Student Loan Consolidation Information

Student Borrowers Responsibilities

When you take out a student loan, you have certain responsibilities. As stated by the U.S. Department of Education in the Student Guide – 1996-97:

• When you sign a "promissory" note, you are agreeing to repay the loan according to the terms of the note. The note is a binding legal document and states that, except in cases of discharge, you must repay the loan – even if you do not complete your education. You must also repay the loan even if you are not able to get a job after you complete the program, are dissatisfied with, or do not receive the education you paid for. Think about what this obligation means before you take out a loan. If you do not repay your loan on time or according to the terms in your promissory note, you may go into default, which has very serious consequences.
• You must make payments on your loan even if you do not receive a bill or repayment notice. Billing statements (or coupon books) are sent to you as a convenience, but you are obligated to make payments even if you do not receive any notice.
• If you apply for a deferment or forbearance, you must continue to make payments until you are notified that the request has been granted. If you don't, you may end up in default. You should keep a copy of any request form you submit, and you should document all contacts with the organization that holds your loan.
• You must notify the appropriate representative (school, agency, lender, or the Direct Loan Servicing Center) that manages your loan when you graduate, withdraw from school, or drop below half time status, change your name, address, Social Security Number, or transfer to another school. If you borrow a Perkins loan, your loan will be managed by the school that lent you the money or by an agency that the school assigns to service the loan. If you borrow a Direct Loan, it will be managed by the Direct Loan Servicing Center. If you borrow a FFEL Program Loan, it will be managed by your lender or its servicing agent. During your loan counseling session, you will be given the name of the representative that manages your loan.
• Regardless of the type of loan you borrow, you must receive entrance counseling before you are given your first loan disbursement, and you must receive exit counseling before you leave school. These counseling sessions will be administered by your school and will provide you with important information about your loan. Your lender or the Direct Loan Servicing Center will provide you with additional information about your loan.

A Borrower's Rights

A student has certain rights as a borrower. Below is a list of some of the borrower's rights:

Before your school makes your first disbursement, you will receive the following information about your loan from your school, lender, and/or the Direct Loan Servicing Center:

• The full amount of the loan
• The interest rate
• When you must start repaying the loan
• The effect borrowing will have on your other eligibility for other types of financial aid
• A complete list of any charges you must repay (loan fees) and information on how those charges are collected
• The yearly and total amounts you can borrow
• The maximum repayment periods and the minimum repayment amount
• An explanation of default and its consequences
• An explanation of available options for consolidating or refinancing your loan
• A statement that you can repay your loan at any time without penalty

Before you leave school, you will receive the following information about your loan from your school, lender and/or the Direct Loan Servicing Center:

• The amount of your total debt (principal and estimated interest), what your interest rate is, and the total interest charges on your loan
• If you have FFEL Program Loans, the name of the lender or agency that holds your loan, where to send your payments, and where to write or call if you have questions
• If you have Direct Loans, the address and telephone number of your Direct Loan Servicing Center
• The fees you should expect during repayment period, such as late charges and collection or litigation costs if you are delinquent or in default
• An explanation of available options for consolidating or refinancing your loan
• A statement that you can repay your loan without penalty at any time

If you borrow a Federal Perkins Loan, the previous information will be provided to you by your school. If you borrow a Direct Loan or an FFEL Program Loan, this information will be provided to you by the Direct Loan Servicing Center or your lender, as appropriate.

If you have direct or FFEL Stafford Loans, your school will also provide you with the following information during your exit counseling session:

• A current description of your loans, including the average monthly anticipated payments of students from your school
• A description of applicable deferment, forbearance, and discharge provisions
• Repayment options
• Advice about debt management that will help you in making your payments
• Notification that you must provide your expected permanent address, the name and address of your expected employer; the address of your next of kin, and any corrections to your school's records concerning your name, Social Security Number, references and driver's license number (if you have one)

You have the right to a grace period before your repayment begins. (Your parents do not receive a grace period for the PLUS loan). Your grace period begins when you leave school or drop below half-time status. The exact length of your grace period is shown on your promissory note.

During exit counseling, your school, lender, and/or the Direct Loan Servicing Center as appropriate must give you a loan repayment schedule that states when your first payment is due, the number and frequency of payments, and the amount of each payment.

You must be given a summary of deferment and discharge (cancellation) provisions, including the condition under which the U.S. Department of Defense may repay your loan.

If you or your parents borrow a FFEL Program Loan, you must be notified when:

• Your loan is sold, if the sale results in your making payments to a new lender or agency
• Both the old and the new lender or agency must notify you of the sale
• The identity of the new lender or agency holding your loan
• The address to which you make payments
• The telephone numbers of both the old and new lender or agency
• This does not apply to Perkins or Direct Loan borrowers

posted by Z3ede3 at 7:25 PM