Borrower Rights and Responsibilities
Even if you do not graduate or find a job, student loans still have to be paid back, with interest. There are several repayment options. For instance, you might pay the same amount each month until the loan is paid off or your payments might be based on your income. Your promissory note will describe the repayment options that apply to your loan. Keep all the information about your student loan(s) in a folder or box, including the promissory note, proof of payments, and any correspondence with the lender or loan servicer (the loan servicer is the agency, on the lender's behalf, to which you make your loan payments).
You have a right to know the details about your loan. Your promissory note will outline the terms and conditions of the loan. In addition, at the time the loan is made, entrance counseling and disclosure statements will outline: (1) The full amount of the loan and the current interest rate; (2) When repayment starts; (3) Yearly and total amounts you can borrow; (4) The maximum repayment periods and minimum repayment amounts; (5) An explanation of default and its consequences; and (6) An explanation of available options for consolidating your loans and a statement that you can repay your loan at any time without penalty.
Prior to entering repayment, WSU will make exit counseling available to you and your lender or loan servicer will send you: (1) A current description of your loans, including average anticipated monthly payments; (2) The amount of your total debt (principal and estimated interest); (3) Your current interest rate and the total interest charges on your loan; (4) The name of the lender or loan servicer; (5) Where to send your payments; (6) An explanation of the fees you might be charged during the repayment period; (7) A reminder of available options for loan consolidation and a reminder that you can prepay your loan without penalty at any time; (8) A description of applicable deferment, forbearance and cancellation (discharge) provisions; (9) Repayment options; and (10) A loan repayment schedule that lists when your first payment is due, the number and frequency of payments, and the amount of each payment.
The lender or loan servicer must notify you (or your parents for Federal PLUS Loans) if your loan is sold and the sale results in making payments to a new lender or loan servicer. Both the old and new lender must provide this information.
As a borrower, it is important to be aware of the following responsibilities:
- Signing the promissory note means you agree to repay the loan. When you sign a promissory note you're agreeing to repay the loan according to the terms of the note. You must repay your loan even if you can't get a job after you graduate or you didn't like the education you paid for.
- Make payments regardless of receiving billing notices. 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. You're obligated to make payments even if you don't receive any reminders.
- Continue to pay while waiting for deferment or forbearance approval. If you apply for a deferment or forbearance, you must continue to make payments until you have been notified that your request has been approved. If you don't, you might end up in default.
- Notify your lender or loan servicer when you… (a) Graduate; (b) Withdraw from school; (c) Drop below half-time status; (d) Change your name, address or Social Security Number; or (e) Transfer to another school.
- Remember to keep in touch with your lender or loan servicer. Throughout the life of your loan, it's important to know your loan servicer and to contact them if you have any questions about anything. Don't get behind on your payments because you could eventually end up with a bad credit record, preventing you from buying a car or a house or getting a credit card.
Grace Period, Deferment, Forbearance and Cancellation (Discharge)
For students who are attending school at least half-time, a grace period is a set period of time after you graduate, leave school or drop below half-time status before you must begin repayment. Not all loans have a grace period. If you are in active military duty for more than thirty days, your grace period can be delayed (for no more than three years) during that time.
Under certain circumstances, you can receive periods of deferment or forbearance that allow you to temporarily postpone loan repayment or, in the case of forbearance, temporarily reduce your loan payments. These periods do not count toward the length of time you have to repay your loan. You can't get a deferment or forbearance for a loan that is already in default. During deferment, interest continues to accrue (accumulate) on unsubsidized loans only. During forbearance, interest continues to accrue (accumulate) regardless of the loan type. The most common loan deferment conditions are enrollment in school at least half-time, inability to find full-time employment (for up to three years) and economic hardship (for up to three years). Forbearance is granted by a lender or loan servicer if you temporarily can't meet your repayment schedule and you're not eligible or deferment. Forbearance can be granted for periods up to twelve months at a time, for a maximum of three years. You must contact your lender or loan servicer to apply for deferment or forbearance.
Under rare circumstances, all or part of your loan may be canceled (discharged). Cancellation (discharge) releases you from all obligations to repay the loan. Discharge refers to the cancellation of a loan, even one in default, due to school closure, false certification, your death or total and permanent disability. Cancellation or sometimes called “forgiveness” of a loan is based on the borrower performing certain types of public service, such service as a special education teacher or a teacher in a low-income school or in a field designated as a teacher shortage area (such as math, science, foreign language, or bilingual education), a law enforcement or corrections officer, or as a nurse or medical technician. You must contact your lender or loan servicer to apply for a discharge or cancellation.
Loan Repayment Examples
The U.S. Department of Education's Repayment Plans and Calculators website offers examples of loan repayment plans for some of the most common federal student loans.
National Student Loan Data System (NSLDS)
The National Student Loan Data System (NSLDS) is the U.S. Department of Education's central database for federal student aid (FSA). If you've received FSA, NSLDS lists your complete FSA history, including grants, loans, and other financial aid. It also lists your current loan servicer. To login to NSLDS, you use your Federal Student Aid PIN (the same PIN used to sign the Free Application for Federal Student Aid [FAFSA]).