Managing Educational Debt: Different Options for Loan Repayment

April 26, 2012

Today’s students are no strangers to debt.  With a collective debt of more than $1 trillion, the idea of repaying this debt can be daunting. Though calls for student debt relief abound and change may be just around the corner, there are programs that can help you right away.

Three different types of educational debt relief can ease the burden of repayment:

  • Income-driven repayment plans, such as Income-Based Repayment (IBR), which lower monthly loan payments based on your income.
  • Forgiveness programs, the broadest of which is Public Service Loan Forgiveness (PSLF). PSLF allows forgiveness on Federal Direct Loans after 120 qualifying payments if you work full-time in qualifying public service employment (employment in government and 501(c)(3) nonprofits count).
  • Loan Repayment Assistance Programs (LRAPs), which provide funds to help make payments on educational loans.

Both Income-Based Repayment and Public Service Loan Forgiveness can provide significant relief for those who work in public service by allowing you to make lower monthly payments on your federal loans and achieve total forgiveness of those loans after ten years.

For example:

  • If you have $25,000 in federal loan debt and make $30,000 per year, your monthly payment under a standard 10-year repayment plan would be $288).  Under IBR, your payment would be $166.  If your income increases, the amount you pay would too. But as long as you have a partial financial hardship it will be capped at 15 percent of your income. For example, if you receive 3 percent annual raises over 10 years, the amount you pay in year 10 would be $216 per month (still lower than a 10-year plan).
  • Under this scenario, over 10 years, you would pay approximately $22,776 and if you qualify for PSLF, the government would forgive what’s left: $17,291.

But even if you aren’t planning to work in public service, IBR can still help lower your monthly payments.  Providing you demonstrate a “partial financial hardship” IBR is available to anyone with federal government loans and offers total forgiveness on any balances that remain after 25 years.

If you are thinking of going to graduate or professional school and will need to take out loans, the numbers – and relief – can add up.

Consider “Dara Defender”.  Dara graduates from law school with $120,000 in federal loans and takes a position as a public defender with a starting salary of $45,000 annually.

  • Under a standard ten-year repayment program, Dara will pay $165,716 over ten years and is required to pay $1,381 monthly regardless of her income; this is more than half her monthly income.  Under a 30-year repayment program, her monthly payments would be $782 and total $281,632 over 30 years.

However, Dara is in control because she knows about IBR and PSLF. She enrolls in IBR right after graduation.

  • In her first year, Dara’s payments are $353 per month (less than half than what she would pay under a 30-year plan).  As she receives annual raises of 3 percent, her payments gradually rise. In 10 years, her monthly payments are $461.
  • Dara has remained in public services and after making 120 payments, she qualifies for PSLF. She has paid $48,570 (a little over one-third of the original principal) over ten years, and the federal government forgives $151,133, the balance of the principal and the interest left on her loans!

What if Dara doesn’t qualify for PSLF? Here’s a look at how IBR can still help:

  • Dara leaves public service after seven years and begins to earn $80,000 per year. With 3 percent annual raises, in year 25 she will make $132,228 and pay $1,227 monthly (still less than a ten-year repayment plan).
  • Dara will pay $241,064 over 25 years, and the government will forgive $43,405.

IBR and PSLF can make a huge difference. There are also special forgiveness provisions for Federal Perkins Loans and for teacher loan forgiveness on Stafford Loans.

Loan Repayment Assistance Programs (LRAP’s) can also help you manage educational debt and are available from a variety of sources.  For example, the American Federation of Teachers has a searchable funding database, the National Health Service Corps helps fund State Loan Repayment Programs, and the Veterinary Medicine Loan Repayment Program offers loan forgiveness to veterinarians. Many law schools and state bar associations also provide LRAPs.

Because they provide funds to help you make payments on your loans, LRAPs are valuable on their own.  In a perfect scenario, you would qualify for low monthly payments under IBR and use LRAP funds to make these payments while working in a qualifying public service position, allowing you to earn PSLF – all without using your own limited income!

