How Student Loan Exit Counseling Works — And Why It Matters

If you’ve recently left or graduated college, your student loans may come due soon. To help prepare borrowers for repayment, student loan exit counseling is required if you have federal student debt or, in some cases, loans from your school.

In this guide, we break down what you need to know about student loan exit counseling, how to complete it, and how to start your next chapter.

What is student loan exit counseling?

Student loan exit counseling is a mandatory training to educate and prepare you for paying back your loans. Most federal student loans as well as some school-based loans require you to complete student loan exit counseling. Parent PLUS borrowers are exempt from this process.

Taking out student loans to pay for higher education is a big responsibility. Managing your debt and figuring out your repayment options can leave you with more questions than answers.

That’s where student loan exit counseling comes in. During this process, you’ll go over:

• Your student loan balance
• Interest rates on your student loans
• Interest accrual and capitalization
• Repayment options
• When your student loan is due
• Who your loan servicer is
• Your student loan rights and benefits
• Student loan forgiveness options
• How to make payments affordable via income-driven repayment (IDR), deferment, and forbearance
• The impact of delinquency and default
• Your monthly payment

Student loan exit counseling is a key step to complete so you have the information you need to tackle your debt. Plus, it’s mandatory — if you fail to complete this process, your school can take action. For example, you may be ineligible to receive school transcripts, or worse, your diploma.

Related: What is Entrance Counseling for Student Loans?

When do I complete exit counseling?

You’ll need to complete student loan exit counseling in a few situations, including:

• Graduating from college
• Dropping below half-time enrollment
• Dropping out of school
• Transferring to a new school

While there’s not an exact deadline to complete counseling, these four situations will trigger the requirement shortly thereafter. It’s a smart idea to complete this process quickly so you’re well-prepared to manage your student loans.

How to complete exit counseling

Going through student loan exit counseling will take approximately 30 minutes and must be done in one sitting. Here are six steps to finish student loan exit counseling:

1. Access the exit counseling portal

To complete your federal student loan exit counseling requirement, start by logging in to the exit counseling portal via StudentAid.gov using your FSA ID. Select the correct option based on your status as either an undergraduate or graduate student.

2. Verify your information

As part of student loan exit counseling, you’ll verify the information on file. This includes your:

• Permanent address
• Email
• Cell phone number
• Communication preferences (via email or mail)

You’ll also need to provide a home or work phone number, if applicable, and your driver’s license information.

3. Add references and school

During exit counseling, provide two personal references as well as information about your closest living relative. While this may seem like an odd request, it’s used in the event your contact information changes and you don’t update your loan servicer.

You’ll also be asked to name your current school to let them know that you’ve completed this required process.

4. Understand your student loans

The next portion will provide you with a breakdown of key student loan terms. You’ll learn how interest works, the impact of your interest rate, and how these factors affect your loan balance. Then, you’ll learn about the different types of federal student loans and how they work.

You’ll be asked to input the date you left school so you know when your repayment will begin. But one of the most eye-opening parts of student loan exit counseling is seeing the interest that accrues on your loans.

You’ll see how much interest adds to your debt per day, per month, and during your grace period. You can then review how starting payments early can minimize interest and save you money.

5. Learn about repayment

Once you’ve covered the basics about your loans, you’ll review the various terms and aspects of the debt repayment journey. This includes your loan servicer — the entity you make student loan payments to — and how to set up payments.

Additionally, you’re reminded of what you signed up for with your master promissory note. Your rights as a borrower are also outlined, and student loan forgiveness options are highlighted.

Your options for pausing payments (and the impact it’ll have on total costs) are part of student loan exit counseling, too. Lastly, you’ll learn what constitutes delinquency vs. default and the potential consequences.

6. Provide info to know your options

The final section asks you to provide specific information so that you know different repayment options available to you. For example, you’re asked about your current marital status, income, employment, and if you have dependents.

Once you provide that information, you can select your repayment goal and then receive a recommended repayment plan. However, you must manually enroll in your chosen repayment plan through your loan servicer.

After that, you’ll get an exit counseling summary touching on everything you’ve gone through. You’ll officially be done with student loan exit counseling and get actionable next steps.

What happens after exit counseling?

Once you complete student loan exit counseling, get in touch with your loan servicer and make sure you’re on a repayment plan that works for your situation. Federal loan borrowers typically have six months as a grace period before payments begin, so note your first due date and prepare accordingly.

Related: How to Change Your Student Loan Repayment Plan

After you’ve reviewed your current loans, you might also explore other options. For example, some borrowers may be interested in refinancing their loans. Those with a reliable income and good credit may qualify for lower rates or a faster repayment timeline, making it easier to manage their loans.

However, refinancing federal student debt carries some extra risk. If you do so, you’ll no longer be eligible for federal benefits such as forgiveness programs, income-driven repayment, and more flexible deferment and forbearance.

FAQ

What happens if I don't complete exit counseling?

If you fail to complete student loan exit counseling, your school may not allow you to register for future classes or receive your diploma or transcripts.

Do I need to complete exit counseling when transferring?

You’re still required to complete student loan exit counseling if you’re transferring to another school. Leaving your current school is one of the situations that mandates exit counseling, even if you’re attending another school.

Do I complete exit counseling if I am going to grad school?

Yes, you must complete exit counseling upon graduation, even if you plan on going to graduate school next.

Who should complete exit counseling?

Nearly all federal student loan borrowers are required to complete student loan exit counseling, with the exception of parent PLUS borrowers.

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