As graduation approaches, you might be feeling clueless about your student loans. Fortunately, student loan exit counseling helps you figure out the next steps.
Exit counseling is required for all federal student loan borrowers. It covers your repayment options, rights, and responsibilities.
Student loan exit counseling is an essential step as you transition away from college. Here’s what exit counseling will tell you about student loans.
What is student loan exit counseling?
Student loan exit counseling teaches you how to handle your student loan debt. Anyone with Direct Loans, Federal Family Education Loans (FFEL), or PLUS Loans must go through exit counseling after leaving school.
There are three scenarios when you must complete exit counseling. These include:
- Graduating from college
- Withdrawing from college
- Dropping below half-time enrollment
Exit counseling is handled in a couple of ways. You could simply sign into your account at StudentLoans.gov and complete the process online. Exit counseling via the web usually only takes about 20 or 30 minutes.
Alternatively, some schools offer in-person exit counseling sessions. These might take place one-on-one or in a group setting. In-person exit counseling can be helpful if you have questions about your specific situation.
Check your school’s website to see how it handles student loan exit counseling. If you can’t find this information online, get in touch with your financial aid office.
Here are the 5 steps of exit counseling
After you finish exit counseling, you should feel prepared to tackle your student loan debt. Here are the five main parts of loan exit counseling.
1. Review the basics of your student loans
The first part of exit counseling goes over the basics of student loans. At the top of this page, you’ll see your total federal student loan balance.
Then, you’ll get an overview of each type of federal student loan. You’ll learn about Subsidized and Unsubsidized Direct Loans, FFELs, Grad PLUS Loans, and Federal Perkins Loans.
This section of exit counseling also reviews how student loan interest works. So, keep an eye out for the current interest rates of each type of loan you have.
All of this information should basically be a repeat of what you learned during student loan entrance counseling. It goes over the basics to make sure you understand what loans you have and how they work.
Once you’ve read this information, move onto part two to learn about your repayment options.
2. Learn about your options for repayment
The second stage of exit counseling is probably the most useful. It goes over all of your options for student loan repayment, including the standard plan and income-driven repayment.
Plus, it has a repayment calculator so you can estimate your monthly payments on each plan. You’ll enter information like your projected annual income and monthly housing costs.
Then, the calculator will balance your other expenses with your student loan payments. You can compare plans to see which one best fits within your budget.
A second calculator shows how much you’ll save by paying interest during the grace period. Even though you may not have to immediately start making student loan payments, the earlier you start, the more money you’ll save.
The final interactive tool shows how much you could save by making extra payments toward your student loans. If you can swing it, a regular extra payment each month could shave years off your plan (and thousands of dollars from the total cost).
Beyond these calculators, you’ll also get some extra loan payment tips. For instance, you’ll learn about the 0.25 percent interest rate deduction you can likely score if you set up automatic withdrawals.
This step is one of the most important parts of exit counseling. Make sure to review the information thoroughly so you know which student loan repayment plan is right for you.
Note that you can change your plan in the future if your circumstances change. Some borrowers even refinance their student loans and switch to a new lender.
3. Read tips on avoiding default
The third stage of student loan exit counseling is all about avoiding default. It teaches you about your options if you run into financial hardship.
Instead of bailing on your student loans — which has a number of consequences — you might put your loans into deferment or forbearance. These two options temporarily pause your payments.
That being said, student loan interest will continue to accrue in most cases. The tool below estimates how much interest will add up if you pause your student loan payments.
You’ll also learn about the benefits of federal loan consolidation. While consolidation won’t save you money, it will combine multiple student loans into just one. As a result, it will be easier to keep track of your bill and due date.
You might also qualify for loan discharge if your college closes or you have a disability. This information is most useful for borrowers who are worried about their ability to pay back their loans.
Here, you can learn about all your federal options for avoiding student loan default.
4. Get advice about financial planning
The next stage in exit counseling asks you to think about your personal finances. It goes over how to plan for the future and set long-term financial goals.
These are a few of the key takeaways in this step:
- Build up a three- to six-month emergency fund
- Create a monthly spending plan
- Pay off your full credit balance every month
- Establish and build up your credit score
5. Update your contact information
This final step has some action items for you. Here, you’ll put what you learned from exit counseling into practice by choosing your repayment plan. Note that your federal loan servicer will still have to review your information to approve your repayment plan request.
You’ll also enter your most recent contact information. Lots of people move and change their emails after graduation. This step ensures your loan servicer has your most up-to-date info.
If you already have a job lined up, you’ll also enter your employer’s information. Plus, you’ll write in the contact information for a relative and two references. In the case of default, the loan servicer will call your references to track you down.
Make sure to review this page before you hit submit. If you need to update your information later, you can sign into your account to do so. And if your income changes, speak with your loan servicer about your options.
After you finish filling out your information, you’re all finished with student loan exit counseling. Once your loan servicer approves your repayment plan, you’ll be ready to enter repayment on the first due date.
Stay updated on your student loan repayment options
Student loan exit counseling is a helpful introduction to student loan repayment. But it doesn’t go over everything, like how to save money on student loans.
While exit counseling is important, it doesn’t tell you every option for student loan repayment. Seek out other resources for more information.
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). 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.
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 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.53% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|