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Office of Financial Aid

Division of Student Affairs

What you need to understand about repaying your student loans, managing your debt, and your rights and responsibilities as a borrower.


Plan:

  • Look for outside sources of grants and scholarships to help reduce your loan expectation. Outside awards can be used to reduce the term-time job amount included in your financial aid package. Search the websites: www.finaid.org or www.fastweb.com
  • Find term-time and summer employment to assist you with paying for your educational and personal expenses. Look for Student Service Positions here at ETSU.
  • Train yourself to save some money each month.
  • Don't respond to credit card applications

Budget:

  • Establish a budget to help you control and manage your expenses. Use the interactive budget worksheets at http://www.collegeboard.org.
  • If you have a credit card, maintain a strong credit record by only charging what you know you can pay back promptly. When you are a full-time student, credit card debt can be very difficult to manage.

Borrow wisely:

  • Borrow only what you need. Any unsubsidized interest that accumulates is added to the original amount you borrowed and increases the amount that must also be paid back. Use the interactive projected loan debt and income calculators at http://www.collegeboard.org.
  • Keep accurate and well-organized records of your signed promissory notes, disclosure statements, and repayment schedules.
  • If you have federal debt, you can review your account information at www.nslds.ed.gov (Stafford and/or Perkins Loans).
  • Paying all or part of your loans off early will reduce your principal balance, total interest paid, and possibly your length of repayment.

Frequently Asked Questions:

What is a Perkins Loan?

The Perkins loan is a federally subsidized 5% fixed interest rate loan. It has a ten-year repayment period and a $40 minimum monthly payment.

What is a William D. Ford Stafford Loan?

The Direct Stafford Loan is a federally funded loan program with a yearly fixed interest rate. For the 2013-14 school year, both the Subsidized and Unsubsidized Direct Stafford Loans will have a fixed interest rate 3.9%. Additionally, both have a ten-year repayment period and a $50 minimum monthly payment.

What are "Other" Loans?

“Other” loans include borrowing from state agencies, or from alternative lenders. In general, these are non-need-based loans and were not part of your financial aid award from ETSU. These loans carry a variety of terms and conditions. Please contact your lender or the Financial Aid Office if you need further assistance.

What is the difference between Subsidized and Unsubsidized loans?

Subsidized means that no interest accrues until the loan goes into repayment, usually six months after you graduate or when you reduce your enrollment to less than half-time.

Unsubsidized means that the interest accrues from the day the loan is disbursed. The interest can be paid monthly, quarterly, or you may let it accumulate and be capitalized when the loan goes into repayment.

What is a Master Promissory Note?

A Master Promissory Note (MPN) is available to first-time borrowers under the William D. Ford Federal Direct Stafford Loan and Federal Perkins Loan  programs. The nature of an MPN is that you sign a single promissory note for each type of loan that you borrow (rather than signing a new note for each loan amount as with a regular promissory note). The MPN allows you to receive multiple disbursements through the same loan program over a maximum ten-year period. Each year, you will receive a disclosure statement from your lender showing the amount of each loan and any additional terms of each loan.

When do I have to start paying back the loans?

Your loans go into repayment when your grace period ends after you graduate or when you reduce your enrollment to less than half-time. The Perkins loan has a nine-month grace period. The Direct loans have a six-month grace period.

May I prepay my loans?

Yes. Part or all of your loans can be paid at any time without penalty. Simply contact your lender for assistance.

What happens to my loans if I take a Leave of Absence?

If you take a Leave of Absence, your loans may enter repayment. Contact the Financial Aid Office so that we may discuss your educational debt and help prepare you for repayment.

If I take a Leave of Absence, what happens to my loans when I return to school?

When you return to school, you should contact each of your lenders to see if you will need to file a deferment form. This will allow you to postpone the payment of the loan until the deferment period ends. Remember that you must file the deferment form or make the minimum monthly payment.

If I am a transfer student, what should I do about my previous loans?

You will need to file a deferment form with each of your previous lenders. This will allow you to postpone the payment of the loan until the deferment period ends. Remember that you must file the deferment or make the minimum monthly payment.

What should I do if I have difficulty repaying my loans?

Always contact your lender. Educational lenders will do everything within the guidelines of the program to help you avoid any adverse consequences of delinquency or defaulting on your student loans.

Are there different types of repayment plans?

Most loan programs just have a standard ten-year repayment period. However, the Federal Direct Stafford loan program has many different repayment options which were designed to assist a wide range of individuals with varying levels of incomes.

What are the consequences of not repaying my student loans?

