Direct Loan Program
The Direct Loan is a low interest loan guaranteed and funded by the federal government. Credit history is not a factor; no credit check is done to qualify for these loans. Students who defaulted on prior student loans are not eligible to borrow until the default status is resolved. The interest rate for loans first disbursed after July 1, 2013 is as follows:
Effective July 1, 2013 to June 30, 2014
- Subsidized/Unsubsidized loans for undergraduates 3.86%
- Unsubsidized loans for graduates 5.41%
Time Limitation of Direct Subsidized Loan Eligibility for First-Time Borrowers
Beginning July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that a student can receive Direct Subsidized Loans. In general, students may no receive Direct Subsidized Loans for more than 150% of the published length of their program. For more information regarding this 150% limitation on Direct Subsidized Loans, please access the following link:
Repayment normally begins six months after graduating, leaving school or dropping below half-time. Half-time for undergraduates is 6 credit hours. Half-time for graduates is 4 credit hours. The monthly repayment amount depends on the total amount borrowed, the length of the payment period, and the repayment option chosen. The average loan indebtedness of ECU undergraduate student borrowers who graduated in May 2009 was $20,802. Based on a standard 10-year repayment schedule at the current interest rate of 6.8%, the average monthly payment would be approximately $240.00. If you have previous student loans, you may access your loan borrowing history at https://www.nslds.ed.gov/nslds_SA/.
The amount of the loan is determined by the Financial Aid Office. Some of the variables that determine the loan amount are your expected family contribution as determined by the FAFSA, your cost of attendance, your grade level, and other types of financial aid you are receiving. ECU may not deliver the first installment of Stafford Loan proceeds to a first-year undergraduate student who has not previously received a Stafford Loan until 30 days after the first day of classes (the 31st day). You must be enrolled at least half-time to receive any loan disbursement. Half-time for undergraduates is 6 hours and for graduate students is 4 hours. If you need to withdraw from all classes before the close of a semester, you must withdraw in writing to the ECU Office of Admissions and Records. You must also contact the Financial Aid Office to determine if funds must be returned to the federal aid programs and to complete required loan exit counseling.
Direct Subsidized Loan - A loan for undergraduate students with financial need. For loans disbursed on or after July 1, 2013, the interest rate is fixed at 3.86 percent. These loans come directly from the U.S. Department of Education and the Federal government pays the interest on subsidized loans while the student is in school. Repayment begins six months after the student graduates, leaves school, or drops below half-time enrollment.
Direct Unsubsidized Loan - A loan for undergraduate and graduate students that have no financial need. For undergraduate unsubsidized loans disbursed on or after July 1, 2013, the interest rate is fixed at 3.86 percent. For graduate students, the interest rate is fixed at 5.41 percent. These loans come directly from the U. S. Department of Education. The Federal government does not pay the interest unsubsidized loans while a student is in school, and repayment begins six months after you graduate, leave school, or drop below half-time enrollment. Students may choose to pay the interest quarterly, or they can allow the interest to accrue and be added to the principal amount of their loan (capitalize the interest).
Direct Parent PLUS Program
This is a loan available to parents undergraduate students that have no financial need remaining. Parents may borrow up to the student's estimated cost of attendance minus other financial aid received. For loans disbursed on or after July 1, 2013, the interest rate is fixed at 5.41 percent for Direct PLUS loans. There is a fee of 4.288 percent of the loan deducted proportionately each time a loan disbursement is made. The PLUS loan goes into repayment 60 days after the loan is fully disbursed. The government's servicer will run a credit check on all PLUS Loan borrowers. The PLUS Loan Request Form is available on the forms link of the financial aid website.
- Complete the Free Application for Federal Student Aid (FAFSA) and list ECU's school code -- 003154. If selected for verification, submit a verification worksheet and signed copies of federal tax forms with W2's and all schedules. Submit any other supporting documents requested by the ECU Financial Aid Office to determine your eligibility.
- When your financial aid file is complete and accurate, the ECU Financial Aid Office will send you an award letter. The award letter states the type and amount of financial aid you are eligible to receive.
- First-time ECU loan borrowers must complete loan entrance counseling before a student loan will be processed. Entrance Counseling is required by federal regulation to help you understand your loan rights and responsibilities. An entrance counseling session may be completed by one of the following methods:
- Click the entrance counseling link to complete online entrance counseling. Read the content, answer the questions, and complete the student form. Print the confirmation page for your records. East Central University will receive confirmation that you completed the online counseling session.
- Complete the online counseling at the Financial Aid Office on the main campus (Administration Building, Room 101A).
- First-time ECU borrowers must complete a Master Promissory Note. This is the binding legal document that lists the conditions under which you are borrowing and the terms under which you agree to repay the loan. The Master Promissory Note can be completed online at https://studentloans.gov. If you are unable to access the Master Promissory Note online, please contact the Financial Aid Office for assistance.
