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Repayment Process + Student Options

Effective with the 2013-2014 academic year Walters State Community College will no longer be participating in the William D. Ford Direct Stafford Loan Program. As a result, we encourage all students to complete the Free Application for Federal Student Aid (FAFSA) as soon as possible after January 1, 2013.

Steps to Apply for a Student Loan
first time borrowers

Step 1

If you would like to apply for a student loan, you will first need to complete the FAFSA at http://www.fafsa.gov.

If you are selected for verification, you will need to provide the Financial Aid Office with specific documents. The documents required will be listed on your StarNET account under 'Eligibility' and 'Requirements'. You must be taking at least six credit hours to apply for a student loan. For more information on the Federal Direct Student Loan Program, go to: http://www.studentloans.gov.

Step 2

You must print out the 2012-2013 Loan Request Form

complete it and return it to:

Walters State Financial Aid Office
500 S. Davy Crockett Parkway
Morristown, TN 3781o

or

You may take it by the Greeneville, Sevier or Tazewell campuses and request it be sent to the main campus

or

You may fax it to: 423-585-6763.

Step 3

You will then need to electronically sign your Master Promissory Note (MPN).

The Master Promissory Note (MPN) is a legal document and your promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s).

Step 4

Once you have electronically signed your promissory note, you will need to complete "Entrance Loan Counseling".

The Entrance Counseling will go into detail about your student loan and cover topics such as your rights and responsibilities, repayment options, etc.

Direct Stafford Loan
Federal

Walters State Community College will no longer be participating in the William D. Ford Direct Stafford Loan Program effective with the 2013-2014 academic year. The final date that Walters State can process a student loan request for the summer term will be June 14, 2013.

Direct Loans are low interest loans for students to help pay for the cost of higher education. The lender is the U.S. Department of Education. To be considered for loans, students must minimally complete the FAFSA, the WSCC Borrower Confirmation Form, Master Promissory Note and Entrance Interview form or assessment. Loan Packets are available in the Financial Aid Office at all WSCC campuses. Students must also provide any additional information as requested by the Financial Aid Office.

Maximum awards are based on financial need, student classification (freshman or sophomore) and dependency status (dependent or independent). Students are also subject to annual and aggregate limits.

Repayment begins including interest begins six months after the student withdraws or drops below half-time status. There are a number of deferment and forbearance options available to students. For details, refer to www.studentloan.gov or the WSCC Financial Aid Office.

Students must complete exit-loan counseling prior to graduation or at which point they otherwise plan to drop below half-time status. Registration and transcript holds are placed on student accounts until this requirement has been satisfied.

Application:

  • FAFSA (yearly)
  • Federal Promissory Note
  • WSCC Loan Application (yearly)

Award:

  • Freshman < 30 completed program hours $5,500 dependent / $9,500 independent.
    No more than $3,500 of these amounts may be in subsidized loans.
  • Sophomore>30 completed program hours $6,500 dependent/$10,500 dependent.
    No more than $4,500 of these amounts may be in subsidized loans.

Direct Stafford Loans have variable interest rates and are for both undergraduate and graduate students. Loans will be either subsidized or unsubsidized.

Subsidized Loan

Eligibility

  • Needs Based
  • Degree seeking
  • Enrolled at least half-time (6 hrs)
  • Meeting SAP (Satisfactory Academic Progress)
  • Cannot exceed COA (Cost of Attendance)
  • Not in default of student loan or owe a federal repayment

A subsidized loan is awarded on the basis of financial need. Interest is not charged to the student while in school. The federal government "subsidizes" the interest during these periods.

Unsubsidized Loan

Eligibility

  • Degree seeking
  • Enrolled at least half-time (6 hrs)
  • Meeting SAP (Satisfactory Academic Progress)
  • Cannot exceed EFC
  • Not in default of student loan or owe a federal repayment

An unsubsidized loan is not awarded on the basis of need. Interest is charged from the time the loan is fully disbursed until it's paid in full. In cases where two disbursements are required, interest will begin accruing after the second disbursement. Interest accrues while the student is in school or during other periods of nonpayment, it will be capitalized. This means the interest will be added to the principal amount of the loan, and additional interest will be based on that higher amount.

Notice To All Student Borrowers:
Participation in the Direct Loan Program Begins Fall 2010
Termination of Participation in the Direct Loan Program effective with the 2013-2014 Academic Year

Walters State Community College will participate in the William D. Ford Federal Direct Loan (Direct Loan) Program beginning August 28, 2010. Students who previously received loans through the Federal Family Education Loan (FFEL) Program will now borrow through the Direct Loan Program. The Direct Loan Program offers the same types of loans as the FFEL Program and Direct Loans generally have the same terms and conditions as FFEL Program loans, but instead of a bank lending the money, the U.S. Department of Education (the Department) lends the money directly to students through the student's school. There are also some differences in the names of the loans. The FFEL Program's Federal Stafford Loans (subsidized and unsubsidized) are called Direct Subsidized Loans and Direct Unsubsidized Loans in the Direct Loan Program. Federal PLUS Loans are called Direct PLUS Loans.

