ADVERTISEMENT
Home > Financial Aid > Student Loans > Borrowing Responsibly

Borrowing Responsibly

Responsibilities, Rights & Loan Deferment

There are a lot of responsibilities when taking out student loans. Below are the most important ones:

ADVERTISEMENT

Responsibilities

Signing a promissory note binds you to the payment terms and conditions of the note. The note states that you must repay the loan even if you do not finish your education. Exceptions include loan discharge or if your school closes before you finish your program. Think about what your repayment obligation means before you take out a loan.

If you don’t repay your loan on time or according to the terms in your promissory note, you’ll go into default, which has serious consequences and lowers your credit score.

You must make payments on your loan even if you don’t receive a bill or repayment notice. Billing statements are sent to you as a convenience, but you’re obligated to make payments even if you don’t get a reminder. You also have to make monthly payments in full. Partial payments do not count.

If you apply for a deferment or forbearance, you must continue to make payments until your request is granted. Keep a copy of your request forms and the contact information of the organization that holds your loan. You have to notify the loan servicer when you graduate, withdraw from school, drop below half-time status, change your name, address, Social Security Number or transfer to another school.

If you borrow a federal loan, the Federal Direct Loans Program services your loan. If you borrow a private loan, the lender you borrowed from services your loan. You will get the names of your loan servicer(s) during your loan counseling session. All borrowers have entrance counseling before your first disbursement and exit counseling before graduation. Your school provides counseling and important information about your loan. Your lender has additional information if necessary.

Rights

Before your school makes your first loan disbursement, you’ll receive the following information about borrowing rights and your loan from your school, lender, and/or the Federal Direct Loans Program:

  • The full amount of the loan.
  • Your repayment date (based on the anticipated graduation date recorded on the promissory note.)
  • A complete list of charges and loan fees, and information on how those charges are collected.
  • Information about yearly and total borrowing amounts.
  • Information about the maximum repayment period and the minimum repayment amount.
  • An explanation of default and its consequences.
  • An explanation of refinancing and consolidation options.
  • A statement that you can prepay your loan at any time without penalty.

Your school must notify you (or your parents, for a PLUS Loan) in writing whenever it credits your account with Direct or PLUS Loan funds. This notification must be sent no earlier than 30 days before and no later than 30 days after the school credits your account. You or your parents can cancel a portion or all of the loan within 14 days after your school sends the notice, or by the first day of the payment period, whichever is later. Your school will tell you the first day of your payment period. If you or your parents receive loan funds directly by check you can refuse funds by returning the check.

Before you leave school, you’ll receive the following information from your school, lender, and/or the Federal Direct Loans Program:

  • Your total debt, including principal and estimated interest, your interest rate, and the total interest charges on your loan.
  • The name of the lender or agency that holds your loans, where to send your payments, and where to write/call for questions.
  • An explanation of the late fees, collection costs or litigation costs if you are delinquent or in default.
  • An explanation of available options for consolidating or refinancing your loan including a statement that you can prepay your loan without penalty at any time.

If you have Direct Loans, your school will provide the following information during exit counseling:

  • A current description of your loans, including average monthly anticipated payments.
  • A description of applicable deferment, forbearance, and discharge provisions.
  • Repayment options.
  • Budgetary advice about how to manage your payments.
  • Notification that you must provide your expected permanent address, the name and address of your expected employer, and any corrections to your school’s records concerning your name, Social Security Number, references, and driver’s license number (if you have one).

You have the right to a grace period before your repayment period begins. There is no grace period for PLUS Loans. Your grace period begins when you leave school or drop below half-time status.

Your school, lender, and/or the Federal Direct Loans Program, must give you a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

You must be given a summary of deferment and discharge provisions, including the conditions under which the U.S. Department of Defense might repay your loan.

Deferment or Forbearance

You may have the option to request a deferment or forbearnace on your loan. Under either condition, you won't have to make repayments on your loan or may be allowed to make smaller payments for an amount of time, but interest will still acrue during this period.

Students may request deferment on their loans if they are:

  • Recieving government benefits or fall 150% below the poverty line.
  • Currently being treated for cancer.
  • Enrolled in an approved graduate fellowship program.
  • Enrolled at least half-time at an eligible college or career school.
  • On active duty military service.

Students may be eligible for forbearance if they are:

  • Experiencing financial difficulties, medical expenses or change in employment.
  • Serving in the AmeriCorps in a position for which they recieved a national service award.
  • Serving in a medical or dental internship or residency program, and meet specific requirements.
  • An active member of the National Guard.
  • Performing a teaching service that qualifies them for Teacher Loan Forgiveness.

You must formally request a deferment through the procedures established by the holder of your loan, and you must continue making payments until you’re notified that the deferment or forbearance has been granted.

ADVERTISEMENT
ADVERTISEMENT

Latest College & Financial Aid News

Thanksgiving 2020 Travel Tips for College Students

November 19, 2020

by Izzy Hall

For many college students this year, Thanksgiving is the end-of-semester holiday rather than a traditional winter break in December. Some colleges started their semesters early so they could wrap up by Thanksgiving, while others are having students finish out the semester virtually. Whatever your circumstances, it helps to have a thought-out plan on how you will be travelling from campus to home so you can enjoy the holidays with your family. Here are our tips for COVID-friendly travel this Thanksgiving. [...]

How Promising COVID-19 Vaccines Could Affect Colleges

November 17, 2020

by Izzy Hall

In recent days, two drug manufactures, Pfizer and Moderna, have both announced that their COVID-19 vaccines have had more than a 90% success rate in clinical trials. The thought of a COVID vaccine is sure to raise anyone’s spirits, and while college students are likely to be at the back of the line when vaccines are distributed, some college officials are hopeful that students may be able to be vaccinated by late next spring or summer. [...]

Capturing Student Sentiment About Fall Semester and Beyond

November 12, 2020

by Izzy Hall

As this highly unusual Fall 2020 semester is nearing its conclusion, administrators are anxious to see how college students have responded to online learning – and how many students are likely to come back for a similar experience in the Spring of 2021. A new student survey from the learning platform company Top Hat finds that while many students are still adjusting to online learning, the majority of them intend to return to school for the Spring semester. [...]

Last Reviewed: November 2020