DL.PLUS.MPN.draft11

William D. Ford Federal Direct Loan Program

Direct Subsidized Loan and Direct Unsubsidized Loan Borrower’s Rights and Responsibilities Statement

Page 1 of 5

Important Notice: This Borrower’s Rights and

Responsibilities Statement provides additional information

about the terms and conditions of the loans you receive

under the accompanying Master Promissory Note (MPN)

for Federal Direct Stafford/Ford Loans (Direct Subsidized

Loans) and Federal Direct Unsubsidized Stafford/Ford

Loans (Direct Unsubsidized Loans). Please keep this

Borrower’s Rights and Responsibilities Statement for

your records. You may request another copy of this

Borrower's Rights and Responsibilities Statement at any

time by contacting the Direct Loan Servicing Center.

Throughout this Borrower’s Rights and Responsibilities

Statement, the words “we,” “us,” and “our” refer to the U.S.

Department of Education. The word “loan” refers to one or

more loans made under the accompanying MPN.

1. The William D. Ford Federal Direct Loan Program.

The William D. Ford Federal Direct Loan (Direct Loan)

Program includes the following types of loans, known

collectively as “Direct Loans”:

• Federal Direct Stafford/Ford Loans (Direct

Subsidized Loans)

• Federal Direct Unsubsidized Stafford/Ford Loans

(Direct Unsubsidized Loans)

• Federal Direct PLUS Loans (Direct PLUS Loans)

• Federal Direct Consolidation Loans (Direct

Consolidation Loans)

The Direct Loan Program is authorized by Title IV, Part D,

of the Higher Education Act of 1965, as amended.

You must complete a Free Application for Federal Student

Aid (FAFSA) before you receive a Direct Subsidized Loan

or Direct Unsubsidized Loan.

Direct Loans are made by the U.S. Department of

Education. Our Direct Loan Servicing Center services,

answers questions about, and processes payments on

Direct Loans. We will provide you with the address and

telephone number of the Direct Loan Servicing Center

after the school notifies us that the first disbursement of

your loan has been made.

2. Laws that apply to this MPN. The terms and

conditions of loans made under this MPN are determined

by the Higher Education Act of 1965, as amended (20

U.S.C. 1070 et seq.) and other applicable federal laws and

regulations. These laws and regulations are referred to as

“the Act” throughout this Borrower’s Rights and

Responsibilities Statement. State law, unless it is

preempted by federal law, may provide you with certain

rights, remedies, and defenses in addition to those stated

in the MPN and this Borrower’s Rights and

Responsibilities Statement.

NOTE: Any change to the Act applies to loans in

accordance with the effective date of the change.

3. Direct Subsidized Loans and Direct Unsubsidized

Loans. Direct Subsidized Loans and Direct Unsubsidized

Loans are made to students to help pay for the cost of

education beyond high school. To receive a Direct

Subsidized Loan, you must have financial need. We do

not charge interest on Direct Subsidized Loans while you

are in school and during certain other periods. Direct

Unsubsidized Loans are not based on financial need. We

charge interest on Direct Unsubsidized Loans during all

periods. For more information on interest charges, see

item #9 of this Borrower’s Rights and Responsibilities

Statement (“Payment of interest”).

4. About the MPN. You may receive more than one loan

under this MPN over a period of up to 10 years to pay for

your educational costs, as long as the school you are

attending is authorized to use the multi-year feature of the

MPN and chooses to do so.

If your school is not authorized to use the multi-year

feature of the MPN or chooses not to do so, or if you do

not want to receive more than one loan under this MPN,

you must sign a new MPN for each loan that you receive.

If you do not want to receive more than one loan under

this MPN, you must notify your school or the Direct Loan

Servicing Center in writing.

5. Use of your loan money. You may use the loan

money you receive only to pay for your authorized

educational expenses for attendance at the school that

determined you were eligible to receive the loan.

Authorized expenses include the following:

• Tuition

• Room

• Board

• Institutional fees

• Books

• Supplies

• Equipment

• Dependent child care expenses

• Transportation

• Commuting expenses

• Rental or purchase of a personal computer

•

Loan fees

• Other documented, authorized costs

6. Information you must report to us after you receive

your loan. You must notify the Direct Loan Servicing

Center and/or the financial aid office at your school about

certain changes.

Until you graduate or otherwise leave school, you must

notify your school’s financial aid office if you:

• Change your address or telephone number;

• Change your name (for example, maiden name to

married name);

• Do not enroll at least half-time for the loan period

certified by the school

• Do not enroll at the school that determined you were

eligible to receive the loan;

• Stop attending school or drop below half-time

enrollment;

• Transfer from one school to another school; or

• Graduate.

