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When you take out a student loan, you have certain
responsibilities. Here are some important ones:
- When you sign a promissory note, you’re agreeing
to repay the loan according to the terms of the
note. The note states that except in cases of loan
discharge (cancellation), you must repay the loan,
even if you don’t complete your education (unless
you couldn’t for a valid reason—because the school
closed, for example). Also, you must repay your loan
even if you can’t get a job after you complete the
program or you don’t like, or don’t receive, the education
you paid for.
- 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 might go into default, which has
serious consequences and will affect your credit rating.
- You must make payments on your loan even if you
don’t receive a bill or repayment notice. Billing
statements (or coupon books) are sent to you as
a convenience, but you’re obligated to make payments
even if you don’t receive any reminders.
You must also make monthly payments in the full
amount your repayment plan has established. Partial
payments do not fulfill your obligation.
- If you apply for a deferment or forbearance, you
must continue to make payments until you’re notified
the request has been granted. If you don’t, you
might end up in default. You should keep a copy
of any request form you submit, and you should document
all contacts with the organization that holds
your loan.
- You must notify your loan servicer when you graduate;
withdraw from school; drop below half time
status; change your name, address, or Social Security
Number; or transfer to another school.
- For Direct or FFEL Stafford Loans, you must
receive entrance counseling before you’re given
your first loan disbursement, unless you’ve previously
borrowed a Stafford Loan. No matter what type of
federal student loan you have, you must receive exit
counseling before you leave school. Your school will
provide the counseling and important information
about your loan. Your lender will give you additional
information.
You have certain rights as a borrower. Listed below are
some of them.
- Before your school makes your first loan disbursement,
you must receive the following information
about your loan from your school, lender, and/or
the Direct Loan Servicing Center:
- the full amount of the loan and the interest
rate;
- the date you must start repayment;
- a complete list of any charges you must pay
(loan fees) and information on how those
charges are collected;
- information about the yearly and total amounts
you can borrow;
- information about the maximum repayment
periods and the minimum repayment amount;
- an explanation of
default and its consequences;
and
- an explanation of available options for
consolidating your loans and a statement that
you can prepay your loan(s) without penalty at
any time.
-
Before you leave school, you will receive the
following information about your loan (as part of
exit counseling) from your school, lender, and/or
the Direct Loan Servicing Center:
- a current description of your loans, including
average anticipated monthly payments;
- the amount of your total debt (principal and
estimated interest), your interest rate, and the
total interest charges on your loan;
- if you have FFELs, the name of the lender or
agency that holds your loans, where to send
your payments, and where to write or call if
you have questions;
- if you have Direct Loans, the address and
telephone number of the Direct Loan Servicing
Center;
- an explanation of the fees you might be charged
during the repayment period, such as late charges
and collection or litigation costs if you’re
delinquent or in default;
- a reminder of available options for loan
consolidation and a reminder that you can
prepay your loan without penalty at any time;
- a description of applicable deferment,
forbearance, and discharge (cancellation)
provisions;
- repayment options and advice about debt
management that will help you in making your
payments; and
- notification that you must provide your
expected permanent address and the name and
address of your expected employer. You must
also provide 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. (Your parents do not
receive a grace period for a PLUS Loan.) Your grace
period begins when you leave school or drop below
half time status.
- Your school, lender, and/or the Direct Loan
Servicing Center, as appropriate, 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.
- If you or your parents borrow under the FFEL
Program, you (or your parents, for a PLUS Loan)
must be notified when the loan is sold if the sale
results in making payments to a new lender or
agency. Both the old and new lender or agency must
provide this notification and must provide the identity
of the new lender or agency holding the loan,
the address to which the borrower must make payments,
and the telephone numbers of both the old
and new lender or agency.
| Deferment Condition |
Direct Loans 1, 2 |
FFELs1, 3 |
Perkins Loans |
| At least half time study at a postsecondary school |
YES |
YES |
YES |
| Study in an approved graduate fellowship program
or in an approved rehabilitation
training program for the disabled |
YES |
YES |
YES |
| Unable to find full-time employment |
Up to 3 Years |
Up to 3 Years |
Up to 3 Years |
| Economic hardship |
Up to 3 Years 4 |
Up to 3 Years 4 |
Up to 3 Years 4 |
| Engages in service listed under Perkins and
Stafford Loan discharge/cancellation conditions. |
NO |
NO |
Yes 5 |
| NOTE: 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 the deferment has been granted. |
1 For PLUS Loans and unsubsidized Stafford Loans, only principal is
deferred. Interest continues to accrue.
2 A Direct Loan borrower who has an outstanding balance on a
FFEL disbursed before July 1, 1993 might be eligible for additional
deferments, provided the outstanding balance on the FFEL existed
when the borrower received his or her first Direct Loan.
3 Applies to loans first disbursed on or after July 1, 1993, to a borrower
who has no outstanding FFEL or Federal Supplemental Loans
for Students (Federal SLS) loan on the date he or she signed the
promissory note. (Note that the Federal SLS Program was repealed
beginning with the 1994-1995 award year.)
4 Many Peace Corps volunteers will qualify for a deferment based
on economic hardship.
5 More information on teaching service deferments and cancellations
can be found on our Web site. Click here.
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