Borrower Rights

When the student takes out a loan, he/she signs a promissory note. A copy of the completed note will be available to the student, and the original note must be returned when the loan is paid in full. A list of deferment conditions must be provided. Before the repayment period begins, the servicer must give the student a loan repayment schedule and must inform the student of:

• The amount of the student’s total debt (principle and interest), what the interest rate is and the total interest charges on the loan.
• Where to send payments and where to write in case of questions.
• The due date of first payment and the number, frequency and amount of all payments.
• Expected fees during the repayment period.
• Prepayment, refinancing and consolidation options.

If the student is willing but unable to meet the repayment schedule and is not eligible for a deferment, forbearance may be requested. Forbearance may permit the student to stop payments temporarily, allow an extension of time for making payments or make smaller payments than were originally scheduled. The servicer is not obligated to grant forbearance or a delay in repayment.

With a subsidized Federal Direct Loan, the student has a right to federal interest benefits. This means that the federal government will pay the interest on the loan until the repayment period begins. It will also pay the interest during authorized deferment periods. The student must arrange with the servicer to pay the interest on all Unsubsidized Federal Direct Loans.

If the servicer transfers the right to receive payment on a Federal Direct Loan, the student must be notified. The student has the right to an honest and complete answer to any question about Federal Direct or PLUS Loans and should not hesitate to ask for information.