When you obtain a student loan you have certain borrowers responsibilities. You must understand the loan is a legal obligation and it has to be paid back. Signing a promissory note means you
agree to repay the loan and you will have to make payments regardless of receiving billing notices.
The most important student loan is the one with lowest interest rate.
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The Amount You Borrow
You should think about the amount you are going to borrow. Try to understand what your repayment obligations means before you take out a student loan.
In case you do not repay your student loan on time or according to the terms in your note, you could default on this legal obligation. This could have serious consequences and it could
adversely affect your credit rating if the loan was taken on your name.
Signing a Note
Signing a promissory note means you are agreeing to repay the loan according to the terms of the note. The note simply states that except in cases of Loan Discharge,
you must repay the loan, even in case where you do not complete your education. There are exceptions for cases where the school was closed.
Making Payments
Whenever you take out a Student Loan you must make payments regardless of receiving billing notices.
Making Payments All The Time
This is an important point. Very often students apply for student loan deferment, forbearance, discharge, or other repayment program and they stop making loan payments.
Notifying the Lender
You are required to notify your lender or loans servicing agency when you:
Entrance and Exit Counseling
You must take an entrance counseling session before you are given first loan disbursement for your Federal Student Loans.
This is true unless you borrowed money before from a Stafford Loan.
The counseling provides you with useful tips and tools to help you develop a budget for managing your education expenses. It will help you understand your loan responsibilities.
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Student Loan Tips |
Q: Take Out Student Loans As The Last Resort
When you try to get all types of Financial Aid and you do not receive anything or if the amount of money is not enough try borrowing money by taking out loans.
Q: Use Your Grandparents
Everyone talks about parents, but very rarely do we hear Grandparents. They can take out a Loans and help you store some of the assets.
Q: Apply For Student Loans On the Same Day
We are not sure if this tip is valid, but if you have to apply for more than one student loan (different banks) do it on the same day. This will prevent the second bank to see your first loan on the credit history and it will be easier to get qualified.
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Important Questions |
Q: Who is responsible for the interest that accrues during a deferment?
If you have Direct Subsidized loans and you are in a deferment, the interest is paid by the Federal Government. If your loans are Direct Unsubsidized loans the interest that accrues during a
deferment period is your responsibility. If the interest is unpaid at the end of the deferment or forbearance period, it capitalizes (is added to the principal balance).
Q: Is there a penalty for putting my account in forbearance?
There is no penalty for putting your loan in a forbearance status. However, keep in mind that interest still accrues and is your responsibility during the forbearance. You may pay the interest during
the forbearance period or have it capitalize (added to the principal balance) at the end of the forbearance period.
Q: Are interest payments required during deferment?
No. The borrower may choose to defer interest payments, as well as principal payments, while the student is in school. However, unpaid accrued interest is capitalized at repayment and increases the
repayment amount. To reduce the overall cost of the loan, borrowers should consider making principal and interest payments while the student is in school.
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Student loans are legal obligations. They have to be paid off. There are many things you will need to understand before you take out a loan and when you graduate.
For federal student loans, the lender will provide you with an entrance and exit sessions explaining your responsibilities.
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