Debt Management Guide

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 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.

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)

Who to Contact: