Forty percent of borrowers surveyed by NERA Economic Consulting in 2012 had no memory of going through student loan counseling.
There’s one problem: The counseling is mandatory.
Every federal student loan borrower must complete entrance counseling upon taking out their first loan and exit counseling upon leaving school.
Once you complete your counseling, don’t forget what it actually covered.
When and where to undergo entrance counseling
Entrance counseling is one of four types of training carried out at StudentLoans.gov. It 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.
Entrance counseling is required for all first-time federal loan borrowers. In fact, a loan won’t be disbursed until you’ve met the requirement.
Graduate students taking out a Direct PLUS Loan are also required to undergo entrance counseling.
If your school requires 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 counseling options.
For the most part, entrance counseling takes place on StudentLoans.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 elect to notify it of the results. The school could be alerted in as little as three to five business days.
Why StudentLoans.gov entrance counseling is worth your time
Entrance counseling has its benefits. If you complete it and realize a student loan isn’t right for you, you can cancel all or part of it without penalty.
More likely, the 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 an FSA ID and gained full access to StudentLoans.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 percent of borrowers surveyed forgot all about it. Perhaps they raced through it and moved on without a care.
To make sure you’re not skimming and blindly clicking through the lessons, StudentLoans.gov has quick “Check Your Knowledge” quiz questions. Answering them correctly allows you to progress.
Take time to complete each section. I found that I needed closer to 40 minutes to grasp everything in the counseling session.
5 topics covered by student loan counseling
What will you learn in the course of a half hour of counseling? That’s really up to you. But here are the five topics the counseling will cover.
1. Understanding your loans
This initial section should keep you engaged because it allows you to enter in your individual loan information. If you’re starting your college career 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 — join the club.
Still, StudentLoans.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:
- Your future monthly loan payment
- Your repayment plan options
- When you should enter repayment
4. Avoiding default
This section is meant to deter you from joining the 11.2 percent of borrowers delinquent on their payments or in default. It covers every option to avoid such a fate:
- Deferment and forbearance
- Loan forgiveness
- Loan cancellation or discharge
- Resolving disputes with your servicer
- Loan consolidation
5. Making finances a priority
The final section 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
- Withholding from your paycheck and considering tax deductions, credits
- Building, maintaining, and protecting your credit score
The reward at the end of entrance counseling
When you complete the five sections of StudentLoans.gov entrance counseling, you’ll land on a page that is colorful — at least by government website standards. You’ll jump to and from easy-to-understand charts and tables.
These are powerful reminders of what your student loan debt looks like now and into the future. But these 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.
Take time to 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 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust 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.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* 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.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.23% – 13.23%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 10.11%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|