Borrower Rights and Responsibilities
When a student takes on a student loan, they have certain rights and responsibilities.
The borrower has the right to receive the following information before the first loan disbursement:
- Full amount of the loan,
- Interest rate,
- Date on which first loan repayment must be made,
- 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;
- 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.