Before taking on a federal or private student loan, it’s important that you’re well informed regarding your student loan rights, and your responsibilities for borrowing.
Your rights as a borrower:
- Accept all, some, or none of the loan funds offered.
- Before applying for a private student loan, you will be presented with a Loan Application and Solicitation disclosure. This can also be used for a firm offer of credit. This disclosure displays the highest interest rate available with all possible in-school repayment options and what the cost of that credit would be for each of those options so that you can compare the options.
- Entitled to a copy of your promissory note, which outlines the terms and conditions of your loan, and to receive it before the loan is made.
- Potentially, defer payments for certain defined periods or request forbearance, if you qualify. Rules are different for Federal and private loans.
- If you have a federal loan you may be eligible to repay under a graduated or income-based repayment plan.
- For federal and many private loans, you may prepay in whole or in part at any time without penalty.
- At the time of approval of a private student loan you should be presented with a Loan Approval Disclosure. This will display the in-school repayment option you have chosen along with the approved interest rate and an estimated repayment schedule. The lender is required to keep the offer open for 30 days so that you can shop around.
- A Final Disclosure form will be presented to you prior to loan disbursement of a private student loan. You have 3 days to cancel the loan before the loan funds can be disbursed. It also contains the approved interest rate, repayment option and loan terms and fees with a schedule of repayment.
Your responsibilities as a borrower:
- Notify your school if you want to borrow less than the amount that has been awarded in your financial aid award letter and apply only for the amount of loan that you want.
- Repay your loans on time and in full, even if you do not finish your education, get a job, or feel satisfied with the education you received.
- Notify your loan holder or servicer immediately of any changes to your name, address, telephone number, or Social Security Number.
- Make scheduled monthly payments, even if you do not receive a bill or coupon booklet.
- Check in with your loan servicer if you have any questions about how your payments are being processed.
- Receive entrance counseling before funds can be disbursed if you are a First-time Stafford and Perkins borrower.
Familiarizing yourself with your federal and private student loan rights and responsibilities as a borrower can ultimately help prepare you for taking out an student loan.