You must also notify the Direct Loan Servicing Center if

any of the above events occur at any time after you

receive your loan. In addition, you must notify the Direct

Loan Servicing Center if you:

• Change your employer, or your employer’s address

or telephone number changes; or

• Have any other change in status that would affect

your loan (for example, if you received a deferment

while you were unemployed, but you have found a

job and therefore no longer meet the eligibility

requirements for the deferment).

7. Amount you may borrow. The charts that follow

show the maximum amounts of Direct Subsidized Loans

and Direct Unsubsidized Loans that you may borrow for a

single academic year (annual loan limits), and the

maximum amounts that you may borrow in total for

undergraduate and graduate study (aggregate loan limits).

The annual and aggregate loan limits for independent

undergraduates also apply to dependent undergraduates

whose parents are unable to borrow under the PLUS

program. If you are enrolled in certain health professions

programs, you may qualify for higher annual and

aggregate limits on Direct Unsubsidized Loans.

The actual loan amount you receive will be determined by

your school, based on your academic level, dependency

status, and other factors such as:

• The length of the program or the remaining portion

of the program in which you are enrolled, if it is less

than a full academic year;

• Your cost of attendance;

• Your Expected Family Contribution;

• Other financial aid you receive; and

• Your remaining eligibility under the annual or

aggregate loan limits.

The actual amount you receive for an academic year may

be less than the maximum annual amounts shown in the

charts.

If you are an undergraduate student, your school must

determine your eligibility for a Federal Pell Grant before

you may receive a Direct Subsidized Loan or Direct

Unsubsidized Loan. Your school is also required to

determine your eligibility for a Direct Subsidized Loan

before determining your eligibility for a Direct

Unsubsidized Loan.

If you have received student loans from another federal

student loan program, you are responsible for informing

your school and your lender of your other student loans.

In some cases, you may not be eligible for loans for which

you have applied.

Annual Loan Limits for Direct Subsidized Loans and

Direct Unsubsidized Loans:

Dependent Undergraduate Students

(except students whose parents cannot borrow

PLUS loans)

First Year Total

(maximum $3,500 subsidized)

$5,500

Second Year Total

(maximum $4,500 subsidized)

$6,500

Third Year and Beyond (each year)

(maximum $5,500 subsidized)

$7,500

Independent Undergraduate Students

(and dependent students whose parents cannot

borrow PLUS loans)

First Year Total

(maximum $3,500 subsidized)

$9,500

Second Year

(maximum $4,500 subsidized)

$10,500

Third Year and Beyond (each year)

(maximum $5,500 subsidized)

$12,500

Graduate and Professional Students

Total Amount (each year)

(maximum $8,500 subsidized)

$20,500

Aggregate Loan Limits for Direct Subsidized and

Direct Unsubsidized Loans:

Dependent Undergraduate Students

(except students whose parents cannot borrow

PLUS loans)

Total Amount Cumulative

(maximum $23,000 subsidized)

$31,000

Independent Undergraduate Students

(and dependent students whose parents cannot

borrow PLUS loans)

Total Amount Cumulative

(maximum $23,000 subsidized)

$57,500

Graduate and Professional Students

Total Amount Cumulative

(maximum $65,500 subsidized; includes

Stafford Loans received for

undergraduate study)

$138,500

8. Interest rate. The interest rate on Direct Subsidized

Loans and Direct Unsubsidized Loans is a fixed rate.

William D. Ford Federal Direct Loan Program

Direct Subsidized Loan and Direct Unsubsidized Loan Borrower’s Rights and Responsibilities Statement

Page 2 of 5

Different fixed interest rates may apply to separate loans

made under this MPN depending on whether the loan is

subsidized or unsubsidized, when the loan is first

disbursed, and whether you are a graduate or

undergraduate student. You will be notified of the actual

interest rate for each loan you receive in a disclosure

statement that we send to you.

9. Payment of interest. We do not charge interest on a

Direct Subsidized Loan while you are enrolled in school at

least half time, during your grace period, during deferment

periods, and during certain periods of repayment under

the Income-Based Repayment Plan. We charge interest

on a Direct Subsidized Loan during all other periods

(starting on the day after your grace period ends),

including forbearance periods.

We charge interest on a Direct Unsubsidized Loan during

all periods (starting on the day your loan is paid out). This

includes periods while you are enrolled in school at least

half time, during your grace period, and during deferment

and forbearance periods. Therefore, you will pay more

interest on a Direct Unsubsidized Loan than on a Direct

Subsidized Loan.