Dependent Undergraduate Students:
- Freshmen may borrow up to $5,500 per year. Up to $3,500 may be subsidized loan.
- Sophomores may borrow up to $6,500 per year. Up to $4,500 may be subsidized loan.
- Juniors and Seniors may borrow up to $7,500 per year. Up to $5,500 may be subsidized loan.
- The maximum that dependent undergraduates may borrow for all years is $31,000 (maximum of $23,000 in subsidized loans).
Independent Undergraduate Students:
- Freshmen may borrow up to $9,500 per year. Up to $3,500 may be subsidized loan.
- Sophomores may borrow up to $10,500 per year. Up to $4,500 may be subsidized loan.
- Juniors and Seniors may borrow up to $12,500 per year. Up to $5,500 may be subsidized loan.
- The maximum that independent undergraduates may borrow for all years is $57,500 (maximum of $23,000 in subsidized loans).
- Graduate students may borrow up to $20,500 per year.
- The maximum that graduate students may borrow for all years is $138,500 (maximum of $23,000 in subsidized loans). The graduate maximum includes Stafford loans received as an undergraduate student.
The loan amounts listed above are the annual maximums for the grade levels indicated. Not all students will qualify for these amounts. The cost of attendance, number of hours enrolled, and other financial aid received are also factors in determining loan eligibility. Students are encouraged to keep debt manageable and borrow only what is needed to cover educational costs. Borrowers may reduce or cancel student loans at any time prior to disbursement and up to fourteen days after disbursement. Borrowers wishing to reduce or cancel student loans must notify the ECU Financial Aid Office in writing.
Your Rights as a Borrower:
- You have the right to written information on your loan obligations, including loan consolidation and refinancing, and information on borrower rights and responsibilities. You have a right to a copy of the master promissory note, and return of the note when the loan is paid in full.
- You have the right to an explanation of default and its consequences.
- If your lender assigns, sells, or transfers your loan to another servicer, you must be provided information on the identity of the purchasing lender, the name and address of the new lender or servicer, and the telephone number of both the purchasing and selling lenders and servicers.
- Before you begin repayment, your loan holder is required to give you a repayment schedule and detailed information about interest rates, fees, the balance you owe and available repayment options.
- You have the right to defer repayment for certain defined periods, if you qualify (refer to section on Deferment and Forbearance).
- You have the right to request forbearance.
- You may prepay your loans in whole or in part at any time without penalty.
Your Responsibilities as a Borrower:
- You must repay your loans according to the terms and conditions of your loan agreement.
- You must attend entrance counseling before receiving loan funds and exit counseling before leaving school.
- You must make payments on time, or make other arrangements with your lender or loan holder.
- You must notify your lender if you change your name, address, phone number, or enrollment status.
- You must notify your lender if you are unable to make payments.
The Federal Government is the lender of all Direct Loans. The U. S. Department of Education will select a "servicer" to maintain your loans.
Loan funds are received via electronic funds transfer and are credited to your account. You must be enrolled at least half-time and making satisfactory academic progress in order to receive your loan funds. Loan funds are disbursed in two payments. The first payment occurs after the add/drop period for the semester and the second payment occurs after the midpoint of the loan period. Loan funds remaining after your ECU bill is paid are given to you as a refund check from the Bursar Office within fourteen days.
All tuition and financial aid refunds are issued through the ECU Tiger Card. ECU contracts with Higher One to provide this service. Students must activate the card and choose either direct deposit to a current checking or savings account or placing the funds on the ECU Tiger Card. Review the ECU website or contact the ECU Bursar's Office for more information and a list of fees for utilizing the card.
Parents can borrow money on behalf of their dependent students through the PLUS loan program. PLUS loans have a fixed interest rate of 8.5%. The parent borrower must pass a credit check and may not have an adverse credit history. Parents may borrow up to the estimated cost of attendance minus other financial aid. To receive a PLUS loan, the parent needs to complete the PLUS Loan Request Form. This form is available on our forms link.
If a dependent student's parent applies for and is denied a PLUS loan due to adverse credit, the dependent student may qualify for additional Stafford loans. If your parents are denied a PLUS loan and you need additional loan funds to pay your educational costs, contact the Financial Aid Office for assistance.
A deferment is a period of time during which you are not required to make loan payments. During the period of deferment, interest continues to accrue on the loan. The government will pay the interest for you during periods of deferment on subsidized Stafford loans. The borrower continues to be responsible for interest during periods of deferment on unsubsidized Stafford loans. Deferments are not automatic. You must apply for them. Contact your servicer for more information.
