Borrower Rights and Responsibilities
When a student takes on a student loan, he or she has certain rights and responsibilities:
The borrower has the right to receive the following information before the first loan disbursement:
- Fll amount of the loan,
- Interest rate,
- Commencement of loan repayment,
- Effect borrowing will have on the student’s eligibility for other types of financial aid,
- Complete list of any charges the student must pay (loan fees) and information on how those charges are collected,
- Yearly and total amounts the student can borrow,
- Maximum repayment periods and the minimum repayment amount,
- Explanation of default and its consequences,
- Explanation of available options for consolidating or refinancing the student loans, and
- Statement that the student can prepay the loan without penalty.
The borrower has the right to receive the following information before leaving school:
- Amount of the student’s total debt (principal and estimated interest), what the student’s interest rate is, and the total interest charges on the loan(s);
- Loan repayment schedule with first payment due, the number and frequency of payments, and the amount of each payment;
- FFELP loans, the name of lender or agency that holds the student’s FFELP loan(s), where to send the student’s payments, and where to write or call if the student has questions;
- Any fees expected during the repayment period
- Explanation of available options for consolidating or refinancing the student’s loans; and
- Statement that the student can repay loan without penalty
The borrower has a responsibility to:
- Understand that by signing promissory notes, the student is agreeing to repay the loan according to the terms of the note;
- Make payments on the loan even if the student does not receive a bill or repayment notice;
- Continue to make payments until notification that the request for a deferment or forbearance has been granted;
- Notify the appropriate representative (institution, agency, or lender) that manages the student’s loans when the student graduates, withdraws from school, or drops below half-time status; changes his or her name, address, or Social Security number; or transfers to another institution; and
- Complete exit counseling before leaving school.