If you do not pay the interest as it is charged on either type

of loan, we will add it to the unpaid principal amount of

your loan. This is called “capitalization.” Capitalization

increases the unpaid principal balance of your loan, and

we will then charge interest on the increased principal

amount.

The chart below shows the difference in the total amount

you would repay on a $15,000 Direct Unsubsidized Loan if

you pay the interest as it is charged during a 12-month

deferment or forbearance period, compared to the amount

you would repay if you do not pay the interest and it is

capitalized.

If you pay

the interest

as it is

charged…

If you do not pay

the interest and it

is capitalized…

Loan Amount $15,000 $15,000

Interest for 12

months (at an

interest rate of

6.8%)

$1,020

(paid as

accrued)

$1,020

(unpaid and

capitalized)

Principal to be

Repaid

$15,000 $16,020

Monthly

Payment

(Standard

Repayment

Plan)

$173 $184

Number of

Payments

120 120

Total Amount

Repaid

$21,734 $22,123

In this example, you would pay $11 less per month and

$389 less altogether if you pay the interest as it is charged

during a 12-month deferment or forbearance period.

You may be able to claim a federal income tax deduction

for interest payments you make on Direct Loans. For

further information, refer to IRS Publication 970, which is

available at

http://www.irs.ustreas.gov.

10. Loan fee. We charge a loan fee of up to 4 percent of

the principal amount of each loan you receive. This fee

will be subtracted proportionally from each disbursement

of your loan. The loan fee will be shown on a disclosure

statement that we send to you.

11. Repayment incentive programs. A repayment

incentive is a benefit that we offer to encourage you to

repay your loan on time. Under a repayment incentive

program, the interest rate we charge on your loan may be

reduced. Some repayment incentive programs require

you to make a certain number of payments on time to

keep the reduced interest rate. The two repayment

incentive programs described below may be available to

you. The Direct Loan Servicing Center can provide you

with more information on other repayment incentive

programs that may be available.

(1) Interest Rate Reduction for Electronic Debit Account

Repayment

Under the Electronic Debit Account (EDA) repayment

option, your bank automatically deducts your monthly loan

payment from your checking or savings account and

sends it to us. EDA helps to ensure that your payments

are made on time. In addition, you receive a 0.25 percent

interest rate reduction while you repay under the EDA

option. We will include information about the EDA option

in your first bill. You can also get the information on the

Direct Loan Servicing Center’s web site, or by calling the

Direct Loan Servicing Center. The Direct Loan Servicing

Center’s web site address and toll-free telephone number

are provided on all correspondence that the Direct Loan

Servicing Center sends you.

(2) Up-Front Interest Rebate

You may receive an up-front interest rebate on your loan.

The rebate is equal to a percentage of the loan amount

that you borrow. This is the same amount that would

result if the interest rate on your loan were lowered by a

specific percentage, but you receive the rebate up front.

The correspondence that you receive about your loan will

tell you if you received an up-front interest rebate.

To keep an up-front interest rebate that you receive on

your loan, you must make all of your first 12 required

monthly payments on time when your loan enters

repayment. “On time” means that we must receive each

payment no later than 6 days after the due date.

You will lose the rebate if you do not make all of your first

12 required monthly payments on time. If you lose the

rebate, we will add the rebate amount back to the principal

balance on your loan account. This will increase the

amount that you must repay.

12. Disbursement (how your loan money will be paid

out). Generally, your school will disburse (pay out) your

loan money in more than one installment, usually at the

beginning of each academic term (for example, at the

beginning of each semester or quarter). If your school

does not use academic terms, it will generally disburse

your loan in at least two installments, one at the beginning

of the period of study for which you are receiving the loan,

and one at the midpoint of that period of study.

In most cases, if the Direct Subsidized Loan or Direct

Unsubsidized Loan that you are receiving is your first

student loan under either the Direct Loan Program or the

Federal Family Education Loan (FFEL) Program, you must

complete entrance counseling before your school can

make the first disbursement of your loan.

Your school may disburse your loan money by crediting it

to your account at the school, or may give some or all of it

to you directly by check or other means. The Direct Loan

Servicing Center will notify you in writing each time your

school disburses part of your loan money.

If your school credits your loan money to your account and

the amount credited is more than the amount of your

tuition and fees, room and board, and other authorized

charges, the excess amount is called a credit balance.

Unless you authorize your school to hold the credit

balance for you, your school must pay you the credit

balance within the following timeframes:

• If the credit balance occurs after the first day of

class of a payment period (your school can tell you

this date), your school must pay you the credit

balance no later than 14 days after the date the

balance occurs.

