Saturday, January 16, 2010

Your Rights As A Student Loan Borrower

When you accept the conditions of a student loan and sign on the dotted line, then, by law, you become the holder of certain inalienable rights, too. For instance, it’s up to the lender to provide you with the following student loan data:

• The complete amount of the loan
• Your loan’s interest rate
• When you must start repaying the loan
• The effect borrowing will have on your eligibility for other types of financial aid
• A tally of any charges you must repay (loan fees) and information on how those charges are collected
• The annual and total amounts you can borrow
• The maximum repayment periods and the minimum repayment amount
• The straight skinny on default and its consequences
• Information on debt consolidation and/or refinancing

Note, too, that because you are a student loan recipient, the lending institution must give you a grace period before you have to start paying off your debt. Your original loan contract should stipulate the specifics of your grace period. Or contact your lending institution for the information.

You also have the right to a loan repayment schedule provided by your lender, stipulating when your first payment is due, how often you have to pay, and the amount you’ll be paying with each installment. Your lender must also:

• Give you a prespecified time limit to repay your loan
• Allow you to prepay your loan at any time without penalty
• Cancel if you become permanently disabled or kick the bucket
• Provide you with a “graduated” loan payment option where you pay less at the start (because money will likely be tighter when you are 25 than at 35) and pay more later as your income rises
• Provide you with an extended repayment schedule of up to 25 years, but only if you are a Federal Family Education Loan Program (FFELP) borrower whose debt exceeds $30,000.

1 comment:

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