Rights
If you take out a student loan, you have certain rights. Some of those rights are listed below:
- If you take out a Stafford Loan, you have the right to a grace period before your repayment period begins. The grace period begins when you leave school, or drop below half-time status as defined by the school. The exact length of your grace period will be shown on the promissory note provided to you by your lender.
- You must be given a repayment schedule, which lets you know when your first payment is due, and the number, frequency and amount of all payments.
- You must be given a list of deferment and cancellation conditions.
Entrance interview
Before the first loan may be disbursed, you must receive the following information in an entrance interview:
- The full amount of the loan, the interest rate and when you must begin repayment.
- The effect borrowing will have on your eligibility for other types of financial aid.
- A complete list of any charges you must pay (loan fees) and information on how those charges are collected.
- The yearly and total amounts you can borrow, and the minimum and maximum repayment periods.
- A current description of loans you owe your school and/or lender, an estimate of what your total debt will be and what your monthly payments will be.
- An explanation of default and its consequences.
- An explanation of options for prepaying your loan and for taking advantage of a consolidation loan.
Exit interview
Before you leave school, you must receive the following information about your loan in an exit interview:
- The amount of your total debt (principal and interest), what your interest rate is and the total interest charges on your loan.
- The average monthly repayment amount you can expect.
- The name of the organization that holds your loan, where to send your payments and where to write if you have questions about your loan.
- The fees you should expect during the repayment period.
- A description of deferment and cancellation provisions.
- A description of repayment options such as prepayment, refinancing and consolidation loans.
- Debt management advice.
- Notification that you must provide your expected permanent address, the name and address of your expected employer, the address of your next-of-kin, and any corrections to the school’s records concerning your name, Social Security Number, references and driver license number.
Responsibilities
You also have certain responsibilities. Here are a few of them:
- When you sign a promissory note, you are agreeing to repay according to the terms of the note. This note is a binding legal document. This commitment to repay means that you will have to pay back the loan, even if you don’t complete your education, aren’t able to get a job after you complete the program, or you are dissatisfied with, or do not receive the education you paid for. If you do not pay back your loan on time, or according to the terms in your promissory note, you may go into default, which has very serious consequences.
- You must make payments on your loan even if you do not receive a bill. Billing statements and coupon books are sent to you as a convenience, but not receiving them does not relieve you of your obligation to make payments.
- Even though you may have applied for a deferment, you still must continue to make payments until your deferment is processed. If you do not, you may end up in default. You should keep a copy of any deferment request form you may have and you should document all contacts with the organization that holds your loan.
- You must notify the organization that holds your loan if you graduate, withdraw from school, or drop below half-time status, change your name, address, or Social Security Number, or transfer to another school.
- Before you receive your first disbursement, you must attend an entrance interview. Before you leave school, you must attend an exit interview (see above).