• If the credit balance occurs on or before the first day

of class of a payment period, your school must pay

you the credit balance no later than 14 days after

the first day of class of the payment period.

13. Canceling your loan. Before your loan money is

disbursed, you may cancel all or part of your loan at any

time by notifying your school. After your loan money is

disbursed, there are two ways to cancel all or part of your

loan:

• If your school obtains your written confirmation of

the types and amounts of Title IV loans that you

want to receive for an award year before crediting

loan money to your account at the school, you may

tell the school that you want to cancel all or part of

that loan within 14 days after the date the school

notifies you of your right to cancel all or part of the

loan, or by the first day of your school’s payment

period, whichever is later (your school can tell you

the first day of the payment period). If the school

does not obtain your written confirmation of the

types and amounts of loans you want to receive

before crediting the loan money to your account,

you may cancel all or part of that loan by informing

the school within 30 days of the date the school

notifies you of your right to cancel all or part of the

loan. In either case, your school will return the

cancelled loan amount to us. You do not have to

pay interest or the loan fee on the part of your loan

that you tell your school to cancel within these

timeframes. If you received an up-front interest

rebate on your loan, the rebate does not apply to

the part of your loan that you tell your school to

cancel. Your loan will be adjusted to eliminate any

interest, loan fee, and rebate amount that applies to

the amount of the loan that was cancelled.

If you ask your school to cancel all or part of your

loan outside the timeframes described above, your

school may process your cancellation request, but it

is not required to do so.

• Within 120 days of the date your school disbursed

your loan money (by crediting the loan money to

your account at the school, by paying it directly to

you, or both), you may return all or part of your loan

to us. Contact the Direct Loan Servicing Center for

guidance on how and where to return your loan

money. You do not have to pay interest or the loan

fee on the part of your loan that you return within

120 days of the date that part of your loan is

disbursed. If you received an up-front interest

rebate on your loan, the rebate does not apply to

the part of your loan that you return. Your loan will

be adjusted to eliminate any interest, loan fee, and

rebate amount that applies to the amount of the loan

that you return.

14. Grace period. You will receive a six-month grace

period on repayment of each Direct Subsidized Loan and

Direct Unsubsidized Loan that you receive. Your six-

month grace period begins the day after you stop

attending school or drop below half-time enrollment. You

do not have to begin making payments on your loan until

after your grace period ends.

If you are called or ordered to active duty for more than 30

days from a reserve component of the U.S. Armed Forces,

the period of your active duty service and the time

necessary for you to re-enroll in school after your active

duty ends are not counted as part of your grace period.

However, the total period that is excluded from your grace

period may not exceed three years. If the call or order to

active duty occurs while you are in school and requires

you to drop below half-time enrollment, the start of your

William D. Ford Federal Direct Loan Program

Direct Subsidized Loan and Direct Unsubsidized Loan Borrower’s Rights and Responsibilities Statement

Page 3 of 5

grace period will be delayed until after the end of the

excluded period. If the call or order to active duty occurs

during your grace period, you will receive a full six-month

grace period at the end of the excluded period.

15. Repaying your loan. The repayment period for each

Direct Subsidized Loan and Direct Unsubsidized Loan that

you receive begins on the day after your grace period

ends. The Direct Loan Servicing Center will notify you of

the date your first payment is due.

You must make payments on your loan even if you do not

receive a bill or repayment notice. Billing information is

sent to you as a convenience, and you are obligated to

make payments even if you do not receive a notice or bill.

You may choose one of the following repayment plans to

repay your loan:

• Standard Repayment Plan – Under this plan, you

will make fixed monthly payments and repay your

loan in full within 10 years (not including periods of

deferment or forbearance) from the date the loan

entered repayment. Your payments must be at

least $50 a month and will be more, if necessary, to

repay the loan within the required time period.

• Graduated Repayment Plan – Under this plan, you

will usually make lower payments at first, and your

payments will gradually increase over time. You will

repay your loan in full within 10 years (not including

periods of deferment or forbearance) from the date

the loan entered repayment. No single payment will

be more than three times greater than any other

payment.

• Extended Repayment Plan – Under this plan, you

will repay your loan in full over a period not to

exceed 25 years (not including periods of deferment

or forbearance) from the date the loan entered

repayment. You may choose to make fixed monthly

payments or graduated monthly payments that start

out lower and gradually increase over time. If you

make fixed monthly payments, your payments must

be at least $50 a month and will be more, if

necessary, to repay the loan within the required time

period. You are eligible for this repayment plan only

if (1) you have an outstanding balance on Direct

Loan Program loans that exceeds $30,000, and (2)

you had no outstanding balance on a Direct Loan

Program loan as of October 7, 1998 or on the date

you obtained a Direct Loan Program loan after

October 7, 1998.

