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Copyright Money Compass Inc 2020. All rights reserved

  • Yosi Rahimi

Know Your Rights and Responsibilities as a Student Borrower

Guest Post by Vanessa Lam & Anisha Mittal


Before the best four years of your life, the idea of college can be stressful. Choosing a college that seems like your best fit can be impacted by many different factors, but many times it can boil down to one: the cost. From the tuition of the college alone to buying textbooks to the cost of traveling, it can be overwhelming to think of how to afford college. In the United States, the government provides student loans to help ease the cost of college for many circumstances. If the government or another loan holder provides you with student loans, it is important to know your rights and responsibilities as a student borrower:


  1. You must use your federal student loan for educational expenses only. While this point may seem obvious, there have been many cases where students have spent it on their own personal goods. It is exceptionally important that students spend their loans strictly on educational expenses such as tuition, books, or general housing. If you fail to do so, you would be held accountable for all the purchases made using the federal loan and cause even greater debt for yourself. The bottom line - stick to using the loan as it was intended.

  2. You must repay your federal loan, plus interest, even if you did not end up finishing the program, did not finish the program in the allotted time, were unhappy with the education, or if you are unable to get a job after you graduate. In short, there are very few circumstances that allow you to be forgiven for the loan. The student loan is essentially an investment the government makes into your future. By helping you obtain higher education, they expect to see the benefits after you graduate, such as working a job and contributing to the American economy. Therefore, they expect you to be able to pay back the loans they gave to you despite most circumstances.

  3. You can file a formal or informal complaint if you believe you are being discriminated against. Make sure you’re being treated fairly. It is illegal for lenders to discriminate on the basis of sex or marital status. They can ask you to select a title on an application form, but only if it is optional. Generally, a lender cannot ask about race, color, religion, national origin, or sex (or that of a co-signer). Receipt of income from any public assistance program is also protected. If you want to file a complaint or just learn more, contact the Consumer Financial Protection Bureau.

  4. You are protected from harassment by collection agencies under the law. Collection agencies can be aggressive, so it is critical to be aware of federal and state fair debt collection practices law. One of the most important protections is your right to send a letter and request that a collection agency stops contacting you. While you can still be sued, they can no longer send letters or call you. Some other rights under the federal fair debt law include validation of debts and false or misleading representation. Know when to push back!

When I was thinking about college, four years felt like forever. Once I got here, though, time flew by and costs added up. Learn about your rights and responsibilities now so you can be best prepared. Getting the most out of your loan means knowing what they can ask of you and what you can ask of them. College is an incredible experience and, while it might seem far away right now, understanding your loan is a huge step forward. Good luck with it all!


Want to become debt free faster? Money Compass allows you to easily find the best repayment plan to fit your goals. Click here to give it a try.


Have a specific question regarding your loans? Send it to FreeAdvice@moneycompass.io

#studentloans #studentdebt