order to
get those 12 credits.
It's something that you need to be in touch with your lender about,
because it does require some communication so that they know your intention.
All it requires is a phone call and saying,
"Hey, I'm about to make this payment and I want these payments to be
counted towards my public service loan forgiveness.
You know, I'm an AmeriCorps member and this is the situation."
You've just got to fill them in so they know that,
and they'll be able to see that and apply that money directly.
Crayton, do we have anyone on the phone yet?
I still show no questions.
No questions.
All right.
Well, let's see, we can go back.
Let's see.
What do we got in the Q&A?
Let's see.
"If your loans are in forbearance currently is it too late to
switch to IDR payments?"
Natasha, do you know?
I am not sure about that.
Okay.
I would suggest that you contact your lender to see if you can switch.
But I think that you should be able to switch
or cancel forbearance at any time and start repayment.
So I think that you should have a conversation with your lender
or lenders about that,
and they should be able to point you in the right direction.
Totally, yeah.
And, you know, it's important to make the distinction that
if your loans are in forbearance, that means your you're not paying on them,
so you wouldn't have any sort of income-driven repayment plan set up
or anything, because there's nothing,
because you're not having to pay back on your loans.
So it's never too late to switch to income-driven repayment,
because you're going to do that once you actually start paying on your loan
again, and once you get out of that period of forbearance.
So the two are sort of unrelated,
in that one doesn't have anything to do with the other,
except for the fact that in one you're making payments
and you're trying to get them lower,
and the other one you're not making payments at all.
Let's see.
Someone said, "So if we make income-driven repayments during our service
and then use the education award,
do we get credit for our monthly payments and the education award
or just the monthly payment?"
So if we use -- let me make sure I understand that.
So if we use the income driven repayment during our service
and then make the education award -- oh, yeah,
so this is the great thing is that you can get two -- you can get two years of
credit for your one-year of service.
So if you're in your period of repayment, you know,
for your entire year of service and you're making low monthly payments,
each one of those is going to count,
and you will also get an additional 12 credits, for a lump sum,
at the end of your service for using the education award.
It's a really great benefit,
sort of like a little loophole to help you really maximize that education
award and maximize the amount of credits that you can get.
Let's see.
Someone asked me, "Hey, Calvin,
do you have an estimate of how much you are expecting to be forgiven by
the end 120 payments in the loan forgiveness program?"
So, actually, if I can be super honest,
let me tell you a little story of what happened to me the other day,
and everyone is probably goes to gasp a little bit.
So, when I went to re-up on my income-driven repayment, you know,
I didn't know which income they were going to pull.
So, you know, I went online, I did the thing to recertify what my income was,
and they led me to the IRS website,
which pulled up the income return for the year of 2014,
which is when I was serving as a member, and I didn't make much money,
so now my payments are zero dollars for the next year, which is great.
What's going to happen, though, is next year,
they're going to pull my income again, and it's going to go back up.
But I'm going to enjoy not having a payment of zero dollars for the next year.
I don't really have an estimate of how much my loans are going to be,
because it's really going to depend on how much my loans go up,
how much my income is going to be by, you know, how much I'm paying each month.
So I don't really know.
You know, when my payment was a hundred dollars a month, let's see,
that would be, so a hundred, that's $1,200 a year, times ten years,
that's $12,000.
So that's $12,000 out of the around 24, I guess, that I had.
So, I mean, that's a pretty big chunk.
That's about $12,000 that would have been forgiven if my payment stayed at a
hundred bucks.
Let's see.
Anything on the phone?
There's still no questions from the phone.
Still no questions.
All right, cool.
I think we'll do a couple more questions from the Q&A and then we will,
you know, kind of -- we'll cut it off and end this webinar.
Someone said, "So if you have a zero dollar payment,
does that count as credit?"
It does, because that is technically a full monthly payment because your
income driven repayment, my payments are just added up to zero dollars.
If they were one dollar, they would all count towards my PSLF.
Let's see.
[Inaudible].
Let's see.
Sorry.
There's a lot of questions in here.
All right, Natasha, I think this one's coming to you.
So Kevin asks, "If I have my loan in forbearance for one year,
will CNCS pay the interest?
On top of that, if I make a lump-sum payment,
will I still get the 12 credits towards PSLF?"
Yes.
Yeah.
Yeah, that's an excellent answer.
That is the answer.
The answer is yes.
And that is -- you know,
that is the way that you would get credit for your service year while still
being in forbearance.
So you can be in forbearance throughout your entire service year,
use your lump-sum payment to get those 12 credits back, you know,
for your year of service.
But if you make payments and you use the lump-sum payment,
you can get two years of credit instead of just the one.
So that's a really great thing.
Good question, Kevin.
So let's see, we'll do one more question, and if we don't have
any on the phone, then we will wrap it up.
Let's see.
Britney asks, "If you put your federal loans into income-base repayment,
will you lose the education award and interest payment from VISTA?"
No.
Well, let's see, "If you put your federal loans in IBR,
will you lose the education award and interest payment from VISTA?"
So if you put your loans -- if your loans are currently in forbearance
and you take them out of forbearance and, you know,
go into a period of repayment,
the amount of time that you were in forbearance,
that interest is going to be paid off.
You can submit a request to have,
let's say it was -- you were only in forbearance for six months during your
service, and then you went out of forbearance and started doing repayment,
CNCS will pay the interest accrued over the six months.
You don't lose your education award.
You still get your education award at the end.
You just only get an interest payment on the amount that you
were in forbearance.
Except for the amount of time that you were in forbearance,
that is your interest payment.
So I'm going to ask one more time, do we have anyone on the phone?
I assume the answer is no.
You're correct; there are no questions.
Okay.
All right, cool.
All right, wonderful.
So, thank you guys so much for all the great questions.
Thank you for attending.
I hope you really got something out of this, and, again,
if you have any questions, we are always here now.
Let's see, Sarina Porter says, "I feel more confused now."
No, Sarina.
If you shoot us an e-mail, you can e-mail me or shoot someone an e-mail,
we can help you out.
I would personally give you a call
and answer any questions that you might have.
I can insert my e-mail in here right now.
It may redirect you, but it's right there. clandrum@cns.gov.
You can shoot us an e-mail, and we'd love to talk to you
and answer any questions that you might have.
So, I want to give you some information on an upcoming webinar
that we are going to be having.
Our next webinar is on "Project Sustainability Approaches and Strategies."
Check out the webinar page under the "Connect and Learn,"
and the VISTA Campus, for more information about that.
It's going to be on April 27th at 2:00 Eastern.
If you want to register for that, or if you have questions,
you can e-mail vistawebinars@cns.gov and we will get back to you.
Again, thank you so much to everyone.
Thank you, Natasha,
so much for being an excellent host -- excellent co-host of this.
Thank you, Endi and Jessica, Education Northwest,
and thank you all for coming and showing up to this webinar.
Hope you all have a wonderful day.
