STUDENT LOANS
Borrower's Rights and Responsibilities

Borrower's Rights

Before your school makes your first loan disbursement, you'll receive the following information about your loan from your school, lender, and/or the Direct Loan Servicing Center:

• the full amount of the loan.
• the interest rate.
• when you must start repaying the loan.
• a complete list of any charges you must pay (loan fees) and information on how those charges are collected.
• the yearly and total amounts you can borrow.
• the maximum repayment periods and the minimum repayment amount.
• an explanation of default and its consequences.
• an explanation of available options for consolidating or refinancing your loan.
• a statement that you can prepay your loan at any time without penalty.

Your school must notify you (or your parents for a PLUS Loan) in writing whenever it credits your account with Stafford Loan, PLUS Loan, or Perkins Loan funds. This notification must be sent no earlier than 30 days before and no later than 30 days after the school credits your account. You (or your parents for a PLUS Loan) may cancel all or a portion of the loan by informing your school within 14 days after the date that your school sends this notice, or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period.

If you or your parents receive loan funds directly by check, the funds may be refused by not endorsing the check.

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 FFEL Program Loans, the name of the lender or agency that holds your loan, 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 your Direct Loan Servicing Center.
• 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.
• a statement that you can prepay your loan without penalty at any time.

If you borrow a Federal Perkins Loan, your school will provide the previous information to you.

If you borrow a Direct Loan or a FFEL Program Loan, the Direct Loan Servicing Center or your lender will provide this information to you, as appropriate.

If you have Direct or FFEL Stafford Loans, your school will also provide you with the following information during your exit counseling session:

• 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 may repay your loan. If you or your parents borrow a FFEL Program loan, 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 notify the borrower of the sale; 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.

For more information go to http://www.dl.ed.gov/borrower/

Borrower's Responsibilities

When you sign a promissory note, you're agreeing 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, you must repay the loan‹even if you don't complete your education (unless you were unable to complete your program of study because the school closed); aren't able to get a job after you complete the program; or are dissatisfied with, or don't receive, the education you paid for.

Think about what this 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 may go into default, which has very serious consequences. 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.

If you apply for a deferment or forbearance, you must continue to make payments until you are notified that the request has been granted. If you don't, you may 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 appropriate representative (school, agency, lender, or the Direct Loan Servicing Center) that manages your loan 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, your loan will be managed by the school that lends you the money or by an agency that the school assigns to service the loan. If you borrow a Direct Loan, it will be managed by the Direct Loan Servicing Center. If you borrow a FFEL Program loan, your lender or its servicing agent will manage it. During your loan counseling session, you'll be given the name of the representative that manages your loan.

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. These counseling sessions will be administered by your school and will provide you with important information about your loan. Your lender or the Direct Loan Servicing Center will provide you with additional information about your loan. If you default on your loan, your school, the lender or agency that holds your loan, the state, and the federal government may all take action to recover the money, including notifying national credit bureaus of your default. This may affect your credit rating for a long time. For example, you may find it very difficult to borrow from a bank to buy a car or a house.

In addition, if you default, the agency holding your loan may ask your employer to deduct payments from your paycheck. Also, you may be liable for expenses incurred in collecting the loan. If you decide to return to school, you're not entitled to receive any more federal student aid. The U.S. Department of Education may ask the Internal Revenue Service to withhold your income tax refund and apply it toward the amount you owe.

For more information go to http://www.dl.ed.gov/borrower/