Sometimes students don’t read the fine print of the federal loans they get, and when this happens, students can make some terrible mistakes. For example, a report produced by the Consumer Financial Protection Bureau indicates that at least 3,800 students had complaints about their student loans, and many of these students were unaware of the repayment schedules they were required to stick to. Now, many of the students included in this report had private loans, not federal options, but even students who have federal loans might have the same sorts of issues.
Exit counseling is designed to help. Students who obtain federal loans for their educations must participate in this program, and by doing so, they may avoid some of the more serious consequences that can come about when their post-graduation plans don’t work out quite right.
Benefits of Exit Counseling
- Helps you to understand your rights as a borrower
- Lays out your responsibilities for repayment
- Teaches tips on making payments easier
- Explains how and where to get help if you need it
- Provides knowledge on how to protect your credit rating
- Reviews deferment options
- Teaches you the seriousness of defaulting and what will happen if that occurs
- Ensures the lender has updated contact information upon completion
- Answers questions about Title IV federal financial aid
- Provides help understanding repayment plan options and helps you choose the right one
- Teaches debt-management strategies and how to set a realistic budget
- Educates you on education tax benefits you may be eligible for
- Explains loan cancellation and forgiveness options
- Provides you with resources available to borrowers
- Shows you how to access the National Student Loan Data System (NSLDS) where you can find out about your loan balance
- Allows you to choose from many options on how to complete exit counseling, some from the comfort of your home
Repercussions of Forgoing Exit Counseling
- Universities may place a hold on your transcript until you complete exit counseling.
- You are violating a stipulation of taking out a federal loan by not completing your exit counseling, as federal law requires it.
- You will likely not understand all the terms and conditions of your loan.
- You will fail to get professional help with budgeting, repayment information, and information on accessing the NSLDS.
- You will have no knowledge on where and when to get help and how to protect your credit ratings.
- You may not fully understand your rights as a borrower.
- You may not realize the seriousness of your responsibilities as a borrower.
- Your loan servicer may not know the most current contact information for you.
- A repayment option will be assigned to you without your input.
Completing Exit Counseling
When students have completed their degrees, or they drop out of their school programs, they’re required to go through this exit counseling process. It takes only a few moments to complete, and the whole process can be done online.
Students can sign into the module with their FSA ID, and then click on the “Exit Counseling” button. Then, they’ll go through a series of screens that teach them how the loans work, how they should be paid back and what consequences might befall a student who chooses to skip out on those obligations. There are quizzes involved, just to ensure that students are really paying attention to the information provided, but the text is generally considered easy to digest and easy to understand. Students should emerge from this training session with a good understanding of what they’re required to do and when they’re required to get started.
The module contains a tour function, for those students who would like to just browse the site without filling out any information. But it’s best for students to actually log in and complete that training soon after graduation. Participation is mandatory, after all.