• Income Contingent Repayment Plan – Under this

plan, your monthly payment amount will be based

on your annual income (and that of your spouse if

you are married), your family size, and the total

amount of your Direct Loans. Until we obtain the

information needed to calculate your monthly

payment amount, your payment will equal the

amount of interest that has accrued on your loan

unless you request a forbearance. As your income

changes, your payments may change. If you do not

repay your loan after 25 years under this plan, the

unpaid portion will be forgiven. You may have to

pay income tax on any amount forgiven.

• Income-Based Repayment Plan (effective July 1,

2009) – Under this plan, your required monthly

payment amount will be based on your income

during any period when you have a partial financial

hardship. Your monthly payment amount may be

adjusted annually. The maximum repayment period

under this plan may exceed 10 years. If you meet

certain requirements over a specified period of time,

you may qualify for cancellation of any outstanding

balance on your loans.

If you can show to our satisfaction that the terms and

conditions of the above repayment plans are not adequate

to meet your exceptional circumstances, we may provide

you with an alternative repayment plan.

If you do not choose a repayment plan, we will place you

on the Standard Repayment Plan.

The chart at the end of this Borrower’s Rights and

Responsibilities Statement (“Repaying Your Loans”)

allows you to estimate the monthly and total amounts you

would repay under the Standard, Graduated, Extended,

and Income Contingent repayment plans based on various

initial loan amounts.

You may change repayment plans at any time after you

have begun repaying your loan. There is no penalty if you

make loan payments before they are due, or pay more

than the amount due each month.

Except as provided by the Act for payments made under

the Income-Based Repayment Plan, we apply your

payments and prepayments in the following order: (1) late

charges and collection costs first, (2) outstanding interest

second, and (3) outstanding principal last.

When you have repaid a loan in full, the Direct Loan

Servicing Center will send you a notice telling you that you

have paid off your loan. You should keep this notice in a

safe place.

16. Late charges and collection costs.

If you do not

make any part of a payment within 30 days after it is due,

we may require you to pay a late charge. This charge will

not be more than six cents for each dollar of each late

payment. If you do not make payments as scheduled, we

may also require you to pay other charges and fees

involved in collecting your loan.

17. Demand for immediate repayment. The entire

unpaid amount of your loan becomes due and payable (on

your MPN this is called “acceleration”) if you:

• Receive loan money, but do not enroll at least half-

time at the school that determined you were eligible

to receive the loan;

• Use your loan money to pay for anything other than

expenses related to your education at the school

that determined you were eligible to receive the

loan;

• Make a false statement that causes you to receive a

loan that you are not eligible to receive; or

• Default on your loan.

18. Defaulting on your loan. Default (failing to repay

your loan) is defined in detail in the Terms and Conditions

section of your MPN. If you default:

• We will require you to immediately repay the entire

unpaid amount of your loan.

• We may sue you, take all or part of your federal and

state tax refunds and other federal or state

payments, and/or garnish your wages so that your

employer is required to send us part of your salary

to pay off your loan.

• We will require you to pay reasonable collection

fees and costs, plus court costs and attorney fees.

• You may be denied a professional license.

• You will lose eligibility for other federal student aid

and assistance under most federal benefit

programs.

• You will lose eligibility for loan deferments.

• We will report your default to national credit bureaus

(see #19, “Credit bureau notification”).

19. Credit bureau notification. We will report

information about your loan to one or more national credit

bureaus. This information will include the disbursement

dates, amount, and repayment status of your loan (for

example, whether you are current or delinquent in making

payments).

If you default on a loan, we will also report this to national

credit bureaus. We will notify you at least 30 days in

advance that we plan to report default information to a

credit bureau unless you resume making payments on the

loan within 30 days. You will be given a chance to ask for

a review of the debt before we report it.

If a credit bureau contacts us regarding objections you

have raised about the accuracy or completeness of any

information we have reported, we are required to provide

the credit bureau with a prompt response.

20. Deferment and forbearance (postponing

payments)

If you meet certain requirements, you may receive a

deferment that allows you to temporarily stop making

payments on your loan. If you cannot make your

scheduled loan payments, but do not qualify for a

deferment, we may give you a forbearance. A

forbearance allows you to temporarily stop making

payments on your loan, temporarily make smaller

payments, or extend the time for making payments.

