What To Know About Student Loans Before Borrowing

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.

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