BEFORE YOU SIGN ON THE DOTTED LINE

Before a student signs an application for a loan or a promissory note, he or she should read it carefully, ask questions, and complete the following steps:

Determine the maximum amount that may be borrowed per academic year, as well as the maximum aggregate amount;

Determine the interest rate;

Determine whether the interest is deferred until after graduation, subsidized, or payable while the student is in school;

Determine whether the interest, if not deferred, is payable monthly, quarterly, or annually;

Determine the fees that will be taken out of the loan for origination and insurance;

Determine the policies governing capitalization or compounding of interest;

Determine whether the loan may be repaid at any time without penalty;

Determine if repayment of the principal can be deferred through residency training;

Determine the maturity date, which is the date upon which the promissory note becomes due and payable;

Determine the grace period;

Determine the number of years allowed for repayment of the loan;

Determine whether the loan can be forgiven for practice in a physician shortage area;

Determine what the minimum monthly payment will be during the repayment of the loan; and

Ensure that you are given a Disclosure Statement signed by the appropriate authority at the lending institution. A Disclosure Statement is a legal document and a record of the loan. All contracts between lenders and borrowers for loans are recorded locally or federally as standing legal obligations until terminated through repayment.

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