When you obtain a student loan you have certain borrower's rights. Those rights mostly pertain what you need to know about your loan. With federal loans you have the right
to have grace periods. The lenders must provide you with a repayment schedule. They also have to inform you when they sell your loan. All these rights are described below.
The most important student loan is the one with lowest interest rate.
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What You Need To Know
You as a borrower have the right to know the details about your loan. Depending on your loan type, some of the following items might be included as part of your
entrance counseling.
Below is what you need to know and must receive from school, Lender, or your loan servicing center.
These items are specific to federal student loans, but most of them are also required for private student loans.
Before You Leave School
Before you leave your school you have the right to receive all the information about your loan and it's current status.
Some of the information you have to receive:
Grace Period Rights
If the loans you took out was a Federal Student Loan and if you are attending school at least half time, you have a set period
of time after you graduate, leave school or drop below half time status before you must begin repayment on a Stafford or Perkins loan. This period is called the grace period.
The period comes before your repayment begins. The term of the grace period will be six or nine months depending on the loan you took out.
Repayment Schedule
You have the right to receive loan repayment schedule from your Student Loan Lender,
or Direct Loan Servicing Center. The schedule must state: when your first payment is due, the number of the frequency of payments, and the amount of each payment.
Sale of Loan
In a scenario where you or your parents took out Student Loans under the
Federal Family Education Loan (FFEL) Program, you or your parents, or
Graduate and Professional Study
students for PLUS Loans must be notified when the loan is sold.
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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, but they also come with borrower's right. Students and parents that borrow money need to know everything about the loan. They have to know where
to send the payment and what the payment is going to be up front. Make sure to validate everything the lender is sending you and follow up on anything you do not understand or does not
seem correct to you.
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