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What Is Loan Exit Counseling and Why Do I Have To Complete Exit Counseling?

what is loan exit counseling and why do i have to complete exit counseling

When you’re a student paying off debt, it’s easy to get tangled up in the mess of repaying one loan after another. To reduce the burden of navigating through such a situation, the US Federal Government provides student loan exit counseling to all.

As all students are responsible for their own education debt, having a field expert on your side is always beneficial. These counselors assist students in determining the best way to repay a federal student loan. In addition, students will learn what their rights and responsibilities are as loan borrowers.

You’ll learn how to apply for a direct federal loan with a loan servicer and the interest rate. The FSA will also give you financial tips and tricks to serve you after school.

What Is Student Loan Exit Counseling?

Student loan exit counseling is designed to help every student navigate their student loan debt after college. Students must complete exit counseling through StudentLoans.gov, an online course offered by the US Department of Education. The course lasts no longer than 30 minutes and covers all the basics.

In some cases, face-to-face counseling sessions are acceptable, too.

Every student that will leave school or drop below half-time enrollment is required to complete exit counseling. During this program, students get acquainted with student loans and how they, as loan borrowers, can better navigate payments.

Any student loan borrower can begin the course by hovering to the official website of Federal Student Aid.

Who Needs To Do Exit Counseling?

Every US student is required by law to attend exit counseling to mend their federal loan debt. Any student who graduates, leaves school, or drops below half-time enrollment must apply for counseling.

How Long Does It Take To Complete Loan Exit Counseling?

Loan exit counseling doesn’t take too long to complete. In fact, if done online at Federal Student Aid, you will complete exit counseling in around 20-30 minutes.

Those who wish to talk to someone face-to-face must contact their school and ask for details. In this situation, you’ll address your request with your school’s financial aid office.

What Will I Need To Complete the Studen Loan Exit Counseling?

What you’ll need entirely depends on how the exit counseling session will take place. If you decide to get loan repayment advice online, you’ll have to provide Federal Student Aid with the following:

  • A valid StudentAid.gov account.
  • Your contact information.
  • The name of your school.

When Do I Have To Do Exit Counseling?

There is no exact date when a student has to do exit counseling. However, there are three instances in which a student is obligated to request a counseling session:

  1. graduating from college
  2. dropping out of college
  3. dropping below half-time enrollment.

Anytime around the period that these actions are taking place is the right time to apply. But bear in mind, if you take too long, you might receive a call from your school’s financial aid office. On the plus side, they can help you set a date and start the session.

What Will Be Covered in the Student Loan Exit Counseling?

The main goal of exit counseling is to help students develop and stick to a student loan repayment plan. Your counselor will go over your repayment options with you, fill you in on any terms and conditions linked to the type of student loan you’re repaying, and teach you all about federal loans, PLUS loans, and any other kind of loan available to students.

This is what the FSA will cover with you during your online exit counseling session:

  1. You will learn all about federal student loans.

The counselor will let you in on how much you owe in student loans. You’ll also learn how to use the National Student Loan Database System. It’s crucial to know this information because it can help you better understand the type of student loan you’re repaying.

  1. You will learn how repayment works.

The FSA will go over your loan repayment plan with you and even help you develop a new one. There are many repayment plans, and the FSA will help you determine the best one for you.

You’ll also learn how to complete a payment with a federal student loan lender successfully. The counselor will explain the repayment process for different types of direct loans, such as a PLUS loan.

The FSA will let you know that you are required to complete any student loans repayments for free. With their help, you’ll be able to spot a potential scammer right away.

You’ll also be taught how to save better to repay your student loan easily. For example, the counselor might suggest applying for an interest-only loan. Interest-only loans come in the form of monthly payments for those with unstable income. Students can decide how much to pay monthly to get out of debt quickly.

  1.  You’ll know what to do when you cannot repay your federal direct loan.

There are student loan forgiveness programs you can take advantage of. The FSA will help you determine which plan is best for your federal student loan.

In addition, your supervisor will familiarize you with the terms forbearance and deferment. This will be helpful for when you have to put payments on hold until you get back on your feet.

The FSA will also acquaint you with federal student loan debt consolidation and how to navigate one.

Lastly, you will receive financial aid in the form of advice. The FSA will explain to you how essential finances work and help you develop your own financial plan. You’ll also learn about what a credit score is and how it can work to your advantage.

By the end of your session, you’ll have picked out a repayment plan and learned how to complete it.

Where Do I Complete My Loan Exit Counseling?

Exit counseling can be completed both online and in person. So, you can choose whichever option suits you best. However, we must mention that completing the process online is a lot more straightforward than in-person.

If you want to have a physical session for your student loans, you’ll have to contact your school and get in touch with the financial aid office.

What Happens If I Don’t Complete Exit Counseling?

Every student must complete exit counseling. If a student chooses to break the law, however, consequences will be imposed. While you will not be fined or imprisoned, you will most likely have to put your diploma on hold.

The school itself dictates the exact consequences of such behavior. Though there is no reason to worry as you’ll still be able to graduate, but you most likely won’t receive your diploma right away.

What Happens After Completing Student Loan Exit Counseling?

Once you complete exit counseling, you’ll most likely be given a grace period before starting with federal loan repayment. To find out how long your grace period is, you’ll have to contact your loan servicer. Sometimes that’s the US Department of Education or whichever lender you choose.

Final Words

Any students who are graduating, leaving school, or planning to drop below half-time enrollment must undergo exit counseling. The US Government offers this program to all its students in the hopes of helping them deal with debt efficiently. These sessions can and will change the course of how you handle your finances—you’ll be set for life, whether it be during school or in adulthood.

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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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