You have certain rights as a borrower. Listed below are some of them:
- You have the right to a grace period before your repayment period begins. (Your parents do not receive a grace period for a Federal PLUS loan.)
- Your grace period begins when you leave school or drop below half-time. The exact length of your grace period is shown on your promissory note.
- You must be given a loan repayment schedule, which lets you know when your first payment is due, and the number, frequency, and amount of all payments.
- You must be given a list of deferment and cancellation conditions and the conditions under which the Department of Defense will repay your loan.
You also have the right to…
- change your repayment plan at any time.
- prepay all or any part of the amount owed without a penalty.
- decline all or part of your loan money before it is disbursed by notifying your school (as explained on the MPN).
- receive documentation that your loans are paid in full.
You must be notified when your loan is sold if the sale results in your making payments to a new organization. The old and new organizations must each notify you of the sale, the identity of the new organization holding your loan, the name and address of the organization to which you must make payments, and the telephone numbers of both old and new organizations.
When you sign a promissory note, you’re agreeing to repay according to the terms of the note. This note is a binding legal document. This commitment to repay means that you will have to pay back the loan–even if you do not complete your education, are not able to get a job after you complete the program, or you are dissatisfied with, or do not receive the quality of education you received. Think about what this obligation means before you take out a loan. If you do not pay back your loan on time or according to the terms in your promissory note, you may go into default, which has serious consequences.
You must make payments on your loan even if you do not receive a bill. Billing statements (or coupon books) are sent to you as a convenience, but not receiving them does not relieve you of your obligation to make payments.
Even though you may have applied for a deferment, you still must continue to make payments until your deferment is processed. If you do not, you may end up in default. You should keep a copy of any deferment request form you may have, and you should document all contacts with the organization that holds your loan.
Your responsibility is to contact the Direct Loan Servicing Center and your school if you:
- withdraw, graduate or fail to enroll in school.
- register for or drop to a less than half-time status.
- transfer to another school.
- change your name, address, phone number or Social Security Number.
- change your expected date of graduation.
- You also have the responsibility to:
- make monthly payments on your loan after you leave school, unless you have a deferment or forbearance.
- notify the Direct Loan Servicing Center of anything that might alter your eligibility for an existing deferment.
Loans are not gifts. They must be repaid. Remember, if you are having trouble making your payments, call the Direct Loan Servicing Center. The Direct Loan Servicing Center will work with you to help you avoid the serious consequences of default.
In addition, New Mexico State University has partnered with Inceptia, a private repayment counseling service that can help you make a smooth transition from your in-school period to your repayment period.
Inceptia can help those students currently in their Grace Period, those that have exited Grace and are in full Repayment, and those that have let their loans lapse into default. Reach out to Inceptia early, to keep your loan from getting into a default situation.
Click the link below to visit the Inceptia website, or call 1-888-529-2028.
Here are the consequences if you default:
- The entire unpaid balance and accrued interest becomes due and payable immediately.
- You lose your deferment options.
- You lose eligibility for additional federal student financial aid.
- Your account is assigned to a collection agency.
- Your account will be reported as delinquent to credit bureaus, damaging your credit rating.
- The Federal Government can intercept any income tax refund due to you or you and your spouse.
- Late fees, additional interest, court costs, collection fees, attorney’s fees, and other costs incurred in collecting your loan will increase your loan debt.
- Your employer (at the request of the Federal Government) can garnish part of your wages and send them to the government.
- The Federal Government can take legal action against you.
Remember if you are having trouble making your payments, call the Direct Loan Servicing Center at 1-800-848-0979. The Direct Loan Servicing Center will work with you to help you avoid default.