Main Content

Borrower Rights & Responsibilities

Borrower Rights & Responsibilities

As a borrower, you are entitled to:

• Written information on my loan obligations and information on my rights and responsibilities as a borrower;
• A grace period before repayment begins;
• A standard repayment period

As a borrower, you have the right to:

• Be notified if your lender sells or transfers your loan, and have new servicer contact information provided to you
• Prepay all or part of your loan at any time without penalty
• Deferment or forbearance of repayment for a specific time period, if requested and approved.
• Have your loan obligation canceled if you die or become totally and permanently disabled.
• Documentation of when my loan is paid in full

Responsibilities

Acceptance of an educational loan requires:

• You must provide complete and true information on all of your loan documents.
• You must notify your lender if you change:
  • Schools
  • Name, address, or telephone number
  • Social security number
  • Enrollment status (i.e., withdrawal, graduation, or enrolled less than half time)
• You must repay your loan on time and in full, even if you:
  • Do not graduate or complete your program of study
  • Are unable to secure employment
  • Are dissatisfied with the education you received
• You must make payments on your student loan even if you do not receive a bill or repayment notice. If you have not received a billing schedule, please contact your loan servicer.
• You must communicate with your loan service provider if you are having trouble making payments. You may be able to reduce or postpone your payments. 

Grace Period

The federal student loan "grace period" begins the day after you graduate, leave school, or drop below half-time enrollment. Federal Direct loans have a six-month grace period; other federal student loans may have longer or shorter grace periods.

Payments are not required during the grace period; however, you may wish to pay the interest that accrues during this period. Any interest that is unpaid when repayment begins will be capitalized and added to your principal balance, increasing the total loan amount you must repay. Note: interest is charged on unsubsidized loans during the grace period, but not on subsidized loans.

How to Manage Your Student Loans

Repayment

Approximately 30-45 days from the last day of your grace period, your first payment will be due. Several repayment plans are available to help manage your student loan account. Each repayment plan has distinct requirements, which may result in paying less interest over time or offer greater benefits such as loan forgiveness.

For more information about loan repayment options, you may visit www.studentaid.gov.

Consolidation

Direct loan consolidation allows a borrower with multiple federal student loans to combine them into a single loan with one interest rate and repayment schedule. The interest rate for the consolidation is the "weighted average" of the interest rates on the loans being consolidated and is fixed for the life of the loan.

For more information about loan consolidation under the Federal Direct Loan Program, please visit www.studentaid.gov.

Deferment

A deferment is a period in which a borrower is allowed to postpone payments on the loan principal. The interest accrues and is capitalized if the borrower has an unsubsidized Direct Loan. You are required to make payments on your Direct loan until all deferment documentation is complete and has been approved by your loan servicer. The following types of deferment are available:

• In-School
• Military Service and Post-Active Duty Student
• unemployed
• experiencing economic hardship
• Cancer Treatment
• Graduate Fellowship
• Parent PLUS Borrower
• Rehabilitation

For more information about deferments, please visit Student Loan Deferment | Federal Student Aid.

Forbearance

Should you become financially unable to make monthly payments, you may be able to delay or reduce monthly loan payments for a short period of time at the discretion of your loan servicer.

For more information on forbearance, you may visit Student Loan Forbearance | Federal Student Aid.

Consequences of Default

If you do not make a payment on time, you are then considered delinquent. Default occurs when a Federal Student Loan borrower becomes 270 days delinquent in making a loan payment. There are several consequences that will result if you default on your federal student loan:

• You will not be eligible for future federal student aid
• Your student loan account may be turned over to collections
• Your credit rating will be damaged
• Your tax refunds and wages may be garnished

Debt Management

Developing good financial health while in college will help you manage your student loan debt when you leave school. Healthy money management while in school involves setting goals and developing and following a budget that will help you meet your goals and minimize loan debt. In addition, only borrow what is needed in your educational journey.

Additional Information

Please contact your loan servicer for more information regarding loan repayment. If you would like to know how many loans you have and who your loan servicers are, please visit studentaid.gov.