Student Loan Repayment

A Student Loan, like any other loan, is a legally binding contract between the borrower and the lender. As the borrower, you have specific rights and responsibilities.

You're responsible for repaying your Student Loan - even if you're not satisfied with the education you receive, you don't find the job you hoped to get, or you don't finish school.

Repayment Stages:


Your Rights as a Borrower

You have the right to be notified of important information about your loan when you first get the loan and before you graduate. As with any loan information, be sure to read these notifications carefully and keep them in your files.

  • Before your school makes the first disbursement of your loan you must be provided with the following information:
    • The loan's full amount and interest rate
    • Estimated date of first repayment
    • Detailed list of any loan fees
    • Information on annual and total borrowing limits
    • Information about the maximum repayment periods and amounts
    • Explanation of default and its consequences
    • Explanation of all available consolidation options
    • Statement that you can prepay your Student Loans without penalty
  • Before you leave school the following information must be provided to you as part of your exit counseling:
    • A current description of your loans, including anticipated monthly payments
    • The amount of your total debt (principal and estimated interest), the interest rate and total interest charges
    • The name of the lender or loan servicer who holds your loans, where to send your payments and where to direct questions
    • An explanation of fees you may incur during the repayment period, such as late fees
    • The available options for consolidating your loans
    • Statement that you can prepay your Student Loans without penalty
    • A description of applicable deferment, forbearance and cancellation provisions
    • Repayment options and advice about debt management
    • Notification that you must provide your expected permanent address and the name and address of your expected employer, if applicable
  • You have the right to a grace period - This is the period between leaving school and the beginning of repayment (6 months and one day). It begins when you graduate, leave school or drop below half-time status.
  • You have the right to be notified if your loan is sold and your payments must be made to a new lender or agency.

Your Responsibilities as a Borrower

  • Repay your loan according to the terms of the promissory note.
  • Notify your loan servicer or lender when you graduate, withdraw from school, drop below half-time status or change your name, address or Social Security Number.
  • Participate in entrance counseling and exit counseling (for all loans) at your school.

Graduation and Loan Repayment

Your grace period - the six-month period before repayment begins - starts immediately upon graduation, withdrawal from school, or dropping below half-time status.

Helpful Repayment Tips

  • Make all of your payments on time and in full. This helps you build a solid credit history.
  • Keep in touch with your lender. It's your responsibility to notify the lender of any personal changes. If the lender doesn't have your correct contact information, you could miss a payment and become delinquent, which will be reflected in your credit history.
  • Keep all of your loan documents. You may need the information later.
  • Keep good records of your repayment activity, including:
    • The date and amount of every payment you've made
    • Notes on your conversations with your lender and your school's financial aid office
    • The form you receive annually from your lender showing how much interest you've paid.

Handling repayment difficulties

If you're having trouble repaying your loan, contact your lender or service as soon as possible. You may qualify for assistance:

  • Deferment is a temporary suspension of your loan payments under certain conditions. Interest may continue to accrue during deferment. Unpaid interest will be capitalized (added to the principal amount of the loan) at the end of a deferment period. You will pay more over the life of the loan.
  • Forbearance is a temporary postponement or reduction of your payment due to financial hardship. Interest will continue to accrue. Unpaid interest will be capitalized (added to the principal amount of the loan) at the end of a forbearance. You will pay more over the life of the loan.

You may also want to explore alternative payment options that may lower your payments:

  • Graduated Repayment allows you to pay a smaller payment at first with larger payments later
  • Income-Sensitive Repayment where the repayment amount changes as your income changes

In all cases, you must apply for assistance from your lender or loan service, and you must continue to make payments until you have been notified that your request has been approved.

Remember, contact your lender or loan servicer as soon as possible if you're having trouble repaying your loan.

If you need contact information for your lender, visit nslds.ed.gov; this database contains all of the information about your student loan account.


Disclosures:

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