This is only a brief description of how these programs work and how you can qualify. Equal Justice Works provides free educational debt relief webinars every month to help you learn more. You can view our schedule and register for the session that fits your needs on our website. You can also download our Educational Debt Manual to help you manage your student debt.

Radhika Singh Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. In 2008, she served on the Student Loans Team in the Negotiated Rulemaking for the College Cost Reduction and Access Act (CCRAA) and has extensive knowledge of this landmark educational debt relief legislation. Radhika graduated from Loyola Law School Los Angeles. Prior to joining Equal Justice Works, she was a staff attorney at the Partnership for Civil Justice, focusing on constitutional and civil rights litigation and advocacy.


Stay up to date on the medical and law school application process

April 23, 2012

With each application cycle, The Career Center sponsors two year-long CTools Sites to support UM students and alumni/ae applying to 1) medical or 2) law school. Subscribers receive timely updates and application tips from beginning to end of each cycle.

Subscribe to the Med App CTools site

Subscribe to the Law App CTools site

For questions about these CTools sites, please send an e-mail to mmecozzi@umich.edu. For questions about your umich account after graduation, please contact ITCS at itcs.accounts@umich.edu.

Please note that even if you register immediately, the new CTools sites will not open for a few more weeks; thus, the Med App 12-13 and the Law App 12-13 tabs will not appear immediately in your CTools site menu bar.

Whatever you do, don’t give up.

April 19, 2012

The words "Don't give up" written in graffiti on a wall

Doug Fischer is an out-going Peer Advisor at The Career Center, graduating in a few short days. Today he shares his own experience with the job search, and some advice for you if you’re still searching for the right fit. Thanks Doug!

It’s nearing the end of April. You are a Senior graduating on the 28th. You are jobless and unsure of what lies ahead in your future. You’ve applied to a number of positions, gotten a few interviews, maybe not, but nothing has panned out yet. What do you do now? Whatever you do, don’t freak out! Believe me, I was in your position just a few weeks ago and freaking out seemed like a pretty fair reaction.

After final round interviews for the job I had thought was “perfect” for me did not lead to a position, confidence was lacking and disappointment settled in. But I listened to Winston Churchill’s advice, “If you are going through hell, keep going” and I kept on chugging! I applied to some more jobs, continued attending networking/career events, developed LinkedIn strategies, and grudgingly wrote a few more of those blasted cover letters. Furthermore, I divested my job blinders and took a more open approach to the available opportunities. I am a sports guy, always have been, always will be, but I strayed slightly from the sports path and looked into anything related to my skills and interests. I realized that straight out of college, I probably was not going to land what I close-mindedly dubbed my “dream job” and also discovered that my mind desired one thing (money, cough cough), but my personality matched others (autonomy, responsibilities, creative environment, professional development). This led to many more types of positions, industries, companies, and people that I could potentially work with and ultimately, directed me to the awesome position I landed with a company called Spark Force.

In applying this to your specific situation, I hope to encourage and motivate you to take a few actions, slightly alter your mindset, and resultantly succeed in finding something to do this next year. To start, (and I cannot emphasize this enough) networking and who you know is incredibly pertinent and useful. Every person you meet and every chance you have to meet new people is important and should be taken advantage of. Whether it’s a networking event, reaching out to people through InCircle, your Dad’s friend’s cousin’s dog’s best friends’ owner, somebody sitting next to you at the bar, professors, informational interviewing, or speed dating, talk to them! Get to know what they do, how they succeeded, who they work with and are connected to, what skills/experience is crucial in their industry, and anything else that could help. Connect with them on LinkedIn, send them occasional e-mails to stay in touch, and NEVER burn bridges. Seriously, you never know what ridiculously random connection or coincidence will lead to a job.

