As a borrower of federal student loans, you have a lot of protections and clearly defined responsibilities.
In terms of your loan, you can learn about your rights and responsibilities in the Master Promissory Note you signed when you took out your loan. If you default on your loan, you are also protected by the Fair Debt Collection Practices Act.
You can also take a few steps to be a more responsible borrower, including:
- Keeping a signed copy of your Master Promissory Note
- Keeping all records related to your student loans and payments
- Opening and reading all loan-related documents you receive
- Sending in your monthly payments on-time and in-full
- Contacting your servicer with questions or concerns
- Trying to get everything in writing
- And taking detailed notes on all loan-related phone calls
There is a lot to know when it comes to understanding your rights and responsibilities as a borrower! To learn more, take a look over the information and resources in this module.
If I have a federal student loan, what are my rights and responsibilities?
You can find your specific rights and responsibilities for your loan in your Master Promissory Note (MPN). Below is a summary of rights and responsibilities for federal student loans from NSLP:
- You must use your federal student loan for educational expenses only.
- Your loan holder must give you details about your federal student loan before it’s disbursed and again when it’s time to start paying your federal student loan.
- You must tell your loan holder any time you drop below half-time enrollment or change schools.
- You must tell your loan holder if you change your name, address, phone number, social security number, references, or driver’s license number.
- Before you leave school, you need to tell your loan holder your permanent address, the name and address of your expected employer (if known), and the address of your nearest relative.
- You must repay your federal student loan, plus interest, even if you did not finish your program, did not finish your program in the regular time allotted for program completion, you are unable to get a job after you finish, or if you are unhappy with or do not get the education or other services you purchased from the school.
- Your loan holder may sell your federal student loan or use a servicer to manage your account. If the federal student loan is sold and the address where you sent payments changes, you’ll be notified of the name, address, and phone number of the new loan holder.
- You are entitled to a deferment or forbearance of your federal student loan payments in certain situations. Contact your loan holder for the details.
- You may prepay your federal student loan at any time without penalty.
In addition, the MPN will include information on:
- Interest rate and fees
- Loan amount
- Repayment terms and repayment plan options
- Loan conditions
- Forbearance and deferment options
- Borrow information and references
You can also look at your school’s website for more information on federal consumer information.
What can I do to be a more responsible borrower?
When it comes to taking out a federal student loan (or any loan), there are a few best practices to keep in mind:
- Keep a copy of your signed MPN – this will include the terms you agreed to and your rights and responsibilities as a borrower
- Keep all records related to your student loans – this includes documents from your school, lender, and loan servicer
- Maintain good records of the loan payments you have made and when you made them
- Open and read all loan-related documents that are sent to you
- Make your monthly payments in full and on time
- Contact your loan servicer with any questions or concerns
- Get as many things as possible in writing
- Take notes on every phone call with your servicer, collection agency, etc.
- Date, time, name (and ID number) of the person you spoke with
Are there any other federal laws that apply to my student loans?
Yes! Borrowers who have defaulted student loans (public or private) are protected by the Fair Debt Collection Practices Act (FDCPA). For more information about restrictions on how a collector can communicate with you and instances where they must temporarily stop collection, take a look at CFPB’s website. On this page, CFPB also includes sample letters for how to respond to a debt collector.
If you think that a debt collector has violated your rights, you can contact:
Check Your Understanding
#1. Your signed Master Promissory Note is your most important student loan document, so you should keep a signed copy. All other loan documents can be thrown away.
The Correct Answer is False: your signed Master Promissory Note is important to keep a copy of, but so are all other documents related to your loan and repayment