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Student loans are a puzzling phenomenon. Odds are you need them to attend college, but the finer points can be a challenge to understand.
Student loan counseling is set up to make sure you understand the terms and conditions of your loans, who services the loan, and how to repay.
This guide will explain your student loan counseling requirements, options, alternatives, and how to complete counseling.
In this guide:
- Is student loan counseling required?
- How can student loan counseling help?
- Types of student loan counseling
- Does student loan counseling cost money?
Is student loan counseling required?
Yes, in many cases, student loan counseling is required. For example, if you’re getting federal student loans for the first time, you’re required to go through entrance counseling before the government disburses your loans.
Graduate students getting Direct PLUS loans will have to go through counseling again, even if they’ve already gone through entrance counseling as an undergraduate.
Students who don’t receive federal loans but opt for private student loans do not have to go through loan counseling. However, counseling can still be helpful when it comes to learning about borrowing money and how it will affect you financially.
How can student loan counseling help?
Student loan counseling is an educational process. College students are typically young and may not have received a robust financial education before attending college. Student loan counseling is intended to help them understand the basics of borrowing money.
>> Read More: Where to find student loan help
Ultimately, student loan counseling aims to help reduce the number of borrowers that default on their loans. Before you borrow money, student loan counseling can help you learn about the terms of the loans available to you, how repayment works, and how you can budget to save money during and after college.
After you’ve borrowed money, student loan counseling can help you fully understand the loans you’ve received and come up with a plan for repaying them. It can also help you learn about different options you can pursue, such as income-driven repayment plans or loan forgiveness.
Types of student loan counseling
There are different types of student loan counseling. Each tailored to a specific kind of loan or time in a student’s life. For example, students entering school must go through entrance counseling. Those leaving have to go through exit counseling.
Each type of counseling will provide advice that is relevant to the student’s situation.
- Entrance counseling
- Exit counseling
- PLUS credit counseling
- TEACH Grant counseling
- Financial awareness counseling
- Private student loan counseling
- What is it? Entrance counseling is the first type of student loan counseling that most students experience. It is required the first time that a student receives a federal student loan, and the government won’t disburse funds until the student completes entrance counseling.
- What is the purpose? This type of counseling aims to help students make the most of the money they borrow and ensure that students understand the responsibility they’re accepting when taking on the loan.
- Where to get started? You can get started with your entrance counseling requirement by clicking here.
How to complete entrance counseling
How to complete your entrance counseling varies by school. Some schools require in-person counseling with a student loan counselor in the financial aid office, while others let you complete your counseling online. Your school’s financial aid office can tell you which is required.
In many cases, you’ll simply be asked to log into the Federal Student Aid website to complete your entrance counseling. It’s an easy process that you can expect to take about 20 to 30 minutes.
- What is it? When a student leaves school, exit counseling is required if they received federal student loans.
- What is the purpose? This type of counseling focuses more on repayment of student loans and helping students understand their options. It can also help students start thinking about post-college budgeting to stay up-to-date on payments.
- Where to get started? You can get started with your exit counseling requirement by clicking here.
How to complete exit counseling
Your school’s financial aid office can tell you how to complete your student loan exit counseling. They may simply direct you to the Federal Student Aid website to complete your counseling, which can take about 30 minutes.
Check out our guide to learn more about student loan exit counseling.
PLUS credit counseling
- What is it? PLUS credit counseling helps you and your parents understand everything about student loan debt so that you can make sense of the requirements and obligations that come with borrowing a PLUS loan.
- What is the purpose? This type of counseling is not mandatory, in all cases, but is available to all PLUS loan borrowers. If you have an “adverse credit history,” you will be required to go through counseling.
- Where to get started? You can get started with your PLUS loan counseling by clicking here.
How to complete PLUS credit counseling
To complete this type of counseling, you’ll need to provide:
- An FSA ID for both student and parent borrowers
- Loan information, which you can find through the National Student Loan Data System (NSLDS)
- Adjusted gross income
- Tax filing status
- State of residence
- Size of your family
- Living expenses, such as whether you rent or own your home, utility costs, what you pay for groceries and insurance, and credit card payments
Financial awareness counseling
- What is it? Financial awareness counseling is not mandatory but could contain helpful information for students whether they took out student loans or not.
- What is the purpose? Financial awareness counseling discusses various government aid programs available for paying for college, including grant and loan programs. It can also help students design a financial plan to follow to put them on the path toward having stable finances.
- Where to get started? You can get started with your Financial awareness counseling by clicking here.
How to complete financial awareness counseling
To complete financial awareness counseling, you’ll need:
- Your student account information.
- Your reward letter from the financial aid office of your school.
- Tuition and fees for your school, which you can find on the College Navigator website.
- Income, financial aid, and living expenses.
You must complete the entire counseling process in a single session, which usually takes about 20 to 30 minutes.
TEACH Grant counseling
- What is it? TEACH Grant counseling is mandatory in each year that a student receives the grant. It discusses the program requirements, including the requirement that recipients teach at a qualifying school four years after graduating.
- What is the purpose? The counseling session can help students learn how to budget during school and make the most of their money.
- Where to get started? You can get started with your TEACH Grant counseling by clicking here.
How to complete TEACH Grant counseling
The Federal Student Aid website lists three main steps to completing your Teach Grant counseling requirements.
- Complete your initial and subsequent counseling
- Complete an Agreement to Service each year your receive a TEACH Grant
- Upon graduation or withdrawal, complete TEACH Grant exit counseling
Private student loan counseling
- What is it? Private borrowers can complete counseling courses through the federal government, but there are also some companies offering private student loan counseling. You may be able to get counseling from your private student lender or through a third-party company. Private counseling may cost you money.
- What is the purpose? This counseling discusses the implications of your loans and advises you on your repayment options.
- Where to get started? You can get started with counseling from the Federal Student Aid website. After that, do some research for non-profit counselors who may be able to help for free.
Does student loan counseling cost money?
Generally, student loan counseling from the federal government is available for free. Borrowers do not have to pay a fee for mandatory or optional counseling.
However, private student loan counselors may charge a fee for their services. It’s up to you whether the amount you’re paying is worth the advice and assistance.
For example, Clearpoint, a company specializing in different types of loan counseling, offers student loan counseling for $99.
Exhaust free options for student loan counseling first
If you want to pursue student loan counseling, the first thing that you should do is check the StudentAid.gov website to see what counseling is available for your situation. Once you’ve exhausted the free counseling options, you can consider private loan counseling.
When comparing private loan counselors, consider a few things, including the cost per session and the length of each session. The more time you spend with a counselor, the more advice they’ll be able to give. At the same time, you don’t want to overpay for advice. One good way to find a counselor is through the National Foundation for Credit Counseling (NFCC), which offers a tool that you can use to find credit counselors in your area.
Author: Kathryn Pomroy