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.

StudentAid.gov

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.

StudentAid.gov

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 2021!
LenderVariable APREligibility 
0.99% – 11.98%1Undergraduate
Graduate

Visit College Ave

1.13% – 11.23%*,2Undergraduate
Graduate

Visit SallieMae

0.99% – 11.44%3Undergraduate
Graduate

Visit Earnest

1.50% – 11.33%4Undergraduate
Graduate

Visit Ascent

1.12% – 11.23%5Undergraduate
Graduate

Visit SoFi

1.15% – 11.01%6Undergraduate
Graduate

VISIT CITIZENS

N/A7Undergraduate
Graduate

Visit FundingU

3.80% – 9.36%8Undergraduate
Graduate

Visit CommonBond

* 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 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.

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.

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. This informational repayment example uses typical loan terms for a first year graduate student 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 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. 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 8/9/2021. 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 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

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

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


4 Important Disclosures for Ascent.

Ascent Disclosures

Ascent loans are funded by Bank of Lake Mills, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: AscentFunding.com/Ts&Cs.

Rates are effective as of 10/01/2021 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes income-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions, please visit AscentFunding.com/Cashback. Cosigned Credit-Based Loan student borrowers must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs are available for the most creditworthy applicants and may require a cosigner.


5 Important Disclosures for SoFi.

Sofi Disclosures

UNDERGRADUATE LOANS: Fixed rates from 4.13% to 10.66% annual percentage rate (“APR”) (with autopay), variable rates from 1.12% to 11.23% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 10.90% APR (with autopay), variable rates from 1.10% to 11.34% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.08% to 10.86% APR (with autopay), variable rates from 1.05% to 11.29% APR (with autopay). PARENT LOANS: Fixed rates from 4.23% to 10.66% APR (with autopay), variable rates from 1.20% to 11.23% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 4/1/2021. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (>www.nmlsconsumeraccess.org).


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 1.15% – 11.01% (1.15% – 10.24 APR)Fixed interest rates range from 4.18% – 11.70% (4.18% – 10.83% APR).

Graduate Rate Disclosure: Variable interest rates range from 1.89% – 10.66% (1.89% – 10.41% APR). Fixed interest rates range from 4.64% – 11.23%% (4.64% – 10.95% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.89% – 9.22% (1.89% – 8.50% APR). Fixed interest rates range from 4.38% – 10.44% (4.38% – 9.72% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.89% – 8.02% (1.89% – 7.72% APR). Fixed interest rates range from 4.28% – 9.24% (4.28% – 8.94% APR).

Parent Loan Rate Disclosure: Variable interest rates range from 1.97% – 7.06% (1.97% – 7.06% APR). Fixed interest rates range from 4.94% – 8.58% (4.94% – 8.58% APR).

Bar Study Rate Disclosure: Variable interest rates range from 4.44% – 9.58% (4.44% – 9.52% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.83% APR).

Medical Residency Rate Disclosure: Variable interest rates range from 3.53% – 7.03% (3.53% – 6.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.98% – 10.09% APR).

Variable Rate Disclosure: Variable Rates are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of June 1, 2021, the one-month LIBOR rate is 0.09%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable rate is the greater of 21.00% or 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 require a 5-year repayment term, immediate repayment, a graduate 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.

Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer.  Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.


7 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.


8 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.  If you choose to complete an application, we will conduct a hard credit pull, which may affect your credit score. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.