There are serious consequences. You will lose your ability to borrow further federal student loans. Delinquent loans are reported to a collection agency and to national credit bureaus, which can damage your credit rating and make it impossible for you to rent an apartment or buy a car. Finally the federal government can garnish your wages and take your federal income tax refund. For these reasons, it is very important that you contact your lenders as soon as you realize that you will have a difficult time meeting your loan debt repayment obligations.

Summary of Borrower Rights:

As a borrower, you have the right to:

  • Obtain written information about your loan debt obligations and your rights and responsibilities as a borrower.
  • Receive a grace period and an explanation of what this means.
  • Receive a repayment schedule, before you begin repaying your loans, which includes information about interest rates, fees, the balance you owe, and the number of payments.
  • Defer or Forbear repayment of your loans for certain defined periods, if you qualify and if you request it.
  • Prepay your loan in part or in full at any time without penalty.
  • Decline all or part of your loan money before it is disbursed by notifying the school.
  • Receive a copy of your promissory note before the loan is disbursed.
  • Receive documentation that your loans are paid in full.
  • Receive information on options for loan discharge, loan forgiveness, or loan consolidation.
  • Receive a Disclosure Statement each time a loan disbursement is made detailing the loan program, the amount credited or debited to your term bill and the date of each transaction.
  • Receive notification, if you are in your grace period or repayment, no later than 45 days after a lender assigns, sells, or transfers your loan to another lender.

Summary of Borrower Responsibilities:

As a borrower, you have the responsibility to:

  • Attend and complete an Exit Interview before you graduate or enroll less than half-time.
  • Repay your loans on time.
  • Make monthly payments on your loan after your grace period ends, unless you have a deferment or forbearance.
  • Notify your lender or loan servicer of anything that might alter your eligibility for an existing deferment or forbearance.
  • Notify your lenders if you:
    • Move/change your address
    • Change your name, phone number or social security number
    • Change employers or your employer’s address or telephone number changes
    • Withdraw from school or enroll less than half-time
    • Transfer to another school
    • Do not enroll or return to school for the period in which the loan was intended
    • Change your expected graduation date
    • Graduate

 

Glossary of Terms:

Accrued Interest: The amount of money in interest that has accumulated on the principal balance of a loan.

Borrower: The person who has signed and agreed to the terms of the promissory note and is responsible for repaying the loan.

Capitalized Interest: The amount of accrued interest added to the principal balance of a loan when it enters repayment.

Collection Agency: A company that specializes in recovering delinquent or defaulted loan payments.

Consolidation: Combining one or more of your federal loans into a new loan.

Default: A state of delinquency occurring after you have violated the terms of your promissory note, e.g. have not made a payment or arrangements for at least 270 days.

Deferment: The temporary postponement of loan payments while enrolled at least half-time, on a fellowship, or on active duty.

Delinquent payments: Payments not received by a specified due date established by the lender.

Exit Interview: A counseling session for student loan borrowers who are graduating or enrolling less than half-time.

Fixed Interest Rate: An interest rate that remains the same over the life of the loan.

Forbearance: The temporary postponement or reduction of loan payments due to financial hardship.

Grace Period: The six or nine month period of time beginning when a student graduates, or enrolls less than half-time, during which the student borrower is not required to repay the interest or principal of the loan.

Maker: See “Borrower” above.

Promissory Note: A legally binding contract between a lender and a borrower which contains the terms and conditions of the loan including how and when the loan must be repaid.

Variable Interest Rate: A rate that fluctuates over the life of the loan and is generally tied to the Treasury Bills or the Prime Rate.

Loan Repayment Charts

(Based on a ten year repayment term)

3.9% Federal Direct Subsidized or Unsubsidized Stafford Loans
Amt. Borrowed Mo. Pymt Interest Total Paid
$2,500 $50 $233 $2,733
$5,000 $50 $1,046 $6,046
$7,500 $76 $1,569 $9,069
$10,000 $101 $2,092 $12,092
$12,500 $126 $2,616 $15,116
$15,000 $151 $3,139 $18,139
$17,500 $176 $3,662 $21,162

 

5% Federal Perkins Loan
Amt. Borrowed Mo. Pymt Interest Total Paid
$2,500 $40 $401 $2,901
$5,000 $53 $1,364 $6,364
$7,500 $79 $2,045 $9,545
$10,000 $106 $2,727 $12,727
$12,500 $133 $3,410 $15,910
$15,000 $159 $4,090 $19,090
$17,500 $186 $4,774 $22,274

Who to Contact:

Federal Direct Stafford Loans Federal Perkins Loans

Direct Loan Servicing Center
Borrower Services Department
P.O. Box 5609
Greenville, TX 75403-5609
(800) 848-0979

ETSU Office of Financial Aid
P.O. Box 70722
Johnson City, TN 37614-1710
(423) 439-4300
Loan Information 
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