Borrowers Rights And Responsibilities

Borrowers' Rights and Responsibilities: As the recipient of a Federal student loan, it is crucial to be aware of the rights you have the option to exercise as well as the responsibilities which you will be held to. First let's take a look at some of the rights granted to every borrower of a student loan. You have the right to always receive the following information from your school, lender, or the Direct Loan Servicing Center before the funds are dispersed to you:

• The amount of the loan
• The interest rate of the loan
• The loan fees you are responsible for
• The date you are responsible for beginning repayment
• The annual and maximum amounts you are eligible to borrow
• The maximum repayment period
• The minimum repayment amount
• A thorough explanation of default procedures
• Refinancing and consolidation information
• A notice stating you can prepay your loan whenever you wish

Your school is required by law to notify you in writing 30 days before or after it credits loan funds to your account. You always have 14 days after you receive the notice, or until the first date of repayment, whichever comes first, to cancel the loan by contacting the school or the lender. If you have Federal Perkins Loans, your school is also required to give you the following information before you leave school:

• Total amount of your debt (including interest)
• Your interest rate
• The name of your lender and their contact information
• Contact information for the Direct Loan Servicing Center
• Fees you can be charged during repayment, including collection and litigation fees
• Consolidation and refinancing information
• A statement that you are allowed to prepay your loan at any time

If you have a Direct or FFEL Stafford Loan, the Direct Loan Servicing Center is required to provide you with the following information:

• Expected monthly payments
• Procedures for deferment forbearance, and discharge
• Options for loan repayment
• Debt management advice
• A notice that you are required to provide a permanent address, employer information, and other personal information

In addition to your rights as a borrower, there are a number of responsibilities that you must be aware of. You are responsible for repaying your loan because you have signed a promissory note. Promissory notes are legally binding and, except for extreme cases such as death or permanent disability, you will be legally bound to this loan. This holds true even if you do not complete your education, you are not satisfied with your program of study, or you don't get the job you wanted. These circumstances have no bearing on your responsibility to repay your loans. Bills or coupon books are sent to you as an added convenience, but even if you don't receive them, you are still equally responsible for making your payments.

You are responsible for continuing to make your payments even while you are applying for deferment or forbearance. Until your request has been approved, you will continue to be responsible for payments. You are responsible for receiving exit counseling regarding your student loans before your first loan is disbursed and before you leave school. The sessions are given by your school and include important information you will need to know. Loan defaults can have serious consequences. The Federal government may take collection action, notify national credit bureaus, or even garnish your wages.