Entrance Counseling: 5 Reasons It’s Worth Doing for Your Federal Student Loans

 February 16, 2020
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Entrance Counseling

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Forty percent of high-debt student loan borrowers surveyed by nonprofit TG Research in 2016 had no memory of going through student loan entrance counseling.

There’s one problem: The counseling is mandatory.

Every federal student loan borrower must complete entrance counseling upon taking out their first loan.

Once you complete your counseling, don’t forget what it actually covered.

Entrance counseling: 5 lessons to learn about your federal loans
How to complete loan entrance counseling
Why direct loan entrance counseling is worth your time

Entrance counseling: 5 lessons to learn about your federal loans

What will you learn in a half-hour of loan entrance counseling? That’s really up to you. But here are the five topics the counseling at StudentAid.gov will cover.

1. Understanding your loans

This initial section of loan entrance counseling should keep you engaged because it allows you to enter your individual loan information. If you’re starting your college journey with multiple loans, you can enter them all. This allows you to see how the debts grow over time.

You’ll also review basic terms and concepts when it comes to your current loan and other financing options. Among them:

  • How your loan will grow over time
  • How and why to seek gift aid before loans
  • Types of federal loans available and their maximum amounts

2. Managing your spending

The highlight of this section is an interactive budgeting tool that prepares you for on-campus expenses. It will even pull the average costs specific to your school.


Based on the financial aid, income and expenses personalized for your situation, you’ll see whether you’ve raised enough money to pay for a year of school.

Further on in this section, you’ll be encouraged to make in-school payments on your loans. The website’s calculator allows you to estimate potential savings.


3. Planning to repay

If you’re a freshman and have no idea what kind of career you’ll pursue after college — join the club.

Still, the federal student aid website StudentAid.gov wants to put you through the paces. It will ask you to visit the Department of Labor’s CareerOneStop website to find the projected annual income of your dream job (even if you don’t have one yet).

The hope is that you’ll understand how a salary, even a placeholder one, will affect the following:

  • Your future monthly loan payment
  • Your repayment plan options
  • When you should enter repayment

4. Avoiding default

This section of student loan entrance counseling is meant to deter you from letting your debt from joining the 11.5% of loans that are delinquent on their payments or in default, according to our student debt stats. The counseling covers every option to avoid such a fate:

5. Making finances a priority

The final section of entrance counseling is as broad as its name implies. It covers every other aspect of your financial future with the idea that healthy spending and saving habits will lead to paying off your loans faster. What’s covered:

  • Opening a savings account and keeping an emergency fund
  • Creating a budget to spend wisely and paying off your credit card debt
  • Withholdings from your paycheck and considering tax deductions and credits
  • Building, maintaining and protecting your credit score

How to complete loan entrance counseling

Entrance counseling at StudentAid.gov is particularly important because it reviews everything you need to know about the gravity of your debt. It’s designed to keep you out of delinquency and default.

The Federal Student Aid office’s counseling is required for all first-time federal loan borrowers. In fact, a loan won’t be disbursed until you’ve met the requirement.

If your school requires alternative counseling for direct loans, it might be part of a Department of Education (DOE) experiment aiming to reduce delinquencies and defaults. Starting in August 2016, the DOE began working with select universities and colleges to test the benefits of additional, flexible loan entrance counseling options.

For the most part, entrance counseling takes place on StudentAid.gov. The website is also a one-stop shop for taking control of your federal debt once you leave school.

Before completing the 20- to 30-minute online session, you can search for your school and choose to notify it of the results. The school could be alerted in as little as three to five business days.

Why direct loan entrance counseling is worth your time

Entrance counseling has its benefits. If you complete it and realize a direct student loan isn’t right for you, you can cancel all or part of it without penalty.

More likely, the student loan counseling will confirm what you already know about student loans and emphasize the finer points of your responsibilities as a borrower. If you have not created a Federal Student Aid (FSA) ID and gained full access to StudentAid.gov entrance counseling, you can follow this demo of the counseling.

The counseling’s five-part agenda is ambitious. That might help to explain why 40% of borrowers surveyed forgot all about it. Perhaps they raced through it and moved on without a care.

Take the time to complete each section. I found that I needed closer to 40 minutes to grasp everything in the entrance counseling session.

When you finish StudentAid.gov’s entrance counseling, you should be reminded of what your student loan debt looks like now and into the future. But the counseling’s cool visuals are only as worthwhile as the data you supply to make them. Much like your actual loans, doing your homework now can paint a rosier picture of the future.

Learn about the different types of student loans available, your interest rates and what you can do now to make repayment easier.

Need a student loan?

Here are our top student loan lenders of 2022!
LenderVariable APREligibility 
2.49% – 13.85%1Undergraduate

Visit College Ave

2.55% – 11.44%2Undergraduate

Visit Earnest

3.25% – 13.59%3Undergraduate

Visit SallieMae

0.00% – 23.00%4Undergraduate

Visit Edly

3.25% – 9.69%6Undergraduate



Visit FundingU

* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. As certified by your school and less any other financial aid you might receive. Minimum $1,000.
  2. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
  3. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 9/15/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.47% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 2.80% APR to 11.69% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

3 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

4 Important Disclosures for Edly.

Edly Disclosures

1. Loan Example:

  • Loans from $5,000 – $20,000
  • Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan.
    • Payments deferred for the first 12 months during final year of education.
    • After which, $270 Monthly payment for 12 months.
    • Then $379 Monthly payment for 44 months.
    • Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan.

About this example

The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment.

2. Edly Student IBR Loans are unsecured personal student loans issued by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply.

5 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of September 1, 2022, the 30-day average SOFR index is 2.23%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
  • Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
  • Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.


    Undergraduate Rate Disclosure: Variable interest rates range from 3.25%-10.35% (3.25% – 9.69% APR). Fixed interest rates range from 4.24% – 10.59% (4.24% – 9.93% APR). 

    Graduate Rate Disclosure: Variable interest rates range from 3.75%-9.90% (3.75% – 9.68% APR). Fixed interest rates range from  5.22% – 10.14% (5.22% – 9.91% APR). 

    Business/Law Rate Disclosure: Variable interest rates range from 3.75%-9.35% (3.75% – 9.16% APR). Fixed interest rates range from 5.20% – 9.59% (5.20% – 9.39% APR).

    Medical/Dental Rate Disclosure: Variable interest rates range from 3.75%-9.02% (3.75% -8.98% APR). Fixed interest rates range from 5.18% – 9.26% (5.18% – 9.22% APR). 

    Parent Loan Rate Disclosure: Variable interest rates range from 3.25%-9.21% (3.25% – 9.21% APR). Fixed interest rates range from 3.96%-9.50% (3.96%-9.50% APR).

    Bar Study Rate Disclosure: Variable interest rates range from 6.58%-11.72% (6.58% – 11.62% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.82% APR). 

    Medical Residency Rate Disclosure: Variable interest rates range from 5.67%-9.17% (5.67% – 8.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).

6 Important Disclosures for Funding U.

Funding U Disclosures

Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.