YOUR RIGHTS AND RESPONSIBILITIES AS A BORROWER
While federal student loan programs differ in some ways, your rights and responsibilities as a borrower are basically the same for all programs.
Borrower Rights:
When you take out a loan, you sign a promissory note. You must be given a copy of the completed note, and the original note must be returned to you when the loan is paid in full.
You have the right to a “grace period” before your repayment period begins, if your loan provides for one. The grace period begins when you leave school or drop below half-time status. The exact length of this period is shown on your promissory note.
You must be given a list of deferment conditions and the conditions under which the Department of Defense will repay your loan.
If you have a Federal Direct Stafford Loan or a Federal Perkins Loan, your loan proceeds are credited directly to your student account.
Before you receive your first loan disbursement, your lender must also give you the following information about your loan:
The full amount of your loan, the interest rate, and when you must start repaying.
A complete list of loan fees, and information on how they are collected.
The yearly and total amounts you can borrow, and the maximum and minimum repayment periods.
A current description of loans you owe, an estimate of what your total debt will be, and what your monthly payments will be.
An explanation of default and its consequences.
An explanation of refinancing and consolidation options, and your option to prepay your loan at any time without penalty.
Before your repayment period begins, your lender must tell you the following:
The amount of your total debt (principal and interest), what your interest rate is, and the total interest charges on your loan.
Where to send your payments, and where to write if you have questions about your loan.
When your first payment is due, and the number, frequency, and amount of all payments.
What fees you should expect during the repayment period.
About prepayment, refinancing, and consolidation options.
You also must be given a loan repayment schedule. If you are willing but unable to meet your repayment schedule because of unusual circumstances, and you have a Federal Perkins Loan, you may request a delay in repayment. If you have a Federal Direct Stafford Loan, you may request forbearance, if you are willing but unable to meet your repayment schedule and are not eligible for a deferment. Forbearance means permitting payments to be stopped temporarily, allowing an extension of time for making payments or making smaller payments than were previously scheduled. Your lender does not have to grant forbearance or a delay in repayment.
If your loan is a subsidized Federal Direct Stafford Loan, you have a right to federal interest benefits. This means that the federal government will pay the interest on your loan until graduate or terminate your studies. During the six-month grace period at the end of your studies, before your principal repayment is scheduled to begin and during any period of deferment, your interest will accrue (accumulate) and be capitalized (interest will be added to the principal amount of your loan).
If you have a Federal Direct Stafford Loan and the federal government sells the loan or transfers the right to receive payments, you must be notified.
Borrower Responsibilities:
If you want a Federal Direct Stafford Loan, the College will act on behalf of your lender, the U.S. Department of Education. If you have a Federal Perkins Loan, the College is your lender. In either case, you must notify the lender if you:
Graduate, withdraw from college, or drop below half-time status.
Transfer to another institution.
Change your name, address, or social security number.
If your address changes while you are in school, you must notify the College of the change.
You must repay the loan according to the repayment schedule your lender will give you.
You must notify your lender of anything that affects your ability to repay the loan or your eligibility for deferment or cancellation.
Your loan money can only be used for tuition and other related education expenses. Before you leave the College, you must participate in an exit interview, which may be conducted on-line.
Loan Consolidation:
A Federal Direct Consolidation Loan allows you to combine one or more federal education loans into a new loan that offers you several advantages.
You may review your federal student loans. More information is available from the Federal
Direct Consolidation Loans website. You should carefully review the benefits of your current federal education loan(s) before proceeding with a Federal Direct Consolidation Loan.
Initial Loan Counseling for Student Borrowers:
Entrance counseling for Federal Direct Loans is available online. Entrance counseling for Amherst Student loans is conducted in the Office of Financial Aid at the time of initial borrowing.