Benefits of the Direct Loan Program

Direct Loans and FFEL Program loans have the same annual and aggregate loan limits, the same deferment and cancellation provisions, and most of the same repayment plans (Standard, Graduated, Extended, Income-Based). The interest rates for FFEL Program Stafford Loans and Direct Subsidized and Unsubsidized Loans are also the same. Direct Loans also have some benefits that are available only in the Direct Loan Program:

  • Lower interest rate on Direct PLUS Loans (7.9% vs. 8.5% for Federal PLUS Loans)
  • Up-Front Interest Rebate
  • Income Contingent Repayment Plan (in addition to the Income-Based Repayment Plan)
  • Public Service Loan Forgiveness Program
  • No interest charged (for up to 60 months) during qualifying periods of active duty military service (for loans first disbursed on or after October 1, 2008

First-Time Direct Loan Borrowers Must Complete a Direct Loan MPN

If you have not previously received a Direct Loan, you must complete a Direct Loan Master Promissory Note (MPN). Although you may have previously signed an MPN to receive FFEL Program loans, a FFEL MPN cannot be used to make Direct Loans.

The MPN is the legal document through which you promise to repay your Direct Loans and any accrued interest and fees to the Department. It also explains the terms and conditions of your loans. A Direct Loan MPN can be used to make loans for up to ten (10) years. You may complete a Direct Loan MPN electronically via the StudentLoans.gov web site. You also have the option of completing a paper Direct Loan MPN.

To complete a Direct Loan MPN electronically, you must have a Federal Student Aid PIN. The Federal Student Aid PIN is the same PIN used to complete the Free Application for Federal Student Aid (FAFSA). To apply for a PIN if you do not already have one, or for customer service regarding a previously assigned PIN, visit Federal Student Aid PIN .

First-Time Student Loan Borrowers Must Complete Direct Loan Entrance Counseling

In some cases, you may need to complete Direct Loan Entrance Counseling.

  • If you are an undergraduate or graduate/professional student and have not previously received a FFEL or Direct Loan program loan, you must complete Direct Loan Entrance Counseling before you can receive a Direct Loan.
  • If you are a graduate/professional student and have not previously received a PLUS loan through the FFEL or Direct Loan programs, you must complete Direct Loan Entrance Counseling before you can receive a Direct PLUS Loan.

You may complete Direct Loan Entrance Counseling electronically via the StudentLoans.gov Web site. A Federal Student Aid PIN is required to complete online Direct Loan Entrance Counseling.

Consolidating FFEL Program Loans into the Direct Loan Program

If you already have FFEL Program loans and will now be receiving Direct Loans, consolidating your FFEL and Direct Loan program loans together into a Direct Consolidation loan may make loan repayment easier. If you consolidate, you will have just a single monthly payment. Consolidating your FFEL Program loans into a Direct Consolidation Loan may also allow you to take advantage of certain benefits that are offered only in the Direct Loan Program, such as Public Service Loan Forgiveness and the Income Contingent Repayment Plan.

To learn more about when you may consolidate, the pros and cons of doing so, and the application process, visit Federal Direct Consolidation Loansor call 800-557-7392 .

Default Management Plan
Walters State Community College – Financial Aid Office

The purpose of the Default Prevention and Management Plan is to promote student and school success by increasing retention and reducing delinquency and default. The college will benefit by avoiding any limitations on participation in the loan programs due to excessive cohort default rates (CDRs). Students benefit by having continued access to Title IV Student Financial Assistance Programs, learning good debt management practices, and establishing a healthy credit history. Walters State is actively committed to promoting student success by helping students learn, graduate, obtain employment, and demonstrate financial responsibility through repayment of the funds borrowed to finance their education.

Consequences of Default for Borrowers

Borrowers who default on student loans face serious consequences. Stafford Loans are considered in default after 270 days without payment. At the time of default, outstanding interest is capitalized and collection fees may be added, resulting in a loan balance that is higher than the amount borrowed. Defaulted loans are reported to credit bureaus, causing borrowers to sustain long-term damage to their credit rating. Defaulters may also face difficulty in securing mortgages or car loans, may have their wages garnished, and their federal income tax refunds and other federal payments seized. Until the default is resolved, collection efforts continue and the defaulter will be ineligible for additional federal student aid.

Consequences of Default for Schools

Institutions may face serious consequences due to high cohort default rates which include the loss of participation in the Direct Loan and/or Pell Grant programs. It is an objective of the Walters State Community College Financial Aid Office to reduce defaults, promote student and school success, help preserve the integrity of the loan programs, and reduce costs to taxpayers.

    The following strategies are used to manage Walters State cohort default rate and promote responsible student borrowing:
  1. An aggregate loan limit will be imposed each academic year. Consideration will be given to college's established student cost of attendance and annual federal loan limits in regard to grade classification (<30 earned hours in program of study = freshman, =>30 sophomore).
  2. Walters State establishes a limit of two annual loans at freshman level. Third year students must progress beyond 30 earned hours in order to receive a third year loan.
  3. The Walters State Financial Aid Office will offer loan counseling and provide financial literacy resources to borrowers throughout their attendance at the college – from enrollment, throughout attendance, and up to graduation or withdrawal.
  4. The Walters State Financial Aid Office monitors both entrance and exit counseling information to ensure that the required forms are completed by every student who has had a loan certified by Walters State.
  5. The Walters State Financial Aid Office will conduct a periodic review of defaulters to discern who is defaulting and why. A review of data can assist in determining common characteristics among defaulters. Causes for defaults may include: absent or incomplete internal procedures, practices, and communication, particular programs and course requirements or structure, and ineffective counseling.
  6. In order to maintain eligibility for financial aid, students must be making progress toward a certificate or degree.