What to Know About Student Loans Before Borrowing
What is Financial Aid Entrance Counseling?
If this is the first time you
received federal student loans, such as Stafford or Perkins Loans, through your
school, you will be required to complete entrance counseling before the funds
can be distributed. The U.S. Department of Education provides the counseling
online for free, or your school might work with an organization called Mapping
Your Future to deliver the session. You can also learn more about the financial
aid process through your school's financial aid department. The information
provided will help you better understand what is expected of you when it’s time
to repay the funds you borrowed.
Canceling a Student Loan
Upon receiving your financial aid award packages,
you may automatically accept all portions that you are qualified to receive. You
may not know what your financial situation will be by the time the funds are
actually disbursed, so this might not be a bad idea. If you complete your
promissory note and accept the student loans, you can still change your mind. In
fact, until the money is disbursed, you can decline all or part of your student
loans - you just need to notify your school that you want to cancel the loans.
After the loan has been disbursed, if you discover that you don’t really need to
borrow as much as you originally anticipated, review the terms provided on the
promissory note to see what the time frame is to cancel the funds.
Promissory Note Rights And Responsibilities
When you receive a student
loan, you will be asked to sign a promissory note that indicates your rights and
responsibilities as a student loan borrower. Review these terms very carefully
because you are obligating yourself to repay whatever amount you borrow. Since
the promissory note is legally binding, you should keep it in a safe place so
that you can review the terms if needed. You have the right to fully understand
all of the conditions of your student loan before you sign the document, so take
this process seriously. Once you sign the document, you have made the commitment
to repay the funds!
Getting Your Federal Student Loan Funds
Like every first time borrower,
you probably want to know when you will get the financial aid funds you were
awarded. While your college notifies you that you qualify for the funds, there
are a few steps that need to be completed before it will disburse your student
loans. First-time borrowers need to complete the entrance counseling for student
loans. This often can be done online, and your school is notified when it is
completed. Next, as an undergraduate you will have to wait 30 days after the
semester begins. Even though your disbursement is delayed, your college will
often work with you to defer payment on your tuition bill. When you get the
funds, you may find that the amount is lower because your school typically takes
out the funds you owe them first. This way your tuition, fees and college
housing are covered before any funds can be spent on your other college
expenses.
