Smart Student Loan Borrowing

As a student loan borrower, you’re faced with a new set of responsibilities. Be informed, make payments on time, and don’t take chances.

Your federal student loan’s Master Promissory Note and Rights and Responsibilities Statement provide you with a complete overview of the terms and conditions of your loan. To help stay current on your loan, pay particular attention to the information below on Change of Status, Grace Period, Delinquency, and Default. If you do run into difficulty, contact your loan holder right away.

Change of Status

As a federal student loan borrower, you are required to notify your school’s financial aid office and loan holder about certain events.

You must notify your school’s financial aid office if:

  • You reduce your enrollment to less than half-time status
  • You withdraw from school
  • You stop attending classes
  • You don’t re-enroll for any term
  • You have a change in your expected graduation date
  • You change your name, local address, permanent address, or email address

Shortly before your enrollment ends, you must participate in exit counseling with your school, during which you will update your loan records about your:

  • Permanent address
  • Email address
  • Telephone number
  • Future employer

You must notify your loan holder if you don’t enroll:

  • At least half time for the loan period certified, or
  • At the school that certified your eligibility

You must notify your loan holders promptly if any of the following events occur before loans held by your loan holders are repaid:

  • You change your address, telephone number, or email address
  • You change your name (for example, maiden name to married name)
  • You withdraw from school or begin attending less than half time
  • You transfer from one school to another
  • You change your employer, or your employer’s address or telephone number changes
  • You have any other change in status that would affect your loan (for example, the loss of eligibility for an unemployment deferment by obtaining a job).

Grace Period for Direct Loans

You will receive a grace period (generally six months) before you must make the first payment of your Federal Direct Loan. The grace period begins the day after you’re no longer enrolled at least half time at an eligible school.

Your grace period doesn’t include any period up to three years during which you’re called or ordered to active duty for more than 30 days from a reserve component of the Armed Forces of the United States, including the period necessary for you to resume enrollment at the next available regular enrollment period.

Commencement of Repayment for PLUS loans

Unlike a Direct student loan, a PLUS loan does not have an automatic in-school deferment and grace period. However, a PLUS loan does offer some flexibility when it comes to beginning repayment. At the borrower’s option, the first payment of a PLUS loan is due:

  • Within 60 days after the final loan disbursement is sent to the school; or
  • For a graduate or professional student borrower, when he or she is no longer enrolled in school at least half time (i.e., graduates, withdraws, or reduces coursework); or
  • For a parent borrower, the day after six months after his or her dependent student is no longer enrolled at least half time.

If a borrower decides to have his or her payments temporarily postponed, the borrower must pay the interest on the loan or may allow it to be capitalized (added to the principal).


A loan is considered delinquent if you make late payments. A payment is late if the loan holder or servicer has not received it by the day after the due date.

Delinquent payments can cost you extra money and can affect your credit history for years to come:

  • You can pay more due to late fees under the terms of your loan
  • Your credit score can be lowered because of late payments – future consumer loans (home, car, etc.) can cost you more in higher interest rates
  • You could lose your ability to borrow money in the future


Default is falling behind on your scheduled payments over an extended period — usually 270 days or more. Default means that you have violated your loan agreement, and the lender or servicer can request immediate payment in full.

Under certain circumstances, if you default on your loan, federal and state laws require guarantors like Trellis Company to:

  • Withhold a percentage of your wages until your account is paid in full
  • Report your default to all national credit reporting agencies
  • Add collection charges, attorney fees, and court costs to the balance of your loans
  • Seize your federal tax refund and other state or federal payments
  • Prevent you from receiving additional federal student aid and other federal benefits