All borrowers have rights and responsibilities when borrowing federal direct loans. Borrowers are encouraged to contact their loan servicer for all repayment options.

Borrower Rights:

  • 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.
  • 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 by notifying your school before or within 14 days after the disbursement.
  • 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.


You have the right to:

  • Prepay any federal loan without penalty
  • Request a copy of your MPN
  • Change repayment plans
  • Recieve grace periods and subsidies on certain loans
  • Use deferment or forebearance to postpone payments
  • Receive documentation of loan obligations, rights, and responsibilites, and when the loan in fully repaid

Borrower Responsibilities:

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. 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.

If you 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 have, and you should document all contacts with the organization that holds your loan.

Students are required to make monthly payments on their loans after they leave school unless they are in deferment or forbearance. They are also responsible to notify the Direct Loan Servicing Center of anything that might alter their eligibility for an existing deferment.


You are expected to:

  • Complete exit counseling before leaving or dropping below half time enrollment
  • Make loan payments on time
  • Make payments despite nonreceipt of bill
  • Notify servicers of changes to your contact or personal information
  • Notify servicers of changes in your enrollment status
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