Understanding Exit Loan Counseling for Student Loans

Federal regulations mandate that student loan borrowers complete exit loan counseling anytime they drop below half-time student status or when they file for graduation. Exit loan counseling is an essential process designed to equip borrowers with the knowledge and resources necessary for successfully managing their student loan repayment. It ensures borrowers understand their rights and responsibilities, repayment options, and potential consequences of default. This article will delve into the specifics of exit loan counseling, its requirements, and the crucial information it provides.

What is Exit Loan Counseling?

Exit loan counseling is an opportunity for the borrower to review their rights and responsibilities regarding their student loan(s) as well as provide their lender(s) with updated contact and reference information. Federal regulations require that all students who have borrowed from the federal loan programs receive exit loan counseling. Students who have borrowed from the Stafford/Direct Loan programs must complete online counseling sessions. It is a mandatory session for student loan borrowers that provides comprehensive guidance on loan repayment.

When is Exit Loan Counseling Required?

Federal regulations require all federal student loan borrowers to complete exit loan counseling each time they drop below half-time enrollment, graduate, or leave school. This can mean a borrower may be required to complete exit loan counseling multiple times throughout their academic career. Exit counseling is required for students that drop below half-time (below six credits for undergraduates or four credits for graduates), withdraw, or graduate.

What Exit Loan Counseling Covers

Exit counseling provides information regarding the rights and responsibilities of a borrower and a lender/servicer.

Rights and Responsibilities

Exit loan counseling is an opportunity for the borrower to review their rights and responsibilities regarding their student loan(s). The Department of Education's Exit Counseling Guide will help you understand your rights and responsibilities as a student loan borrower. Borrowers should first thoroughly review the terms and conditions offered by their lender.

Read also: Understanding Student Loans

Loan Details and Servicers

The timely repayment of your student loans is important to maintaining a good credit history, especially if you wish to consider applying for future consumer or student loans. Therefore, it is important to know who owns your loan, when your payments are due, how to make a payment, and your total amount of indebtedness. The online exit counseling session will provide pertinent repayment information and also provide the opportunity for borrowers to update their contact information. Loan exit counseling explains all of your rights and responsibilities regarding the repayment of your loan.

Contact Information Update

Exit counseling provides an opportunity for the borrower to review their rights and responsibilities and provide their Loan Servicer(s) with current contact information. As part of the counseling, the school must ensure that the student borrower provides current information concerning name, address, social security number, references, and driver's license number and State of issuance, as well as the student borrower's expected permanent address, the address of the student borrower's next of kin, and the name and address of the student borrower's expected employer (if known).

Repayment Options

Depending on your financial circumstances during repayment, you may want to consider different repayment options. Use the Loan Simulator to compare your repayment options. This helps borrowers make wise decisions with regard to the repayment of their loans.

Loan Consolidation

You may want to consider consolidating your loans.

Loan Forgiveness Programs

For information on loan forgiveness, you should review the web page of your prior federal student loan lender or the Department of Education. Some potential employers may also have loan forgiveness programs, be sure to add this item to the list of benefits you're considering when accepting employment. The Teacher Loan Forgiveness Program is intended to encourage students to enter and continue in the teaching profession. See the US Department of Education for more information.

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Fresh Start Initiative

In April of 2022, the Department of Education announced a 'Fresh Start' to help eligible federal student loan borrowers in default. To learn more, visit the Department of Education's Fresh Start page.

Private Loan Repayment

Learn about refinancing your Private Loans.

How to Complete Exit Loan Counseling

To complete the online exit counseling session, you will need your FSA ID that was used to complete your FAFSA. The entire counseling process must be completed in a single session. Most students complete counseling in 20-30 minutes.

Steps to Access and Complete Exit Counseling Online:

Navigate to studentaid.gov.
Under the Manage Loans tab, select Complete Exit Counseling.
Select the Log in to Start button next to either the Undergraduate or Graduate student type.
Select the school(s) you want to notify of counseling completion.

Consequences of Not Completing Exit Loan Counseling

Make sure you complete your exit counseling in a timely manner. A hold will remain on your student record until exit counseling is complete.

Additional Resources and Support

The Ombudsman Group is dedicated to helping resolve disputes related to Direct Loans, Federal Family Education Loan (FFEL) Program loans, and Guaranteed Student Loans.

Important Considerations

Completion of exit loan counseling in no way affects a borrower’s ability to get future financial aid nor does it put your loans into repayment. Your loans will only enter repayment if you are no longer enrolled at least half-time* (full-time for HPSL loans) at an eligible institution.

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