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How to do Exit Counseling for Student Loans

how to do exit counseling for student loans

After completing college and with a graduation forthcoming, most students can’t hide their excitement of soon venturing into the corporate world. However, if you have a federal student loan, it means that you’ll soon be required to start making student loan repayments.

While you may have done entrance counseling when applying for the loan, chances are you’ve forgotten some important details over time. That’s why all federal student loan borrowers are required to complete exit counseling before their deferment period ends to prepare them for the student loan repayment process.

What Is Federal Student Loan Exit Counseling?

It’s a mandatory, short, online or in-person session that all federal student loan holders must complete before they leave school or drop from college. The session offered by the U.S. Department of Education takes 20 to 30 minutes to complete.

It helps you understand your repayment options before you begin making student loan repayments. Federal student loan borrowers must complete the exit counseling when they:

  • Drop below half-time enrollment at school
  • Graduate
  • Drop out of school and enter a repayment period

The counseling is compulsory for students who took out subsidized, unsubsidized, or PLUS loan(s) under the “William D. Ford Federal Direct Loan (Direct Loan) Program or the Federal Family Education Loan (FFEL) Program.” Private student loan borrowers don’t have to complete student loan exit counseling.

What do I Need to do Student Loan Exit Counseling?

Students ready to go through the exit counseling can check if their college has an in-person session or log into their FSA account on the StudentLoans.gov website page for quick online sessions. To complete the session, you need to have:

  • Your verified FSA ID
  • Financial aid information
  • Income information
  • Expected and current living expenses
  • Contact information for yourself, next of kin, your future employer if you have a job lined up already, and two references.

These exit counseling requirements for students vary from one school to another. Therefore, you should check with your school’s financial aid center to confirm you have fulfilled everything.

And, if you still have questions regarding your student loan after completing the exit counseling session, you may contact the financial aid office for assistance. Alternatively, check out the Federal Student Aid website, which may offer specific answers about your federal student loan(s).

5 Steps to Follow when Doing Your Student Loan Exit Counseling Session

To get started, follow your schools’ financial aid website link and log into your account. Then follow this process:

Step 1: Go Through all the Basics of Federal Student Loans

In this step, you get a refresher on everything about student loans that you learned during your entrance counseling, including how the loan works. You will cover:

  • Loan-related important terms like capitalized interest, interest accrual, acceleration, and master promissory note.
  • How various federal student loans work and how the main federal loan programs work.
  • Your student loan balance or precisely how much you owe in student federal loans.
  • How the National Student Loan Database System (NSLDS) is used.

Step 2: Learn how Federal Student Loan Repayments Work

The second step is more interactive than step one. In this step, you’ll:

  • Learn different saving strategies: how you can save in the long run if you make interest rate only repayments during forbearance or deferment period. Also, you understand repayment incentives you qualify for, among other cost-reducing tips of your student loan(s).
  • Review your repayment plans: You will be asked to fill out a worksheet with your future budget estimates. From that, you’ll find out how much you’ll be able to afford for a monthly payment and the number of months or years it would take to fully pay your loan with different plans.
  • Find out how to repay the loan: You’ll learn essential information like what a loan servicer does, how to contact yours, and ways to change repayment plans.
  • Get information on potential scams and how to avoid them.

Step 3: Learn What Happens if You Cannot Afford Repayments

In the third step, you’ll learn how to avoid federal student loans default. You’ll learn other options you can take to help you stay current. Also, you’ll:

  • Learn how forbearance and deferment works: You’ll understand what happens if you place your repayments on hold and, using a calculator, find out the amount of money it would cost if you choose either option.
  • Gather vital tips on how to stay on top of your loans: You learn all the tips to help make student loan payments on time and how to avoid defaulting.
  • Find more information about default or becoming delinquent on your federal student loans and the consequences of such actions.
  • Go over cancellation, forgiveness, and discharge programs. Find out if and how your debt can get erased from school-related discharges to Public Service Loan Forgiveness.
  • Learn where to find your records. Learn where your online records and other student information are kept. This comes in handy if you want to resolve a dispute.
  • Understand everything about consolidation. Find out if debt consolidation is an ideal option to consider and where to learn more about it.

Step 4: Get a Personal Finances Primer

In this step, you’ll receive important information to help you handle your personal finances after graduating or leaving college. Therefore, you’ll:

  • Learn how taxes work: You’ll be required to fill a table with your expected income to calculate how much you’ll get after tax deductions. In addition, you’ll learn about credits and tax deductions for federal student loans.
  • Understand how to plan your finances: You’ll learn how to set “SMART” goals, understand different responsible savings and spending strategies.
  • Understand how credit scores work: Find what credit score means, how credit bureaus track your credit history, how to make your credit score solid, and how to prevent identity theft.
  • Learn how to borrow responsibly: Get the basics on when and how to use personal loans and credit cards prudently.

Step 5: Request a Repayment Plan

The final step is to pick a suitable loan repayment plan for your federal student loan. That also includes making an actionable payment plan detailing how you’ll pay off the loans and letting your loan servicer know about it. But, you can apply to have the plan changed at any time. So, you’ll:

  • Provide your personal information, including your contact details and, if you’ve already secured a job, your employer information.
  • Give two references: Enter their full names and contact information.
  • Provide information on your next of kin: Give their names, phone number, and relationship status, and ensure they are US residents.
  • Select a repayment plan. Review your monthly repayment estimates on different plans and choose the one you prefer to start with once your grace period ends.

What Happens Next After You Finish Exit Counselling?

After you complete your exit counseling program, you’ll typically have a six months’ grace period before you start making repayments. The loan servicer will call after those six months to provide important information like your student loan repayment plan details, and instructions on how to start repaying.

What Happens if I Don’t Complete Exit Counseling?

All student federal loan borrowers must complete exit counseling sessions as it is a mandatory process required by federal law. Failure to complete it may have some consequences, though they depend on your school. Some bursars hold back your student’s transcripts until students finish the exit counseling though they may still graduate. Completing exit counseling is important when you drop below half-time enrollment or leave school.

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Frank is a graduate of the Master's program in Economics Sciences. He has been passionate about writing in the financial niche. He enjoys discovering new ways to improve personal wealth and sharing them with his readers. In addition, Frank likes to travel and play board games.

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