What to expect with student loan exit counseling

The 5 steps you need to take before federal repayments begin.

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Everyone with a federal student loan is required to go through exit counseling before leaving school. It’s a short, mostly informative session that ends with you picking your student loan repayment plan. Some schools have different procedures for how exit counseling works, so reach out to your financial aid office before you get started.

What is student loan exit counseling?

Student loan exit counseling is a required informational session that all federal student loan borrowers must complete before leaving school. You’re required to go through exit counseling when you:

  • Graduate
  • Drop out of school
  • Drop below half time at your school

The purpose of exit counseling is to ensure you understand your options before repayments begin. It guides you through the different types of federal loans and repayment plans, gives tips for avoiding default and provides general advice for financial planning as a college graduate.

Typically, it takes around 20 to 30 minutes from start to finish.

Where can I complete student loan exit counseling?

You can complete exit counseling online through the Federal Student Aid (FSA) website by logging in to your FSA account. However, some schools also offer in-person exit counseling. Check with your school’s financial aid office to find out which options are available to you.

What’s the deadline for student loan exit counseling?

The FSA doesn’t have any specific deadlines for exit counseling, but your school’s financial aid office might. If you plan on graduating, dropping out of school or falling below half-time enrollment, reach out to your financial aid office for instructions.

5 steps to completing online student loan exit counseling

To get started, either visit the FSA website or follow the link on your school’s financial aid website. Make sure to log in to your account before you start — otherwise, it might not be counted and you’ll have to do it over again.

Step 1: Go over the basics of student loans

You’ll get a refresher on how student loans work in the first step of the student loan exit counseling process. In this section, the FSA will cover:

  • Your student loan balance. You’ll find out exactly how much you owe in student loans.
  • How to use the National Student Loan Database System (NSLDS). The FSA explains that you can learn everything you need to know about your specific student loans by checking out the NSLDS, including finding out who your servicer is.
  • How different federal loans work. You’ll get a primer on the main federal loan programs and how they work.
  • Important terms you should know. A refresher on definitions for terms like interest accrual, capitalized interest, master promissory note and acceleration.

Step 2: Learn how repayments work

This step is more interactive than Step 1. In this section, you’ll:

  • Review repayment plans. The FSA has you fill out a worksheet with an estimation of your future budget. From there, you can see how much you’d pay monthly and over the life of your loan for each of the different repayment plans.
  • Learn how to save. Find out how taking small steps like making interest-only repayments during deferment or forbearance could help you save in the long run. Plus, find out what repayment incentives you might be eligible for and other tips for reducing the cost of your student loans.
  • Find out how to make repayments. Get basic information on what a servicer is, how to get in touch with yours and how to change repayment plans.
  • Get a warning about scams. The FSA informs you that your student loan servicer is required to perform services for free and gives you a resource to learn more about potential scams to avoid.

Step 3: Learn what happens if you can’t afford repayments

This third step is aimed to help you avoid defaulting on your federal student loans by taking you through other options that can help you stay current. During this section, you’ll:

  • Get tips on how to stay on top of your loans. The FSA recommends finishing your program, making payments on time and reaching out to your servicer to avoid getting into a situation where defaulting is on the table.
  • Learn how deferment and forbearance work. Get a brief definition of how putting repayments on hold works with federal loans and use a calculator to find out how much more it’ll cost you if you choose one of these options.
  • Go over forgiveness, cancellation and discharge programs. Find out when and how you can have your student loan debt load erased, from Public Service Loan Forgiveness to school-related discharge.
  • Find out what happens if you fail to repay your loans. Learn when exactly you become delinquent and when your loan is considered to be in default. Plus, get a rundown of what consequences you can expect.
  • Learn where to find records. Get the scoop on where to find your records online and other student information about your student loans. If you need to resolve a student loan dispute, your records will come in handy.
  • Read about consolidation. Find out when consolidating your federal loans might be a good idea and where to get more info.

Step 4: Get a personal finances primer

This step is meant to give you the information you need to be an informed consumer and handle your personal finances after leaving school. In this step, you’ll:

  • Learn how to plan ahead. Find out how to set goals, learn about different savings strategies and get tips for spending responsibly.
  • Find out how taxes work. Complete a table with your expected income to find out how much money you’ll actually have after taxes. Plus, learn about tax deductions and credits for federal student loans.
  • Read about how credit scores works. Find out what a credit score is, how credit bureaus track your credit history and what you can do to make sure your score is solid — including preventing identity theft.
  • Learn how to borrow responsibly. Get the basics on when and how to use credit cards and personal loans wisely.

Step 5: Request a repayment plan

Now that you understand how repayments work, this step requires you to choose a repayment plan for your student loans. This is the plan you’ll use to start paying off your loans — though you can apply to change your plan at any time by contacting your servicer. During this step, you’ll:

  • Enter your personal information. This includes your contact details and employer’s information — if you have a job.
  • Give information on your next of kin. Provide a name, contact information and relationship status to your closest living relative.
  • Provide two references. Enter the names, contact information and relationship status for two people who know you well — such as a family friend, mentor or employer. They must live in the US.
  • Choose a repayment plan. Review your estimated monthly repayments on different plans and select the one you’d like to start with when your grace period ends.

Why do I have to include references?

The FSA asks you to include two references so it has someone to contact if you default on your loan. These references aren’t the same as a cosigner — they won’t be responsible for paying off your loan. But they could receive phone calls or letters if the FSA isn’t able to get in touch with you after you fall behind on repayments.

I finished exit counseling. What happens next?

After exit counseling, you generally have a six-month grace period before repayments start. Typically, your student loan servicer — the company that handles repayments — contacts you during this time to review how your repayment plan works and give you instructions on how to get started.

What happens if I don’t complete exit counseling?

Exit counseling is required by federal law. What happens if you don’t complete it depends on your school. Typically, the Bursar’s office will put your transcripts and diploma on hold until you finish exit counseling. Generally, you’ll still be able to graduate.

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Bottom line

Exit counseling is a requirement for all federal student loan borrowers. It breaks down what you can expect when it comes to student loan repayments. And beyond that, it sets you up to handle your money wisely as you transition into the work force.

Find out more about how it all works by checking out our guide to student loans.

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