What is student loan exit counseling and how does it work?

Student loan exit counseling helps federal student loan borrowers understand their repayment obligations and prepares them to manage their student loan debt

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If you’re about to graduate, leave school, or drop below half-time enrollment, you may need to do student loan exit counseling. (Shutterstock)

Student loan exit counseling is a step that federal student loan borrowers are legally required to take once they graduate, leave school, or drop below half-time enrollment. It’s similar to the entrance counseling borrowers must complete when they first receive Direct Loans. 

Exit counseling helps borrowers understand how much debt they have and the consequences of not repaying that debt, as well as how to repay their federal student loans. 

If you’re graduating or leaving school soon, visit Credible to learn about private student loan refinancing options.

What is student loan exit counseling?

If you have federal student loans, you’re legally required to complete exit counseling once you graduate, leave school, or become enrolled less than half-time. Student loan exit counseling helps ensure you understand your repayment obligations and prepares you to manage your student loan debt. 

Throughout the process, you’ll gain a better understanding of what your student loan payments will be like, what type of repayment plan would work best for you, and how to avoid default.

Even if you leave school with the intention of restarting another program at a later date, you’ll still need to complete exit counseling.

Generally, only federal student loan borrowers undergo exit counseling since it’s a requirement for federal student loans. You’ll complete counseling if you have Federal Direct or FFEL Subsidized Loans, Direct or FFEL Unsubsidized Loans, or Direct or FFEL PLUS Loans. Borrowers who have Parent PLUS Loans aren’t required to complete exit counseling.

Some private lenders may also require exit counseling, so it’s a good idea to check with your lender if you have private student loans. Your individual school might also have its own requirements for exit counseling, so be sure to check with your financial aid office.

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How does student loan exit counseling work?

Federal student loan exit counseling is a fairly quick process that only takes about 30 minutes to complete. You don’t have to pay anything for federal student loan exit counseling. To start, you’ll log in to your Federal Student Aid account using your FSA ID username. Note that you must finish online exit counseling in one session. 

During your student loan exit counseling session, you can expect to: 

  • Review your student loan information. You’ll need to review the terms and conditions that apply to your specific federal student loans, which will help you understand how you can manage your student loan debt and what you can do to repay your debt on time.
  • Learn about your repayment options. During counseling, you’ll learn more about what repayment options are available to you, such as income-driven repayment plans. That way, you can choose a repayment plan that best suits your financial and personal needs.
  • Get tips for avoiding student loan default. To help you avoid falling into default, student loan exit counseling will walk you through strategies such as making smart career choices that’ll make it easier to afford your monthly payments.
  • Receive financial planning advice. On top of tips for avoiding default, you’ll learn ways to plan financially for the future and how to make a budget. Creating good financial habits as soon as you leave college will pay off now and in the future.
  • Make sure your contact information is up to date. When you complete exit counseling online, you’ll need to provide your contact information, which will be sent to your loan servicer. If you change your contact information in the future, you’ll need to update your loan servicer directly.

Benefits of student loan exit counseling

While student loan exit counseling may seem like one more thing to add to your to-do list, it’s designed to benefit you and help make repaying your student loans easier. Some of the benefits you can expect include: 

  • You’ll know where you stand. When you take part in exit counseling, you’ll gain a clearer understanding of the terms and conditions that apply to your federal student loans and what your repayment options are. You’ll feel a lot more prepared to tackle your loans after completing student loan exit counseling.
  • You’ll have a plan for avoiding student loan default. Falling into default isn’t ideal, and student loan exit counseling walks you through how to avoid defaulting on your loans.
  • You’ll get a head start on financial planning. Figuring out how to manage your personal finances after leaving school comes with a learning curve. Student loan exit counseling gives you a head start when it comes to learning the basics of financial planning.

Where to find student loan exit counseling

Federal student loan borrowers can complete the student loan exit counseling process by going to StudentAid.gov. To get started, you’ll need to have a verified StudentAid.gov account, will provide the name of the school (or schools) you took loans out to attend, and will share your up-to-date contact information. 

If you need help managing private student loans, you can contact your private lender to see if it offers its own version of student loan exit counseling. 

For additional help learning how to navigate your student loan debt, you can talk to an NFCC Certified Financial Counselor, who may be able to help you create a plan for paying off your loans. Before contacting any type of certified financial counselor or student loan counseling company, it’s best to have all your student loan information and documentation ready. 

Is student loan exit counseling right for you?

While student loan exit counseling is required for federal borrowers, any student loan borrower can benefit from some form of student loan exit counseling that prepares them to repay their student loans. 

If you’re looking to pay off your loans quickly and efficiently or feel overwhelmed by the process, student loan exit counseling can help you regain a sense of control and make a plan for repayment that you’re comfortable following. The last thing any borrower wants to do is start the next chapter of their life feeling like they’re drowning because of their student loan debt

If you want a different loan term to make your student loan repayment more manageable, visit Credible to compare student loan refinance rates from various lenders in minutes.