Responsibilities

When you take out a student loan, you have certain responsibilities. Here are some important ones:

• When you sign a promissory note, you’re agreeing to repay the loan according to the terms of the note. The note states that except in cases of loan discharge, you must repay the loan, even if you don’t complete your education (unless you could’t for a valid reason: because the school closed, for example). Also, you still must repay your loan if you can’t get a job after you complete the program, or you don’t like, or don’t receive, the education you paid for.
  
  Think about what your repayment obligation means before you take out a loan. If you don’t repay your loan on time or according to the terms in your promissory note, you might go into default, which has very serious consequences and will affect your credit rating.
  
  You must make payments on your loan even if you don’t receive a bill or repayment notice. Billing statements (or coupon books) are sent to you as a convenience, but you’re obligated to make payments even if you don’t receive any reminders. You must also make monthly payments in the full amount your repayment plan has established. Partial payments do not fulfill your obligation.

• If you apply for a deferment or forbearance, you must continue to make payments until you’re notified the request has been granted. If you don’t, you might end up in default. You should keep a copy of any request form you submit, and you should document all contacts with the organization that holds your loan. You must notify the loan servicer when you graduate, withdraw from school, or drop below half time status; change your name, address, or Social Security Number; or transfer to another school.

• If you borrow a Perkins Loan, either the school that lends you the money will service your loan or an agency the school employs will.

• If you borrow a Direct Loan, the Direct Loan Servicing Center will service your loan.
  If you borrow under the FFEL Program, your lender or its servicing agent will service your loan. During your loan counseling session, you’ll be given the name of the loan servicer(s).
  Regardless of the type of loan you borrow, you must receive entrance counseling before you’re given your first loan disbursement, and you must receive exit counseling before you leave school. Your school will provide the counseling and important information about your loan. Your lender will give you additional information about your loan.

• Before you leave school, you’ll receive the following information about your loan from your school, lender, and/or the Direct Loan Servicing Center:
  
  • the amount of your total debt (principal and estimated interest), what your interest rate is, and the total interest charges on your loan
    
  • if you have FFELs, the name of the lender or agency that holds your loans, where to send your payments, and where to write or call if you have questions
    
  • if you have Direct Loans, the address and telephone number of the Direct Loan Servicing Center
    
  • an explanation of the fees you might be charged during the repayment period, such as late charges and collection or litigation costs if you’re delinquent or in default
    
  • an explanation of available options for consolidating or refinancing your loan; and a statement that you can prepay your loan without penalty at any time.
    
  If you borrow a Federal Perkins Loan, your school will provide this information to you. If you borrow a Direct Loan or a FFEL, the Direct Loan Servicing Center or your lender will provide this information to you, respectively.

• If you have Direct or FFEL Stafford Loans, your school will also provide the following information during exit counseling:
  
• a current description of your loans, including average monthly anticipated payments
  
• a description of applicable deferment, forbearance, and discharge provisions
  
• repayment options
  
• advice about debt management that will help you in making your payments
  
• notification that you must provide your expected permanent address, the name and address of your expected employer, and any corrections to your school’s records concerning your name, Social Security Number, references, and driver’s license number (if you have one).

• You have the right to a grace period before your repayment period begins. (Your parents do not receive a grace period for a PLUS Loan.) Your grace period begins when you leave school or drop below half time status.

• Your school, lender, and/or the Direct Loan Servicing Center, as appropriate, must give you a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

• You must be given a summary of deferment and discharge (cancellation) provisions, including the conditions under which the U.S. Department of Defense might repay your loan.

• If you or your parents borrow under the FFEL Program, you (or your parents, for a PLUS Loan) must be notified when the loan is sold if the sale results in making payments to a new lender or agency. Both the old and new lender or agency must provide this notification and provide the identity of the new lender or agency holding the loan, the address to which the borrower must make payments, and the telephone numbers of both the old and new lender or agency.

Taken from The Student Guide