Secondly, have an open mind and consider a variety of positions. There are benefits and advantages to different jobs and just because it isn’t in your ideal industry or the company isn’t a fortune 500 giant, doesn’t mean it won’t be a valuable experience. To go one step further, if you do apply to a number of different positions, I guarantee that the right one will find you. Job openings have a natural way of finding and filling themselves with the most suitable and matched person. If you are extremely creative and autonomous, a position that locks you behind a desk in a traditional environment will not choose you. If philanthropy and corporate social responsibility are critical to you, a for-profit, money-scrounging position most likely won’t select you. Words of wisdom from Garrick Ollivander: “The wand chooses the wizard. That much has always been clear to those of us who have studied wandlore…” Just as the wand made of Holly with a phoenix feather selected Harry Potter, you and your job will mutually find each other.

Lastly, always look for ways to improve. When rejected, explore why and what you can do to correct any mistakes. Constantly improve your resume and cover letters. Ask experts and the people you interact with in your industry to find what is most coveted and what will help set you apart from the rest. Remember, there can only be one! Find ways to stand out and be unique. I largely attribute my job acquisition to the fact that I went above and beyond the calling and developed a marketing plan that I sent them as a Powerpoint presentation. They did not ask for this, but I figured it was a great way to showcase my creativity and ambition outside of the interview process and doubted the other applicants would do this. Think outside of the box and find ways to display your talents and skills, sometimes it’s extremely difficult for recruiters to fully understand your capabilities through an interview.

I hope this helps, because I understand your situation and the increasing anxiety that comes with it. But seriously, believe me when I say that everything will work out. Don’t lose sight of the bigger picture and try to stay optimistic. When you come to the end of your rope, tie a knot and hang on (FDR). There is plenty of time to get a job and hey, maybe a month or two break from school and responsibility is really what you need! Maybe you’ll discover an incredible opportunity working/traveling abroad or maybe next week you will get that job offer. Whatever you do, don’t give up.

Remember that The Career Center is open now and throughout the summer, so whether you’re a regular or have never been before, we’re here to help you explore your options and find a job that you’re passionate about. If the concerns Doug mentioned above resonate with you, make an appointment to see us!

Photo Credit: Brendan CCC BY 2.0


Freshman Friday: Design Jams and Future Work Skills

April 12, 2012

Every Friday, we’ll be highlighting some helpful information specifically for first-year students. Today we hear from a couple first-year students who participated in Immersion Excursions. You can view all the previous Freshman Friday posts here.

Yes, I realize we’re one day early here, but we didn’t want you to miss this!

Have you ever heard of a Design Jam? It’s a ~2 hour event where groups of students brainstorm and respond to a problem statement presented by an external company representative. There’s one coming up tomorrow (April 13th) with Ford Motor Company, focused on mobility:

The growing number of mega-cities in the developing world will require us to completely re-think personal transportation as congestion, parking and pollution increase. By 2015, it is projected that there will be at least 35 Mega Cities with populations greater than 10 million. No one company or industry will be able to solve the mobility issue alone; therefore collaboration, communication and common global frameworks are required. The challenge is to develop new business models to determine how Ford will be relevant in these mega-cities as personal vehicles are banned or become impractical.

Why should you attend this sort of event, you ask? Consider the Future Work Skills 2020 report, released by the Apollo Research Institute. The report lists 10 skills that will be vital for future success in the workforce, including novel and adaptive thinking, cross-cultural competency, transdisciplinarity, virtual collaboration, and design mindset. It’s a pretty good bet that you can start improving on those skills by attending the design jam. Taking advantage of these sorts of opportunities is important while you’re here in Ann Arbor — they’re one of the things that separates Michigan from other universities.

If you’re interested in participating, please email Jean Leverich, Program Director – Living Arts (Leverich@umich.edu).


Different Paths in Public Service

April 11, 2012

Career opportunities in public service are varied and growing and there are many paths you can take to get the public service job of your dreams.

