The best loan that students can avail is the federal loan as these loans are subsidized by the government. Moreover, with this loan borrowers’ are entitled to some rights. Not all are aware of these rights. Knowing about these rights can help students both before and after availing the loan. The rights are as follows:
Students are entitled to loan counseling. This would help them learn everything about the terms of the loan. Not all terms are understandable and soon students may unwittingly commit themselves to a mistake. So, as per the federal requirements students should seek a thorough loan counseling to understand the ins and outs of the loan.
If you are seeking a student’s loan, you are entitled to the following:
Loan service helps:
Services contracted by the DoE should be available always to answer queries or problems related to student loans. Students can seek appointment with these contracted providers whenever they want. It is mandated by the government that services should guide students at every step especially when sought by the student.
A student can defer payment under trying circumstances like sickness or because of staying unemployed. Those pursuing their studies in graduate school or the military can defer payment till they complete their course. Based on the circumstances, one can stop making payment or pay partly up to 12 months. However, interest will keep accruing.
Earning based payment:
Some programs are so designed that facilitate payment in case you cannot avail higher loans. For instance, with the “pay as you earn” plan you can make a monthly payment at 10% of your expected income. Likewise with the “income-based repayment plan” you can pay at least 15% of your future earnings.
Consolidated loan payment:
The state entitles the student to several federal student loans at a time. If one has more than one loan, one can always consolidate the different loans into a single monthly payment.
Those who are employed in early childhood education, law enforcement, emergency management, public health, military, etc. Can have their student loan balance forgiven. However only those who have made 120 payments under the Public Service Loan Forgiveness Program are entitled to this facility.
Changing payment schedule:
Though standard student loan tenure is for 10 years one can get it extended to 25 years. Loan repayments can also be graduated starting low with an increase every two years.
Students who get a job after passing out can deduct their loan interest from their taxable income.
Early repayment would incur no penalty. So students who wish to ease off the loan burden soon can do it without any worry.
Knowing about student loan rights can help students take informed decisions. It helps student’s pick up the right loan program and schedule a proper repayment plan.