Borrowing

As a Federal Stafford Loan Borrower, you must understand that you are about to undertake a very serious obligation. Before obtaining a loan, understand that you must repay the full amount of the loan(s) with all accrued interest and deducted fees.

You must repay in full whether or not you are satisfied with your educational experience. This is true even if you do not obtain employment upon completion of your educational program. You must repay the loan even if you do not complete your program of study. In general, a student loan cannot be “forgiven” or “discharged” in bankruptcy. It is “canceled” only upon death of the student.

The full details of the loan contract (including interest rates, fees, repayment terms, deferment options, etc.) are provided as part of the loan application process. A Master Promissory Note (MPN) and/or Disclosure Statement materials must be signed by the Borrower when accepting the loan terms.

If you fail to fulfill any of the terms of your loan contract, you will be considered in default and may suffer the following negative consequences:

• Be sued by the Federal Government to force payment and pay the court and attorney costs
• Federal and/or state tax refunds will be withheld (including Economic Stimulus payments)
• The default will be reported to credit bureaus affecting future borrowing and credit availability (denied loans for cars, homes and also assessed higher insurance rates).
• Lose eligibility for other federal and state financial aid
• Some states deny or revoke State Licensures for specific vocations
• Wages may be garnished (includes retirement pensions and/or social security)
• Loan becomes due in full immediately

You can be a responsible borrower and use the program to help pay for educational expenses. Many students borrow using the Federal Loan Program and are successful in completing their program of study, obtaining employment and repay their loans under the conditions of their contract. The repayment of their loans has helped them build a positive credit history and credit scores.

However, borrowing should be seen as the “last” resort after gift aid is exhausted, scholarships have been searched and applied for and the school payment plan has been considered. If a need to borrow exists the student should know and understand the obligations of borrowing. The student should know the full costs of their education program. The student should know the cost of tuition, fees and books needed for the loan period and then borrow only what is need to meet these costs.

The amount of student loans available to borrow during an award year has maximums based on student status and the loan period. Another factor is the individual student’s eligibility for the program and cost of attendance for the loan period. At a community college the relative costs are low and maximum loan amounts are limited.

Research has shown that excessive borrowing, not completing their educational program in a timely manner (or not at all) and not communicating with their loan servicer when having difficulty in making payments are the key reasons a student enters default. If you decide to borrow you should also decide to avoid default at all costs and to be a responsible borrower. Your future depends upon this.