What to know about student loans before borrowing
Borrowing student loans is a very serious process, and there’s a lot to know before you take out a loan. Here are some basic questions and key pieces of information you should know as you prepare to borrow student loans.
The first time you receive federal student loans through your school, you will be required to complete entrance counseling before the funds can be disbursed. 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. The entrance counseling is mandatory, and will explain a lot about your federal student loan(s). 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 package, you can automatically accept the package. 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 part or all 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.
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
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 can often be done online, and your school is notified when you complete the counseling. If you are an undergraduate student, you will have to wait 30 days after the semester begins to receive your funds. Your school will typically take out the funds you owe them first, before disbursing the rest of the loan to you. This way your tuition, fees and college housing are covered before any funds can be spent on your other college expenses.