Deferment

You may receive a deferment while you are:

• Enrolled at least half-time at an eligible school;

• In a full-time course of study in a graduate

fellowship program;

• In an approved full-time rehabilitation program for

individuals with disabilities;

• Unemployed (for a maximum of three years; you

must be diligently seeking, but unable to find, full-

time employment); or

• Experiencing an economic hardship (including

Peace Corps service), as determined under the Act

(for a maximum of three years).

• Serving on active duty during a war or other military

operation or national emergency or performing

qualifying National Guard duty during a war or other

military operation or national emergency and, if you

were serving on or after October 1, 2007, for the

180-day period following the demobilization date for

your qualifying service.

Effective October 1, 2007, if you are a member of the

National Guard or other reserve component of the U.S.

Armed forces (current or retired) and you are called or

ordered to active duty while you are enrolled at an eligible

school or within 6 months of having been enrolled, you are

also eligible for a deferment during the 13 months

following the conclusion of your active duty service, or until

you return to enrolled student status, whichever is earlier.

You may be eligible to receive additional deferments if, at

the time you received your first Direct Loan, you had an

outstanding balance on a loan made under the Federal

Family Education Loan (FFEL) Program before July 1,

1993. If you meet this requirement, you may receive a

deferment while you are:

• Temporarily totally disabled, or unable to work

because you are required to care for a spouse or

dependent who is disabled (for a maximum of three

years);

• On active duty in the U.S. Armed Forces, on active

duty in the National Oceanic and Atmospheric

Administration (NOAA), or serving full-time as an

officer in the Commissioned Corps of the Public

Health Service (for a combined maximum of three

years);

• Serving in the Peace Corps (for a maximum of three

years);

• A full-time paid volunteer for a tax-exempt

organization or an ACTION program (for a

maximum of three years);

• In a medical internship or residency program (for a

maximum of two years);

William D. Ford Federal Direct Loan Program

Direct Subsidized Loan and Direct Unsubsidized Loan Borrower’s Rights and Responsibilities Statement

Page 4 of 5

• Teaching in a designated teacher shortage area (for

a maximum of three years);

• On parental leave (for a maximum of six months); or

• A working mother entering or re-entering the

workforce (for a maximum of one year).

You may receive a deferment based on your enrollment in

school on at least a half-time basis if (1) you submit a

deferment request form to the Direct Loan Servicing

Center along with documentation of your eligibility for the

deferment, or (2) the Direct Loan Servicing Center

receives information from the school you are attending

that indicates you are enrolled at least half-time. If the

Direct Loan Servicing Center processes a deferment

based on information received from your school, you will

be notified of the deferment and will have the option of

canceling the deferment and continuing to make payments

on your loan.

For all other deferments, you (or, for a deferment based

on active duty military service or qualifying National Guard

duty during a war or other military operation or national

emergency, a representative acting on your behalf) must

submit a deferment request form to the Direct Loan

Servicing Center, along with documentation of your

eligibility for the deferment. In certain circumstances, you

may not be required to provide documentation of your

eligibility if the Direct Loan Servicing Center confirms that

you have been granted the same deferment for the same

period of time on a FFEL Program loan. The Direct Loan

Servicing Center can provide you with a deferment

request form that explains the eligibility and

documentation requirements for the type of deferment you

are requesting. You may also obtain deferment request

forms and information on deferment eligibility

requirements from the Direct Loan Servicing Center’s web

site.

If you are in default on your loan, you are not eligible for a

deferment.

You are not responsible for paying the interest on a Direct

Subsidized Loan during a period of deferment. However,

you are responsible for paying the interest on a Direct

Unsubsidized Loan during a period of deferment.

Forbearance

We may give you a forbearance if you are temporarily

unable to make your scheduled loan payments for reasons

including, but not limited to, financial hardship and illness.

We will give you a forbearance if:

• You are serving in a medical or dental internship or

residency program, and you meet specific

requirements;

• The total amount you owe each month for all of the

student loans you received under Title IV of the Act

is 20 percent or more of your total monthly gross

income (for a maximum of three years);

• You are serving in a national service position for

which you receive a national service award under

the National and Community Service Trust Act of

1993. In some cases, the interest that accrues on a

qualified loan during the service period will be paid

by the Corporation for National and Community

Service;

• You are performing service that would qualify you

for loan forgiveness under the teacher loan

forgiveness program that is available to certain

Direct Loan and FFEL program borrowers;

• You qualify for partial repayment of your loans

under the Student Loan Repayment Program, as

administered by the Department of Defense; or

• You are called to active duty in the U.S. Armed

Forces.

