Education and Loan Agreements: What Students Should Know

Students often sign agreements for loans, university enrolment, or scholarships. These documents can be long and full of jargon—and the stakes are high. A student loan can follow you for years; university terms can bind you to fee schedules, conduct policies, and refund rules; and scholarship conditions can affect your funding or require repayment if you leave. If you don't read carefully, you might miss important details—like when repayment starts, what happens if you can't pay, or what happens to your scholarship if you withdraw. Here's what to look for before you sign—so you know what you're committing to and what to ask the lender or institution.

Student loans

Student loans are one of the biggest financial commitments many students make. Understanding the key terms can save you money and avoid surprises later.

Repayment and interest

When do you start repaying? Some loans have a grace period (e.g. 6 months after you leave school) before repayment begins. Others require repayment while you're still in school—or interest accrues from day one even if you don't pay until later. What's the interest rate, and is it fixed or variable? A variable rate can go up—and your payment with it. Is there a cap? What's the total cost over time—not just the monthly payment, but the total amount you'll pay including interest? Use a loan calculator if the lender doesn't provide a clear breakdown. Are there grace periods, income-based repayment options, or deferral/forbearance if you can't pay? In some places government-backed loans offer these options; private loans may not. Know what's available before you sign.

What to look for

• Clear repayment schedule. When does repayment start? How much is the monthly payment? How long is the term (e.g. 10 years, 20 years)? What's the total amount you'll pay over the life of the loan?
• Interest rate. Fixed or variable? What's the rate? If variable, what is it tied to and how often can it change? What's the cap, if any?
• What happens if you can't pay? Deferral (pause repayment while in school or in hardship)? Forbearance (pause or reduce payment for a period)? Income-based repayment (payment tied to your income)? Default (what happens if you miss payments—late fees, impact on credit, collection)? Know the escalation steps. In some places default can have serious consequences (e.g. wage garnishment, loss of benefits). Avoid it if you can—contact the lender early if you're struggling.
• Prepayment. Can you pay early without penalty? Some loans charge a fee for early repayment; others don't. If you can pay extra, you'll save on interest. Check whether there's a penalty.

Red flags

• Unclear interest or fees. If the lender won't tell you the full cost (interest + fees) in writing, or the rate seems too good to be true, be cautious. Compare with official or government-backed options where available.
• Very short repayment windows. If you're required to repay in 2 or 3 years with high monthly payments, that can be hard to manage on a starting salary. Look for longer terms or income-based options.
• Harsh default terms. What happens if you miss a payment? Late fees, default after how many days, impact on credit, collection—know the full picture. Some private lenders are aggressive; government-backed loans often have more flexible options.

University terms and enrolment

When you enrol at a university, you're often agreeing to the institution's academic and conduct policies, fee schedules, and withdrawal/refund rules. Here's what to check.

What you're agreeing to

Enrolment may bind you to: Academic policies—attendance, grading, plagiarism, progression (e.g. what happens if you fail a course). Conduct policies—behavior, discipline, suspension, expulsion. Fee schedules—tuition, fees, when payments are due, late fees. Withdrawal and refund rules—if you withdraw, do you get a full refund, partial refund, or nothing? By when must you withdraw to get a refund? Changes to programmes or fees—can the university change the programme, cancel a course, or raise fees? How much notice do you get? These terms are often in a handbook, on the website, or in the enrolment form. You're agreeing to them by enrolling—so find them and read the key parts.

What to look for

• Fee structure and when payments are due. Is tuition due per semester, per year, or per course? When is each payment due? What happens if you pay late—late fee, hold on your account, inability to register?
• Refund or withdrawal deadlines. If you withdraw in the first week, do you get a full refund? After 2 weeks, partial? After a month, nothing? The deadlines matter—missing them can cost you a lot. Put them in your calendar.
• How changes to programmes or fees are communicated. Does the university have to give you notice? How much? If they raise fees mid-year or cancel a course you need, what are your options? Some institutions allow you to withdraw and get a refund if they make material changes; others don't. Check the terms.
• Keep a copy of the terms you accepted. When you enrolled, what version of the handbook or fee schedule applied? Download or save it. If the institution changes terms later, you may have rights under the version you agreed to—and you'll need the copy to prove it.

Scholarships and grants

If your funding comes from a scholarship or grant, there are often conditions—e.g. you must maintain a certain GPA, remain enrolled full-time, or not work more than X hours. If you don't meet the conditions, you might lose the funding or have to repay it. Make sure the conditions are written down and you understand them. What happens if you drop a course, take a leave of absence, or withdraw? Do you have to repay the scholarship? In full or in part? Get it in writing.

Practical tips

You don't have to read every word of a long loan or enrolment document—but you should find and read the sections that affect your wallet and your rights.

• Read the summary or key terms even if the full document is long. Many lenders and institutions provide a one- or two-page summary. Start there—then dive into the full document for the sections that matter most.
• Focus on: repayment, interest, fees, cancellation, refund, and default. For loans: When do you pay? How much? What if you can't pay? For enrolment: When are fees due? What's the refund policy? What if you withdraw?
• Compare options. If you're considering multiple loans (e.g. government vs. private), compare the full cost, repayment terms, and what happens if you can't pay. The cheapest monthly payment isn't always the best deal over time.
• BeforeYouSign can highlight these sections in your education or loan agreement so you know what you're committing to and what to ask the lender or institution before you sign.