Borrower Rights and Responsibilities
Borrowing a student loan warrants responsibilities.
Repay the Loan. When a promissory note is signed, an agreement is made to repay the loan according to the terms of the note. The note is a binding legal document and states that, except in cases of discharge, the borrower must repay the loan–even if education is not completed, a job is not received after completing the program, or the borrower is dissatisfied with, or does not receive the education paid for. Consider this obligation before borrowing. If a loan is not repaid on time or according to the terms in the promissory note, the borrower may go into default, which has very serious consequences.
Voluntary Payments. Payments must be made on a loan even if a bill or repayment notice is not received. A borrower is obligated to make payments even if a notice is not received. Billing statements (or coupon books) are sent as a convenience.
Deferment. If applying for a deferment or forbearance, a borrower must continue to make payments until notified that the request has been granted. The loan may go in default if payments are not made during the process. A copy of any submitted request forms should be kept. The borrower should document all contacts with the organization that holds your loan.
Notification of Status. Upon graduation, university withdrawal, or a drop below part time status, a borrower must notify the appropriate representative (school, agency, or lender) that manages the loan. If a change of name, address, Social Security Number, or transfer to another school occurs, the representative should be contacted. If borrowing a Perkins Loan, the loan will be managed by the school that lends the money or by an agency that the school assigns to service the loan. If borrowing a FFEL Program Loan, it will be managed by the lender or its servicing agent.
Entrance Counseling. Regardless of the type of federal loan borrowed, entrance counseling must be completed prior to a first loan disbursement. Exit counseling must be completed before leaving school. These counseling sessions will be administered by Delta State and will provide important information about loans. Additional information about a loan will be provided by the lender.
Borrowers have certain rights.
Prior to a loan disbursement, the following information about a loan from the school or lender will be received:
- full amount of the loan
- interest rate
- loan repayment date
- effect of eligibility for other types of financial aid
- a complete list of any charges that must be paid (loan fees) and information on how those charges are collected
- yearly and total amounts available to borrow
- maximum repayment periods and the minimum repayment amount
- explanation of default and consequences
- explanation of available options for consolidating or refinancing a loan
- statement of loan prepayment without penalty
Before leaving school, the following loan information will be received from the school or lender:
- Amount of total debt (principal and estimated interest), interest rate, and the total interest charges on a loan
- Expected fees during repayment, such as late charges and collection or litigation costs upon loan delinquency or default
- Explanation of available options for consolidating or refinancing a loan
- Statement of loan prepayment without penalty.
- The following information will be provided for FFEL Stafford Loan holders during exit counseling:
- name of the holding lender or agency,
- where to send payments
- where to write or call with questions
- description of current loans, including the average monthly anticipated payments
description of applicable deferment, forbearance, and discharge provisions
- debt management advice
- notification that the following must be provided: expected permanent address, name and address of your expected employer, address of next-of-kin, and any corrections to school’s records concerning borrower’s name, Social Security Number, references, and driver’s license number
- Right of grace period before repayment begins (Parents may not receive a grace period for a PLUS Loan.) A grace period begins when the borrower leaves school or drops below part-time status. The grace period length is shown on the promissory note.
- Loan repayment schedule from school, lender, and/or the Direct Loan Servicing Center (as appropriate) stating the date that first payment is due, the number and frequency of payments, and the amount of each payment
- Summary of deferment, forbearances, and discharge (cancellation) provisions, including the conditions under which the U.S. Department of Defense may repay the loan.
Parents that borrow a FFEL Program Loan must be notified when a loan is sold if the sale results in making payments to a new lender or agency. The old and new lender or agency must notify the borrower of the sale. The identity of the new lender or agency holding the loan, payment address, and contact information must be provided. (This does not apply to Perkins Loan borrowers.)