Your rights and responsibilities as a federal student borrower can vary depending on your exact loan program. Understanding what you’re responsible for will help you make well-informed decisions and efficiently manage your debt.
So, when you take out a loan from the U. . Department of Education, you’ll need to sign a legal document called the Master Promissory Note (MPN). By signing this document, you’re making a promise to repay the loan, as well as any interest and fees that accumulate over time. The MPN also lays out all the details and rules that come with your loan(s).
Students are required to complete loan exit counseling prior to graduating or dropping below half-time enrollment, and must also meet other requirements as outlined in Student Eligibility.
Entrance Counseling
Entrance counseling is a mandatory process that must be completed by a student prior to receiving the first disbursement of their Federal Stafford Loan funds. It is a brief online tutorial that covers topics such as loan terms, repayment options and delinquency/default prevention. The counseling session takes approximately 30 minutes to complete. Students are encouraged to print any or all sections for their records. Entrance counseling is required for undergraduates taking out their first Direct Subsidized and/or Unsubsidized loans as well as Graduate PLUS loans for graduate and professional students. Federal regulations require all first time borrowers to go through this session before the loan funds can be disbursed to their NYFA account.
To access entrance counseling visit the StudentLoanDirect Web site (link below). Sign in using your FSA ID user name and password, select “Manage My Direct Loan” and then click on the link titled “Entrance Counseling”. This will take you to the first screen that requires you to enter your personal information; once all of this is entered and the screen displays your information, click on the button labelled “Complete Entrance Counseling”.
Once you have completed your entrance counseling, you will be returned to the same screen where you clicked on the button labelled “Complete Entrance”; from here you will be taken to the confirmation page. The confirmation page can be printed and saved just as you did for the entrance counseling session. It is important to keep a record of all counseling sessions as these are used in the event of an adverse credit history report by lenders. Also Read: Unlock Pro Gaming with Glorious Model D Software
This is the final step before you can begin to receive your loan money. The Office of Financial Aid will be notified electronically within 24-business hours that you have completed your entrance counseling and that your Master Promissory Note has been signed; therefore, the office can then disburse your loan funds. Please note that if you have already borrowed a Grad PLUS loan before, you do not need to complete this session again. However, you will need to complete a new exit counseling session once you graduate or drop below half-time enrollment.
Exit Counseling
If you’re a graduate student, or are graduating, withdrawing from school, or dropping below half-time enrollment, federal regulations require that you complete online exit counseling with your loan servicer. Exit counseling is a quick crash course in your rights and responsibilities, and how to manage your student loans once you’re out of school. It’s important to take the time to go through this process, so that you know what to expect once your loan repayment starts.
The first part of the session goes over your responsibilities as a borrower, including how to repay your loans and what happens if you miss payments. It also covers your options for deferment or forbearance, which temporarily pauses your loan repayments. This is a great way to avoid defaulting on your loans, which can damage your credit and make it difficult for you to find a job or rent an apartment.
In the second section of exit counseling, you’ll be able to choose a repayment plan that fits your budget. You’ll be asked to enter information like your projected annual income and monthly housing costs to help you compare different plans. Then, you’ll be able to use a calculator to estimate your monthly payments and interest accrual for each plan. The final section of the process helps you decide if you want to consolidate your loans or refinance them.
It’s important to take your time when completing online exit counseling, and not rush through the sessions. It should only take about 20 to 30 minutes to complete. It’s also a good idea to update your contact information with your loan servicer, so that they have the most recent info about you.
If you don’t complete exit counseling before graduation, you may not be able to walk at commencement or receive your diploma. And, if you’re applying to graduate school, you might not be able to get official transcripts or an unofficial copy of your undergraduate degree, which could hurt your chances at a top program. Plus, if you’re not in good standing with your debts, the government can garnish your wages or seize your tax refund.
Master Promissory Note (MPN)
The Master Promissory Note (MPN) is the legally binding contract you sign promising to repay your student loans. You must complete an MPN for each type of federal loan you borrow — such as a Direct Unsubsidized or Direct PLUS loan — and you may have to complete one for each school year. Your MPN also contains the Borrower’s Rights and Responsibilities and the Terms and Conditions for repayment.
You’ll need to sign your MPN before your student loans can be disbursed. This is usually done after you’ve been accepted into your college or university, and you’ve filled out the FAFSA and your federal loan eligibility has been determined. You may also be required to complete an MPN before receiving certain types of federal work-study funds, such as a Federal Work Study Grant.
The MPN process will include a short, informative session about your student loan options and requirements. You will be able to ask questions about your specific situation and receive help making the best decisions about how much to borrow. Your MPN will also describe repayment options, such as deferment and forbearance options, loan forgiveness options and income-driven repayment plans.
In addition, your MPN will require you to provide contact information for two references. These are not cosigners, but rather people who can attest to your good character and financial responsibility. Your lender will use this information to confirm your identity and check on your credit history.
Once you’ve completed your MPN, your school will send it to the federal government. The government will then notify your school, and your college’s financial aid office can begin to disburse your student loan funds — typically within 2 weeks.
The MPN process can be confusing, but it is a necessary part of borrowing funds for college. By taking advantage of the educational opportunities offered to you and limiting the amount you borrow, you can minimize the risk of debt that could hinder your future financial freedom. If you have any questions about the MPN process, please visit our FAQ page or contact your college’s financial aid office.
Conditions and Terms of the Loan Program
There are a number of conditions and terms associated with the loan program that you should be aware of. It is very important to read through any documentation that is sent to you by the Department of Education and/or your loan servicer and ask for clarification if needed. This will allow you to make well-informed decisions and efficiently manage your student loan repayment process.
It is also your responsibility to notify the Department of Education and/or your loan servicing company of any change in contact information, including name, address, telephone number or email address. This will ensure that you receive all necessary communications relating to your federal student loans.
This is a legal contract between you and the U.S. Department of Education under which you promise to repay the money you borrow plus interest. It is required for all first-time borrowers of Direct Loans. Your school uses this document to certify that you are a student and meet certain eligibility requirements for federal student aid. Your MPN is also the legal document that authorizes your Direct Loan funds to be disbursed to your account at your school.
The terms and conditions of your specific federal student loan will be set forth in the Master Promissory Note that you sign. These terms and conditions can vary from one type of loan to another, so it is very important that you review the terms and conditions of your specific loan program to understand how your individual loans will work.
If you fail to meet the terms and conditions of your loan program, it is possible that you will go into default. When you go into default, you are no longer eligible to receive any federal student aid, and your loan may be subject to collection activities. This can include your account being reported to credit bureaus, having your income tax refund withheld or garnishing your wages. In addition, going into default may affect your ability to obtain employment or qualify for a professional license. You are encouraged to contact your loan servicer if you are having trouble making your loan payments or have any other questions or concerns regarding your federal student loans.