You may qualify for a deferment if you meet any of the following conditions:
- Half-time enrollment
- Economic hardship
- Graduate fellowship
- Rehabilitation training
A forbearance is a temporary reduction or postponement of your student loan payments. Your servicer can grant forbearance up to 12 months at a time, for a maximum of three years. You will have to provide documentation to the lender to show why you should be granted forbearance. You must continue to make your loan payments until your lender notifies you that a forbearance has been granted and the terms of the agreement.
Delinquency and default have serious consequences for a borrower.
If you are late on a scheduled payment, you are considered to be delinquent on your loan. If you are more than 90 days late, your delinquency will be reported to national credit bureaus.
If you are 270 days late on your scheduled payment, you are in default on your loan agreement, and it will be assumed that you do not intend to repay your loan. The federal government will buy your loan from your servicer and track you for payment. Defaults are reported to national credit bureaus and remain on your credit report for seven years. This may affect your ability to obtain an auto loan, credit cards, or other financing.
Other consequences of default include:
- The entire unpaid amount of your loan, including interest, may become immediately due and payable.
- Collection costs may be added to the amount of your loan.
- Legal action may be taken against you.
- The federal government may collect loan payments from federal and state income tax refunds, garnished wages, or state lottery winnings.
- You will be ineligible to receive any additional federal or state financial aid funds (Federal Pell Grant, Supplemental Educational Opportunity Grants, Teach Grants, Academic Competitiveness Grants, National SMART Grants, Oklahoma Tuition Aid Grants, Work Study, and the Perkins, Subsidized and Unsubsidized Stafford Loans, and/or PLUS loans) at any institution.
- Your college records may be placed on hold.
- You will lose your student loan deferment options.
- You may not be able to obtain a professional license or get hired by an employer that performs credit checks.
Your default will have an effect on the future of this loan program and could jeopardize the educational opportunities of future students. If you are unable to make your scheduled loan payments, contact your lender to determine if you qualify for deferment or forbearance.
Borrowing student loans is serious business. Although loans can be great in helping you attend college, these legal obligations can also become quite a burden during repayment. We don't want you to borrow loans without understanding the responsibility. Neither does the federal government who requires Entrance Counseling before borrowing and Exit Counseling when leaving East Central University.
Entrance Counseling helps show your rights and responsibilities regarding borrowing. It is a good idea to do this even before accepting a student loan. You can complete this requirement by choosing one of the following options below. But do it early. Your student loan can't be processed without it, even if done before at another institution. And you don't want to take on debt without knowing how it works.
An entrance counseling session may be completed by one of the following methods:
- Click the entrance counseling link below to complete online entrance counseling. Read the content, answer the questions, and complete the student form. Print the confirmation page for your records. East Central University will receive confirmation that you completed the online counseling session.
- Complete the online counseling at the Financial Aid Office on the main campus (Administration Building, Room 101A).
When you drop below half-time enrollment, graduate, or transfer to another school you will complete Exit Counseling. This will remind you of your rights, responsibilities and options to help you successfully manage your student loans. You may complete exit counseling by one of the following methods:
- Click the exit counseling link below to complete online exit counseling. Read the content, answer the questions, and complete the student form. Print the confirmation page for your records. East Central University will receive confirmation that you completed the online counseling session the next business day.
- Complete the counseling online at the Financial Aid Office on the main campus (Administration Building, Room 101A).
We want to help you understand the process. So regardless of which method you use, if you have loan questions please contact us by phone at (580) 559-5243, email us at firstname.lastname@example.org, or visit us in the Administration Building, Room 101A. You are assigned a Financial Aid Counselor based on your last name. If you last name begins with:
L - Z
(Entrance Counseling) https://studentloans.gov
(Exit Counseling) http://www.nslds.ed.gov/nslds_SA/
The Ombudsman's office is a resource for borrowers to use when other approaches to resolving student loan problems have failed. Borrowers should first attempt to resolve complaints by contacting the school, lender, servicer, or guarantor. If the borrower has made a reasonable effort to resolve the problem through normal processes and has not been successful, the borrower should contact the FSA Student Loan Ombudsman at:
U. S. Department of Education
FSA Ombudsman Group
830 First Street, N.E., Mail Stop 5144
Washington, DC 20202-5144
Toll-free Phone: 1 (877) 557-2575
Internet help: http://studentaid.ed.gov/repay-loans/disputes/prepare
Borrowers who received loans from one or more lenders in the FFELP program and the Direct Loan program may wish to consider consolidation which may make payments more manageable by combining multiple student loans into one loan with one monthly payment. It can lower your monthly payment by extending the repayment period. Extending repayment will increase the amount of interest. Some deferments and benefits may be lost through consolidation. To learn more about the pros and cons of consolidation, go to www.loanconsolidation.ed.gov or call the Direct Loan Consolidation Center at 1-800-557-7392 [TDD 1-800-557-7395].