Are you passionate about a problem facing society today and do you have the desire to help find a solution?  Are you interested in global climate change?  Providing health care to children living in poverty?  Economic re-development?  If you are committed to a cause such as these, then a non-governmental organization (NGO) might be a great place to start your public service career.  NGOs bring together people with similar interests and concerns to work to address a variety of issues.  NGOs include nonprofit (tax exempt and other) and voluntary organizations on the local, state, national and international levels. There are many resources to help you search for opportunities with NGOs, and this worldwide directory of NGOs from The World Association of NGOs is a good place to start. If you have something specific in mind already, try this custom search engine.   While you’re still in school, try to get as much practical learning experience as possible by getting involved.   Volunteer to get your foot in the door, take internships that deal with issues that interest you, and look for summer opportunities. University of Michigan has the Public Service Intern Program, and you can also keep an eye out for non-profit and NGO openings at Idealist.org: a great resource for volunteer, internship, summer program, and job opportunities.  And if you are considering a public service legal career, make sure you explore the clinical programs, pro bono requirements and externships at the law schools you are interested in attending.  The Equal Justice Works Guide to Law School can help you quickly compare law school offerings.

Working for local, state, federal or tribal government is another public service option that offers tremendous variety.  From providing vital daily services to the public, to disaster response, financial management and policy analysis, government employees have the opportunity to assist in an industry that was designed to improve and protect the lives of people locally as well as throughout the country and world. You can find jobs in the federal government by searching USAjobs.gov, and find local and state government jobs on your state’s website. The federal government offers many development programs, such as the Presidential Management Fellows program and the Pathways Program, to get you started in your government career.

Academia is another important and influential public service career option.  Whether your passion is working with youth or lecturing at the collegiate level education is an area where qualified individuals are always needed in many areas of the country and the world.  And while a position in academia is often thought of as teaching, a public service career in education does not always mean standing in front of a classroom.  Other options are administrative positions in school districts, such as being a Principal or Superintendent, or staff positions in universities and colleges, such as recruitment and financial aid offices, career services or student group centers, and individual college offices. Gain experience in academia by volunteering as a tutor in your community, or seeing if you can work part time in one of your school’s administrative offices. Test the water to see if academia is right for you by applying to programs like Teach for America or local teaching fellowships.

One more note:  Public service careers are often lower paying than those in the public sector.  If you have educational loans and are concerned that you will be unable to “afford” a public interest career, there are programs that can help. Repayment plans like Income-Based Repayment (IBR) can help lower your monthly payment amounts, Loan Repayment Assistance Programs (LRAPs) can help you make those payments and with Public Service Loan Forgiveness (PSLF) you can earn forgiveness after making payments for 10 years. Don’t let the high cost of education stop you from pursuing a career in public service. Visit Equal Justice Works’ online resource center to learn more about IBR, PSLF and LRAPs, how they work and how to qualify, and the steps you can take to ease the burden of student debt.  Again, if you are interested in public interest law,  The Equal Justice Works Guide to Law Schools has information that can help you explore different schools’ LRAPs, scholarships and grant programs to help you determine affordability BEFORE you go to law school..

Having an interest in a public service career is a great goal, and luckily you have a variety of options to achieve it.  There are many online resources that advertise positions in the fields noted above and more.  Some of these resources include Public Service Careers, PSLawNet, Higher Ed Jobs, The Center for Independent Consulting, as well as local and state government and news websites.  Best of luck in your job search and we commend you for following you passion into public service.

Nita Mazumder is a program manager of law school relations at Equal Justice Works.  She is responsible for cultivating and maintaining relationships with law school professionals and student groups as well as serving as the main point of contact for the organization’s National Advisory Committee. Nita previously worked for Georgetown University Law Center and has practiced in both the private and public sectors.


Career Center Connector Staff Picks: Week of April 9th

April 9, 2012

Career Center Connector (C3) is the best way to stay informed on what you need to know as a job or internship seeker while you’re a student here at UM. Besides housing a resume builder, C3 is also a great way to find opportunities specifically for Michigan students. Each week, we plan to highlight a few positions that we come across that we find particularly interesting. Learn more, including application information, by checking out each pick on Career Center Connector. While you’re there, see what other interesting opportunities you find!

