Student Loan Exit Counseling: A Complete Guide

Student loan exit counseling is as crucial as counseling to determine which loan to take.

Graduating from college is an exciting time. You’ve worked hard for your degree and are ready to start the next chapter of your life.

But before you toss your cap in the air, there’s one important thing you need to do: student loan exit counseling.

Keep reading to learn all about exit loan counseling and its importance.

What is Student Loan Exit Counseling?

Student loan exit counseling is a mandatory information session all federal student loan borrowers must complete when graduating, leaving school, or dropping below half-time enrollment.

The session covers important details about repaying your federal loans and managing your student loan debt.

The federal government requires exit counseling so that you fully understand your loan obligations.

This helps ensure a smooth transition from school to loan repayment. Completing exit counseling is a requirement for graduating or losing full-time student status.

Why is Student Loan Exit Counseling Required?

There are a few key reasons why the federal government requires student loan exit counseling:

To review your loan balance and specific loan details – Exit counseling provides an overview of your total federal student loan debt, including how much you’ve borrowed in each type of loan (Direct Loans, PLUS Loans, etc.). Interest rates, loan servicers, and other account details will also be seen.
To explain repayment plan options – One of the most important parts of exit counseling is learning about student loan repayment plans like standard, graduated, income-driven, and extended plans. You’ll see how much your monthly payment could be under each option.
To highlight loan deferment and forbearance – Exit counseling outlines situations where you can temporarily postpone federal student loan payments through deferment or forbearance if you’re facing financial hardship.
To review student loan forgiveness programs – You’ll learn about student loan forgiveness options you may qualify for, like Public Service Loan Forgiveness and teacher loan forgiveness.
To go over student loan delinquency and default – You’ll receive information about what happens if you miss loan payments, how to avoid default, and steps for getting out of default if it occurs.

In short, exit counseling aims to fully inform you of your rights and responsibilities as a federal student loan borrower before you leave school.

Reviewing this information helps you make a smooth transition to repayment.

When Should You Complete Exit Counseling?

Exit counseling must be completed when:

You graduate from your college or university
You drop below half-time student enrollment status
You leave school for any other reason

In most cases, it’s best to complete exit counseling right before your graduation date or immediately after your enrollment status changes.

Many colleges have an on-campus exit counseling session during finals week for graduating seniors.

But you can also complete student loan exit counseling online through the Federal Student Aid website or your loan servicer’s website.

Either way, complete exit counseling close to your last day as a full-time student – you can’t put it off for too long after leaving school.

The federal deadline is within 30 days, but don’t take your time.

How Does Student Loan Exit Counseling Work?

Exit counseling sessions can be completed in person, over the phone, or online. Here’s an overview of what’s covered:

1. Review of Loan Balance and Servicers

You’ll log into the National Student Loan Data System (NSLDS) to review:

Total student loan balance
Breakdown of loan amounts by program type (Stafford, PLUS, etc.)
Interest rates on each loan
All federal loan servicers

This helps you understand exactly what you owe and who you must pay.

2. Overview of Repayment Plan Options

One of the biggest parts of exit counseling is learning about different ways to repay federal student loans.

Key points covered include:

Standard Repayment Plan – Fixed monthly payments for up to 10 years. Minimum $50 monthly payment.
Graduated Repayment Plan – Payments start low and increase every two years—up to 10 years of repayment.
Extended Repayment Plan – Fixed or graduated payments up to 25 years for higher loan balances.
Income-Driven Repayment (IDR) Plans – Monthly payments based on income and family size. Any unpaid balance is forgiven after 20-25 years.

You’ll use online calculators to estimate your monthly payment under each plan and decide which works best for your situation.

3. Deferment and Forbearance Options

Exit counseling outlines options to temporarily postpone federal student loan payments, such as:

Deferment – Pauses payments for reasons like unemployment, economic hardship, or returning to school. Interest might still accrue.
Forbearance – Also pauses payments for up to 12 months due to financial hardship or illness. Interest keeps accruing.

You’ll learn eligibility requirements and how to request deferment or forbearance if needed.

4. Student Loan Forgiveness Programs

Exit counseling provides information on student loan forgiveness programs like:

Public Service Loan Forgiveness (PSLF) – Forgives loan balance after ten years of payments while working for a government or a nonprofit.
Teacher Loan Forgiveness – Up to $17,500 forgiveness for teaching in certain schools and subjects for five years.

You’ll see full eligibility details for these programs.

5. Avoiding Delinquency and Default

To keep your federal student loans in good standing, exit counseling stresses the importance of:

Making monthly payments on time, even if it’s a small amount through an income-driven plan
Staying in touch with your loan servicer if you face financial hardship or unemployment
Avoiding deferments and forbearances unless necessary

You’ll also learn steps for getting out of default if it occurs, like loan rehabilitation and consolidation.

6. Repayment Incentives and Tax Benefits

Exit counseling will highlight potential incentives for staying on track with repayment, such as:

Interest rate reductions for signing up for auto-debit payments
Public Service Loan Forgiveness for government and nonprofit work

You’ll also learn about possible federal income tax deductions and credits that may help reduce your tax bill as a student loan borrower.

How to Complete Exit Counseling

Ready to get your student loan exit counseling done? Here are the steps:

Gather your federal student loan documents and contact info for your loan servicers.
Visit StudentAid.gov/exit-counseling and click on “Start Exit Counseling.”
Log in using your FSA ID username and password that you used to complete the FAFSA®.
Review your federal student loans, know your options for repayment, and learn how to manage repayment.
Answer comprehension questions as you go through the exit counseling modules.
Provide information on your future income, family size, and career plans.
Print or save the completion confirmation when you’re finished for your records.

The full exit counseling process takes about 30 minutes to complete. Set aside dedicated time to get through the session in one sitting.

Some colleges also offer in-person group exit counseling sessions on campus in addition to the online process.

Check with your school to see if that’s an option – it can provide a chance to ask questions and get peer insights.

What if I Don’t Complete Exit Counseling?

It’s very important to make sure exit counseling is completed on time – there can be serious consequences if you skip it, such as:

Your federal student aid is being placed on hold, and you cannot receive future loans or grants.
Delayed graduation or inability to obtain your diploma. Some colleges will only let you graduate if exit counseling is done.
Your student loans immediately enter repayment instead of receiving a 6-month grace period after leaving school. This means sudden monthly bills.
Enrolling in alternative repayment plans, deferments, or forbearances is impossible since you didn’t complete the required loan counseling.
Hits to your credit report if forced repayment causes you to become delinquent or default on loans.

Don’t put yourself in a tough spot – start and finish your federal student loan exit counseling on time! Set a reminder if needed so you remember.

What Happens After Completing Exit Counseling?

Finish your exit counseling requirements as close to your graduation or last day of classes. After that:

You’ll receive email and mail reminders about upcoming student loan payments if you have a federal loan grace period.
Your servicer will contact you to choose a repayment plan around two months before monthly bills start. You can explore income-driven plans with required proof of income and family size.
If employed, consider deducting student loan payments directly from your paycheck to stay on track. Sign up for auto-debit with your servicer to earn an interest rate reduction.
Mark all monthly student loan payment due dates in your calendar and budget accordingly. Make payments on time to protect your credit score.
Keep an eye out for future communications from your loan servicer, and don’t hesitate to contact them with any questions. Building a relationship with your servicer now will serve you well.

Final Thought

Following up quickly on exit counseling requirements ensures you’ll start repayment on the right foot.

With a little planning and organization, you’ll be ready to tackle those student loans and enjoy life after college!