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Student Loans

What is Student Loan Exit Counseling?

Updated May 05, 2021   |   5 mins read

The last several years of college have been a whirlwind. You’ve gone to class, maybe hit a few parties, and signed on the dotted line to get more federal loan funding each year. Now, it’s almost time to pick up your diploma, but first, you may have to go through student loan exit counseling.

The federal government requires that every student who takes out federal student loans completes exit counseling before graduation. In addition, students who drop out of college or go below half time enrollment must also complete this counseling.

You might be a little stressed out about going through student loan exit counseling, but don’t worry, it’s an informative process that will help you understand how student loans work so you can be successful in repayment. Remove the stress by learning what to expect during your counseling session.

Who Conducts the Session?

Your college’s financial aid office might be in charge of your exit counseling session. You might meet with a financial aid officer in a one-on-one setting, or your financial aid officer might hold a group session. However, it doesn’t have to be your school. Audiovisual presentations, interactive tools, and online counseling are also options which can be found on online on a government website. Either way you must receive some type of student loan exit counseling to prepare you for student loan repayment.

What You’ll Learn

Regardless of how the session is conducted, you might learn plenty of helpful information. First, you’re going to learn how to access the National Student Loan Data System. This system contains federal loan information, so once you log in, you can find out how much you actually owe. For the average college student, those signatures can add up to nearly $30,000 in student loans, so be sure to log in and find out what to expect over the next several years.

You’ll also go over your repayment options. The federal government offers the following repayment plans:

  • Standard
  • ​Graduated
  • ​Extended
  • ​Pay as you earn
  • ​Revised pay as you earn
  • ​Income-based
  • ​Income-contingent
  • Income-sensitive

Your counselor should go over each option with you, including the pros, cons, and expectations of each plan. He or she may also talk about loan consolidation. Direct loan consolidation is a repayment plan offered by the federal government for those who are struggling with their loans. However, private companies and banks also offer consolidation loans which is more commonly known as student loan refinancing. Through refinancing, you can consolidate your loans and receive a new interest rate and repayment term in the process. This interest rate is determined by your credit profile and income, so bear that in mind if you’re considering a refinance loan.

In addition, your counselor will go over your options for loan forgiveness or cancellation; however, these options could be limited depending on your career path and loan situation. Be sure to pay attention to all of this information, as it can come in handy down the road.

Budgeting is also a big topic you will cover during the session. This might be the most important topic of all; it’s important in all aspects of finance, not just student loan repayment. If you’ve spent your entire life in school, you may not have dealt much with a real-life budget or have worried much about your finances. That will change once you’re done with school and out in the real world with financial responsibilities. More than likely, you will have to find a way to create a budget that allows you to live and repay your student loans at the same time. Your counselor will help you with the process so you can start off on the right foot.

Questions to Ask

It is always a good idea to go into a student loan exit interview with a list of questions to ask. While this won’t be the only time you can talk to a financial aid officer, it is still a good time to make sure you are both on the same page.

If you’ve taken out any private loans, ask if they will impact your repayment strategy. Private loans are an additional financial burden, so you may need to factor them into your budget.

In addition, ask what will happen if you miss a loan payment. Hopefully, this will never happen, but if it does, you need to know exactly what to expect. In many cases, knowing what to expect makes it easier to keep up with those payments. The idea of facing consequences is a good way to stay in line.

You should also ask what happens if anything in your life changes. What will be expected of you if you get a new job? Will you have to pay more? What if you lose your job or you move? The answer to this question could depend on what repayment plan you chose.

Finally, ask who you can contact if you have further questions. You should have a contact at the financial aid office that you can reach even after you graduate. This person will be able to answer any questions that come up during the payment process.

Your student loan counseling exit interview is one of the most important things you will do near graduation. Set aside some time to prepare for your interview so you can take in all of the important information you need to begin repaying your loan.

>> Read More: Types of student loan counseling