Loan Info FAQ
Answer questions related to loan planning & repayment
What is a William D. Ford Stafford Loan?
The Direct Stafford Loan is a federally funded loan program with a yearly fixed interest rate.
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.
In general, you must repay your loan even if you don't graduate, can't find work in your field of study, or are dissatisfied with the education program. Keep in mind that your Federal Direct loans have a 6-month grace period after you graduate or drop below half time enrollment before your loan repayment period begins. You can only use your grace period once! Federal PLUS loans, however, do not offer a grace period.
Can I start paying before my grace period ends or while I’m still in school?Payments can be made at any time to Direct Lending. You can also make payments on the interest building on unsubsidized Direct or PLUS loans.
There are several different repayment options offered to you. Each of these options offers a different amount required for your monthly payment. You may find one of these repayment options will suit your needs better than the other. The Direct Loan Program allows you to change repayment options at any time. Get some understanding and try the Calculators & Interest Rates .
How can I defer my loan payments?You may be able to defer your payments if you are enrolled at least half time at an eligible school, studying full time at a graduate fellowship program or an approved disability rehabilitation program, unemployed or experiencing economic hardship, serving on active duty in the military during a war/national emergency, are a member of the National Guard or other reserve component of the USA military and are called to active duty within 6 months after having been enrolled.
What if I can’t make my next loan payment and am not eligible for a deferment?Contact Direct Lending about requesting forbearance. Forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. You can avoid defaulting on your loan with a little help and information on Deferment and Forbearance. Get Help!
Delinquency and Default
If you're having trouble making payments on your loans, contact the Direct Loan Servicing Center as soon as possible. The Direct Loan Servicing Center staff will work with you to determine the best option for you. Late fees may be added, and your delinquency will be reported to one or more national consumer reporting agencies (credit bureaus), but this is much better than remaining delinquent on your payments and going into default. Visit our default information page for more information about what to do and who to contact.
What is delinquency?You are delinquent if your loan payment is not received by the due date. Delinquency can result in late fees and can be reported to one or more of the national credit agencies, causing a negative effect on your credit score.
What is default?Default occurs when you become 270 days delinquent in making payments on your loans. Going into default will result in you losing eligibility in the future for Federal Financial Aid, having to pay collection fees and possibly court costs, and an impact on your credit report at all national credit agencies.
Consolidating your loans into one loan can benefit you by giving you one monthly payment and extending your repayment period, resulting in lower monthly payments. You can even combine your old Stafford loans that you had through lenders with your new existing loans through the Direct Loan Program! Got questions such as: Should I consolidate? How do I benefit? Am I eligible? Find out more about loan consolidation.
Please do not hesitate to ask questions!
Check your loan aggregates at https://nslds.ed.gov/nslds_SA/
You can contact the Direct Loan Servicing Center at: 1-800-557-7394 or visit their website at https://studentaid.ed.gov
Stay in touch with ETSU and the Direct Loan Servicing Center. Let us know if you've changed your name or permanent address, and make sure that the Direct Loan Servicing Center knows when you've completed your educational program or transferred to another school.