Student Loan Counseling Benefits

Education is one of the most important investments for you and your family. But with the rising cost of tuition and the need to borrow to pay for it, a college degree has become a liability instead of an asset. With student loan debt approaching $1.3 trillion and student loan default rates well above 10%, there is a need for better education about education loans.

The Department of Education, schools, and some student loan lenders and servicers require that borrowers complete a minimal amount of student loan counseling. While many students see counseling as an unhelpful burden, loan counseling has several benefits before your start, while you’re in college, and especially after you graduate and get ready to start repaying your student loans.

Here is an overview of the most important types of student loan counseling and the benefits you’ll receive from completing them.

Entrance Counseling

Entrance counseling is designed to help you become familiar with your obligations regarding student loans. If you are an undergraduate or graduate/professional student who is receiving federal loans for the first time, you’ll be required to complete entrance counseling.

Financial Awareness Counseling

You’ll also be able to complete the optional financial aid awareness counseling. It’s there to help you learn more about all types of financial aid, not just your student loans. The main reason you’ll want to consider this optional counseling is for help with your college budget and living expenses. Tuition, fees, books, and supplies are only part of the equation. You’ll need to pay for transportation, clothing, and certain types of living expenses whether you live on or off campus. Financial awareness counseling will help you to manage your finances, maintain your expenses, and complete your studies.

PLUS Counseling

PLUS counseling helps both students and parents understand their responsibilities when taking out parental loans. In most cases, PLUS counseling is optional but may be required in cases where the borrower has an adverse credit history.

TEACH Grant Counseling

If you receive a TEACH grant, you’ll need to complete initial and subsequent counseling in order to continue receiving the grant. Since TEACH grants are not loans, they do not have to be repaid. TEACH grant counseling ensures that you understand your ongoing responsibilities while you are in school and the work or service requirements you will commit to after you complete your education or leave school.

Exit Counseling

Once you completed your education, leave school, or change to less than half-time enrollment status you’ll need to be prepared to repay your student loans. Exit counseling is required for any of these 3 situations and will let you know about your responsibilities and options available to repay your loans.

Where Can I Get Student Loan Counseling?

There are several resources to help you get the financial aid and loan counseling you need. First, find out exactly what your school requires. You can complete your student loan counseling online or in person at your school. When you complete your counseling online, you’ll need to sign your Master Promissory Note in addition to completing entrance counseling. You can complete the online module in about 30 minutes.

Non-profit Student Loan Counseling

You can find several non-profit and community-based organizations that offer financial aid and student loan counseling to students preparing for college. Many also offer counseling to help deal with student loan debt. Some offer seminars or online tools to help you get familiar with the types of loan programs and repayment options available.

Others have counselors on staff that will help new students apply for financial aid or help graduates who are having trouble repaying their student loans to apply for student loan consolidation (the act of consolidating student loans together), deferment or forbearance (the act of postponing payments for a period of time), income-driven repayment plans (repayment plans that cap monthly payments by percentage of income), or loan forgiveness programs (a program that could forgive your student debt). In addition to dealing with your student loans, many of these organizations also have resources to help you with budgeting and managing other types of debts.

Improving Financial Literacy Among Students

The Department of Education has announced new initiatives to improve student loan and financial aid counseling. Colleges and universities will be able to participate in an experimental effort to provide or require yearly counseling aimed at increasing financial literacy among students and better preparing them to repay their loans once they leave school.

Since it’s still in the early stages, you’ll need to find out if programs are available at your school or one you’re considering. You also may not be required to complete this counseling if you have private student loans, but if you can, it is probably a good idea.

Take advantage of the student loan counseling resources that are available. If you’re a new student you’ll be better equipped to handle your student loan repayment when you graduate. If you’re approaching graduation, exit counseling along with community-based counseling can help you to repay your loans successfully and avoid default.