To request a forbearance, contact the Direct Loan

Servicing Center. The Direct Loan Servicing Center can

provide you with a forbearance request form that explains

the eligibility and documentation requirements for the type

of forbearance you are requesting. You may also obtain

forbearance request forms and information on forbearance

eligibility requirements from the Direct Loan Servicing

Center’s web site.

Under certain circumstances, we may also give you a

forbearance without requiring you to submit a request or

documentation. These circumstances include, but are not

limited to, the following:

• Periods necessary for us to determine your eligibility

for a loan discharge;

• A period of up to 60 days in order for us to collect

and process documentation related to your request

for a deferment, forbearance, change in repayment

plan, or consolidation loan (we do not capitalize the

interest that is charged during this period); or

• Periods when you are involved in a military

mobilization, or a local or national emergency.

You are responsible for paying the interest on both Direct

Subsidized Loans and Direct Unsubsidized Loans during a

period of forbearance.

21. Discharge (having your loan forgiven). We will

discharge (forgive) your loan if:

• You die. The Direct Loan Servicing Center must

receive acceptable documentation of your death, as

defined in the Act.

• Your loan is discharged in bankruptcy. However,

federal student loans are not automatically

discharged if you file for bankruptcy. In order to

have your loan discharged in bankruptcy, you must

prove to the bankruptcy court that repaying the loan

would cause undue hardship.

• We determine that you are totally and permanently

disabled (as defined in the Act), based on a

physician’s certification, and you meet additional

requirements during a 3-year conditional discharge

period. During that period, your earnings from work

must not exceed the poverty line amount for a family

of two, and you must not receive any additional

loans under the Direct Loan, FFEL, or Federal

Perkins Loan programs. You may not receive a

discharge due to total and permanent disability

based on a condition that existed before your loan

was made, unless a doctor certifies that the

condition substantially deteriorated after the loan

was made.

In certain cases, we may also discharge all or a portion of

your loan if:

• You could not complete a program of study because

the school closed;

• Your loan eligibility was falsely certified by the

school;

• A loan in your name was falsely certified as a result

of a crime of identity theft; or

• The school did not pay a refund of your loan money

that it was required to pay under federal regulations.

We may forgive a portion of any student loans you

received under the Direct Loan or FFEL program after

October 1, 1998 if you teach full time for five consecutive

years in certain low-income elementary and/or secondary

schools and meet certain other qualifications, and if you

did not owe a Direct Loan or FFEL program loan as of

October 1, 1998, or as of the date you obtain a loan after

October 1, 1998.

A public service loan forgiveness program is also available

Under this program, the remaining balance due on your

eligible Direct Loan Program loans may be cancelled after

you have made 120 payments on those loans (after

October 2, 2007) under certain repayment plans while you

are employed in certain public service jobs.

To request a loan discharge based on one of the

conditions described above (except for discharges due to

death or bankruptcy), you must complete a loan discharge

application that you may obtain from the Direct Loan

Servicing Center.

In some cases, you may assert, as a defense against

collection of your loan, that the school did something

wrong or failed to do something that it should have done.

You can make such a defense against repayment only if

the school’s act or omission directly relates to your loan or

to the educational services that the loan was intended to

pay for, and if what the school did or did not do would give

rise to a legal cause of action against the school under

applicable state law. If you believe that you have a

defense against repayment of your loan, contact the Direct

Loan Servicing Center.

We do not guarantee the quality of the academic

programs provided by schools that participate in federal

student financial aid programs. You must repay your loan

even if you do not complete the education paid for with the

loan, are unable to obtain employment in the field of study

for which your school provided training, or are dissatisfied

with, or do not receive, the education you paid for with the

loan.

22. Loan consolidation. A Direct Consolidation Loan

Program is available that allows you to consolidate

(combine) one or more of your eligible federal education

loans into one loan. Consolidation allows you to extend

the period of time that you have to repay your loans, and

to combine several loan debts into a single monthly

payment. This may make it easier for you to repay your

loans. However, you will pay more interest if you extend

your repayment period through consolidation, since you

will be making payments for a longer period of time.

Contact the Direct Loan Servicing Center for more

information about loan consolidation.

23. Department of Defense and other federal agency

loan repayment. Under certain circumstances, military

personnel may have their federal education loans repaid

by the Secretary of Defense. This benefit is offered as

part of a recruitment program that does not apply to

individuals based on their previous military service or to

those who are not eligible for enlistment in the U.S. Armed

Forces. For more information, contact your local military

service recruitment office.

Other agencies of the federal government may also offer

student loan repayment programs as an incentive to

recruit and retain employees. Contact the agency’s

human resources department for more information.

