How Student Loan Exit Counseling Works

Before you start repaying your federal student loans, you’ll need to complete exit counseling.You’re required to do this if you graduate, leave school, or drop below half-time enrollment. 

Exit counseling walks you through your repayment options, estimated monthly payments, and how to manage your loans after school. Here’s what to expect.

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What is student loan exit counseling?

Student loan exit counseling is a required online session that prepares you to repay your federal student loans. You’ll complete it in one sitting, and it typically takes about 30 minutes. 

During the session, you’ll learn:

• Your repayment plan options
• How interest builds on your loans
• What happens if you miss payments
• What to expect once repayment begins 

“Think of it as a transitional briefing to help keep little problems from becoming long-term financial headaches,” says Raymond Tarpley, Jr., growth initiatives manager at the University of Maryland Global Campus.

Who has to complete student loan exit counseling?

You’ll need to complete exit counseling if you have federal student loans and leave school, graduate, or drop below half-time enrollment.

This requirement applies to most federal student loan borrowers. However, if you took out a parent PLUS loan for your child, you don’t need to complete exit counseling.

When should you complete exit counseling for student loans?

If you’re leaving school, graduating, or dropping below half-time status, you’ll need to complete federal student loan exit counseling as soon as possible. Ideally, you’ll tackle this requirement before graduating or leaving school. Even if you plan to enroll in another program soon, you’ll still need to complete exit counseling for your current federal loans. 

How do you complete student loan exit counseling?

To complete student loan exit counseling, log in to StudentAid.gov and follow the required steps.

1. Update your contact information

The process starts by confirming or updating your contact information. Be prepared to share a permanent address, email address, driver’s license number, and phone number. 

2. Provide references

You’ll need to share the contact information of your closest family members and references. The people you name won’t be responsible for loan repayment. Instead, these names serve as backup contact information in case your loan servicer is having trouble reaching you. 

3. List your school

Next, you’ll need to select which school(s) to notify about your completion of exit counseling. Once you complete the session, StudentAid.gov will notify the schools you name. 

4. Share details about your loan

You’ll be asked to confirm details about your loan, which will be used to simulate your repayment options. Since you’ll be logged into your StudentAid.gov account, your loan details should populate the tool automatically. But it’s a good idea to check over the details to confirm everything is correct. 

5. Review your loan details and terms 

You’ll review the key details of your loans, including your balance, interest, and repayment timeline. This step shows when your payments start, how interest builds over time, and how your grace period works. You’ll also see how interest capitalization can increase your balance and how making early payments could reduce what you owe.

6. Learn how to make payments

You’ll learn how to set up and manage your loan payments. This includes creating an account with your loan servicer, enrolling in automatic payments, and making extra payments to pay down your balance faster.

7. Understand your rights and potential consequences

Before wrapping up, you’ll learn all about your rights as a federal student loan borrower. For example, you’ll be reminded that you can pay your loans off early without penalty, change repayment plans at any time, and potentially save money on interest charges by enrolling in automatic payments. 

You’ll also review potential loan forgiveness options and see what can happen if you miss payments. This includes delinquency and default, which can increase your balance and damage your credit.

8. Explore your repayment options

Finally, you'll answer a few questions about your finances, employment plans, and goals for your loans.

Based on your answers, the tool will show your repayment plan options and suggest one that fits your situation. You can choose the plan that works best for you, but you’ll still need to enroll through your loan servicer.

“You should pay attention and take notes,” advises Reyna Gobel, author of “Graduation Debt: How To Manage Student Loans and Live Your Life.” 

“The repayment plans you choose can affect the next ten plus years of your life. Talk to your school financial aid office and your servicer to get details on all your options,” she adds.

What happens during exit counseling for student loans?

Student loan exit counseling covers several key areas, including the following:

• Loan information: The session covers the terminology of federal student loans, helping you navigate the repayment process more smoothly. 
• Rights and obligations: You’ll get a refresher on the rights and responsibilities attached to your federal student loans, including borrower protections and repayment expectations. 
• Repayment options: You’ll see the available repayment plans and how each affects your monthly payment and total loan cost.

What happens if you don’t complete exit counseling?

Federal student loan exit counseling is required for all student borrowers, without exception. If you don’t complete the required session, the consequences can be severe. For example, your school might refuse to issue your transcripts or allow you to register for classes again until you complete the requirement.