Geni Harclerode, Asst. Director of Experiential Learning and Employer Development
Geni’s pick: Blood Services Intern – American Red Cross, Washtenaw County Chapter
Job ID: 13928

Every year I am so impressed with the work that students and other members of our Michigan community put forth to make the Blood Battle a success. For one thing, I always look forward to beating Ohio State (or “Ohio”) at anything, but maybe more importantly, because giving blood is such an important and life-saving act. The local chapter of the Red Cross is offering a really cool chance for a student to help organize and promote more blood drives like this all over the county. This is a great chance for someone to see what it’s like to work for a non-profit and the position has some important public relations, marketing, and event coordinating aspects to it too. Check it out!

Rushi Vyas, Career Advisor
Rushi’s pick: Part-Time Marketing Coordinator – Door-to-Door Organics
Job ID: 23059

With graduation approaching, some students are starting to say, “I just want something, ANYTHING, to do for next year.” The Part-Time Marketing Coordinator position with start-up company Door-to-Door Organics, could provide that “something” while still giving you time to explore. I found this position by simply typing “explore” into the keyword search. At 20 hours a week, but with quite a bit of responsibility, this Part-Time opportunity in the Livonia area could provide valuable experience in multiple areas. For those interested in marketing/sales or the “business” side, there is quite a bit of very hands-on experience in this opportunity. For those interested in public health and/or environmental sustainability the company’s mission may provide an interesting gap year opportunity. Or for those more entrepreneurial individuals, getting experience working for a relatively new start up that is still nationwide having a footprint in five different locations, could give some interesting background for your own future proposals. It’s ok if you are not fully decided on what the next steps are, and maybe this opportunity allows you to explore that while still having some income.

Lizzy Rewalt, Peer Advisor
Lizzy’s pick: Assistant Media Planner – Initiative
Job ID: 22682

This posting interested me because of its focus on Media and that it’s in an excellent location to be involved with media – New York City. As an assistant media planner, you will oversee media budgets, make planning decisions and maintain relationships with clients and vendors to execute advertising and communication efforts.

The position would elicit development in areas of communication, finance and project management for any students interested in communication, PR, marketing, advertising, or media. The advanced and creative design of Initiative’s website showcases the company’s focus on creativity. The deadline to apply is April 11, 2012.

Job/internship postings are included within Career Center Connector due to their potential interest to UM, Ann Arbor students. Inclusion of a posting does not imply Career Center endorsement of the particular program, opportunity or employer described.


Freshman Friday: First-Year Students at Immersion Excursions

April 6, 2012

Every Friday, we’ll be highlighting some helpful information specifically for first-year students. Today we hear from a couple first-year students who participated in Immersion Excursions. You can view all the previous Freshman Friday posts here.

UM students at the Valassis Immersion Excursion

Valassis Immersion

Before I attended the Valassis Immersion, a friend of mine from the business school told me at the Career Fair in February that I need to gain marketing skills if I want to be a Sports Agent. The idea sounded logical since I do have to market my clients well to different coaches and general managers. My career advisor in the Emerging Wolverines program (which every freshman should join) sent an email about Valassis. I wanted to learn different options with my degree, so I applied. Valassis employees were ecstatic, friendly, and open to answer every question we had. I did not think they would pay close attention to my resume because I am a freshman but they did. Last week, they emailed me about a job position. In this case, do not be afraid to take chances because you never know what opportunities will come to you.

Starcom and Red Frog Events Immersion

I was given the unique opportunity to speak with Associates and Supervisors at Chicago companies Starcom MediaVest Group and Red Frog Events. Participation in this event introduced me to influential individuals and educated me about a small fraction of the business world. I started the day at Starcom, where the company provided us with a great opportunity to start networking. After a comprehensive presentation about their daily tasks within the company, we had a chance to ask employees questions about their careers. I learned about the different Strategy and Activation teams involved in the company as well as the responsibilities of a potential intern. I was truly impressed with their level of professionalism and the awards that Starcom has received over time.

After a wonderful experience at Starcom, we continued with a tour of Red Frog Events. This event-planning company has unparalleled work ethic and enthusiasm. Inside their office is a tree house, a conference table that substitutes swings for chairs, a living pet frog, and a climbing wall. But the most incredible part about it is that none of these entertaining things inhibit productivity. The employees clearly enjoyed their work environment and were motivated to succeed within it.


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