24. AmeriCorps program education awards. Under the

National and Community Service Act of 1990, you may

receive an education award that can be used to repay a

Direct Subsidized Loan or Direct Unsubsidized Loan if you

successfully complete a term of service in an AmeriCorps

program. For more information, contact an official of your

program.

William D. Ford Federal Direct Loan Program

Direct Subsidized Loan and Direct Unsubsidized Loan Borrower’s Rights and Responsibilities Statement

Page 5 of 5

Repaying Your Loans

Income Contingent

5, 6

Income = $15,000

Income Contingent

5, 6

Income = $25,000

Income Contingent

5, 6

Income = $45,000

Standard

Extended

2, 3

Graduated

Single Married/HOH

Initial Debt

When You

Enter

Repayment

Per

Month

Total

Per

Month

Total

Per

Month

Total

Per

Month

Total

Per

Month

Total

Per

Month

Total

Per

Month

Total

Per

Month

Total

Per

Month

Total

3,500 50 4,471 Not Available 25 5,157 21 6,939 20 6,673 27 6,092 25 6,405 36 5,128 36 5,128

5,000 58 6,905 Not Available 40 7,278 30 9,912 29 9,533 38 8,703 36 9,150 51 7,326 51 7,326

5,500 63 7,595 Not Available 43 8,007 33 10,903 30 10,463 42 9,574 40 10,065 56 8,059 56 8,059

7,500 86 10,357 Not Available 59 10,919 45 14,868 30 14,019 57 13,055 54 13,725 76 10,989 76 10,989

10,500 121 14,500 Not Available 83 15,283 64 20,815 30 18,877 80 18,277 76 19,215 107 15,385 107 15,385

15,000 173 20,714 Not Available 119 21,834 87 29,685 30 25,229 114 26,110 108 27,451 153 21,978 153 21,978

18,500 213 25,548 Not Available 146 26,929 87 35,992 30 29,465 140 32,203 134 33,856 188 27,106 188 27,106

23,000 265 31,762 Not Available 182 33,479 87 43,141 30 34,128 174 40,036 166 42,091 234 33,699 234 33,699

30,000 345 41,429 Not Available 237 43,668 87 52,340 30 39,756 228 52,221 197 55,743 407 43,956 407 43,956

40,000 460 55,239 277 83,289 316 58,229 87 62,005 30 44,827 253 72,717 197 84,352 468 58,608 468 58,608

46,000 529 63,524 319 95,782 363 66,956 87 66,084 30 46,378 253 89,828 197 105,472 509 67,399 509 67,399

50,000 575 69,048 347 104,111 395 72,778 87 68,153 30 46,860 253 103,268 197 111,575 587 73,260 587 73,260

60,000 690 82,858 391 140,816 474 87,334 87 71,219 30 46,934 253 136,615 197 124,085 587 88,251 587 88,251

70,000 806 96,667 456 164,285 535 101,890 87 71,721 30 46,934 253 148,551 197 133,106 587 106,551 587 106,551

80,000 920 110,477 522 187,754 632 116,445 87

71,721

30 46,934 253 157,373 197 138,907 587 128,146 587 128,146

90,000 1,036 124,287 587 211,224 711 131,002 87 71,721 30 46,934 253 163,227 197 141,925 587 152,967 587 152,967

100,000 1,151 138,096 652 234,693 790 145,556 87

71,721

30 46,934 253 166,457 197 142,386 587 181,224 587 181,224

110,000 1,266 151,906 717 258,162 869 160,111 87 71,721 30 46,934 253 167,172 197 142,386 587 213,485 587 213,485

120,000 1,381 165,716 782 281,632 948 174,668 87

71,721

30 46,934 253 167,172 197 142,386 587 250,281 587 250,281

130,000 1,496 179,525 848 305,101 1,024 189,224 87 71,721 30 46,934 253 167,172 197 142,386 587 292,313 587 292,313

138,500 1,594 191,264 903 325,050 1,094 201,596 87

71,721

30 46,934 253 167,172 197 142,386 587 332,912 587 332,912

The estimated payments were calculated using a fixed interest rate of 6.80%.

This repayment plan is available only to borrowers who have an outstanding balance on Direct Loan Program loans that exceeds $30,000, and who had no outstanding balance on a Direct Loan Program loan as of October 7,

1998 or on the date they obtained a Direct Loan Program loan on or after October 7, 1998.

These amounts are fixed, rounded to the nearest dollar, and calculated based on a 25-year repayment term.

This is your beginning payment, which may increase during your 10-year repayment term.

Assumes a 5% annual income growth (Census Bureau).

The estimated payments were calculated using the formula requirements in effect during 2006.

HOH is Head of Household; assumes a family size of two.